Healthcare Technology Featured Article

September 10, 2013

The Ins and Outs of HIT Equipment Financing


From imaging equipment to revenue cycle management software and everything in between, technology is transforming the way physicians provide patient care. Rapidly developing technology provides abundant opportunities – and challenges – for physicians, administrators and even patients in today’s healthcare system, most of which is currently driven by impending Electronic Health Records (EHR) deadlines.

Deadlines for HIPAA Omnibus rules, stage two meaningful use and ICD-10 implementation, as well as overall uncertainty about changes to healthcare policy and reimbursement, are keeping many providers awake at night. And for many, how to pay for the necessary capital investment is at the top of their list of concerns.


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Financing May Be the Answer

Fortunately, financing options are readily available for healthcare providers of all types who plan to acquire healthcare information technology (HIT) equipment, including hardware, software and services. In fact, a recent report from Global Industry Analysts Inc. predicts that by the year 2017, the global market for all medical equipment leasing will reach $56 billion.

It’s easy to understand why. Many HIT vendors proactively offer flexible financing solutions that will fully fund the cost of their hardware, software, installation, training and support. And even if the preferred vendor doesn’t offer financing as part of the sales process, independent finance companies can offer similar solutions, all of which allows the provider to conserve cash while still investing in needed technology.

Once the technology investment is decided, finance companies can advantageously offer flexible and competitive financing structures that may even include upgrade options, which helps providers hedge against equipment obsolescence due to the constant evolution of hardware and software.

The Benefits Add Up

Some of the key recognized benefits of leasing EHR equipment include:

  • 100 percent financing – Some financing arrangements do not require a down payment. Conserving capital may become even more important as providers prepare for ICD-10.
  • Flexibility – As a practice grows and its needs change, the provider may be able to add or upgrade technology at any point during the financing term.
  • Speed – Lease financing offerings can often be approved quickly and easily, allowing providers to save valuable time under tight deadlines.
  • Improved cash forecasting – Since the number and cost of payments is determined up front, leasing makes it easier for physicians to forecast the cash requirements of their EHR system.
  • Efficient financing alternative to loans – With a lease for hardware, in particular, physicians can avoid requirements like compensating balances, large down payments, client list reviews and cash-flow projections, making the financing process faster and simpler.
  • Long installations/progress payments – Many finance companies with experience funding HIT solutions can structure the financing to include “progress payments” over the course of a long technology installation.

Taking the Next Step

For physicians and administrators who have weighed the cash versus financing options and have determined an interest in leasing HIT equipment, the next step is choosing a finance partner. A good first step is to ask your equipment vendor if they offer financing, as well as to consult with your regular bank or financial institution and with known providers of HIT financing solutions.

During initial consultations, look for a partner that understands your investment objectives, is experienced with the technology solution needed and is committed to your relationship over the long term. Another consideration is the financial strength of the finance company, as the practice will be entering into a multi-year partnership that should provide long-term benefits.

As with any purchase decision, it’s important to get as much information as possible before making a commitment. Following is a list of 10 questions that take into account the “before, during and after” stages of a lease agreement and should help provide the information needed to make a sound financial decision. Also, be sure to consult with a tax advisor before making a final decision.

Questions to Ask

Before

1. How am I planning to use this technology in my business?
2. Does the finance representative understand my business and how this transaction helps me to do business?
3. What types of “soft costs” will I encounter, and can they be financed?

During

4. What is the total of the monthly lease payments and are there any other costs that I could incur before the financing period ends?
5. What happens if I want to change this financing agreement or end it early?
6. How am I responsible financially if the equipment is damaged or destroyed?
7. What are my other financial obligations for the equipment (such as insurance, taxes and maintenance) during the financing period?
8. Can I upgrade the technology or add equipment under this agreement?

After

9. What are my options at the end of the financing term?
10. Are there any extra costs at the end of the financing period?

With answers to these questions, most healthcare providers will be well on the way to a successful EHR financing arrangement and getting back to focusing on the business of providing patient care.

For more information about HIT equipment financing, visit the Equipment Leasing & Finance Association’s website, or the Key Equipment Finance website.

Steve Jasiukiewicz is Vice President of Sales–Healthcare at Key Equipment Finance. He has more than 30 years experience in healthcare equipment financing. He can be reached at 267-513-1851 or at [email protected].




Edited by Alisen Downey
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By TMCnet Special Guest
Steve Jasiukiewicz, Vice President of Sales - Healthcare at Key Equipment Finance ,




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