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Healthcare Equipment Acquisition in an Improving Economy

William G. Sutton, CAE, for HealthLeaders Media, May 9, 2011

Therefore, in addition to pent-up demand, a large focus will be on acquiring healthcare IT systems necessary to achieve meaningful use. This is due to the stimulus funds available now, combined with potential penalties for non-compliance looming in 2015, which have made this a priority for most providers.       

Healthcare Equipment Financing Conditions Improving

The healthcare equipment finance environment is improving, and end users should be strongly considering equipment finance. It is important to understand, however, that the changes and uncertainty surrounding healthcare legislation and reimbursement are affecting access to liquidity. But while credit conditions have not returned to pre-recession levels, the situation has clearly improved compared to 12 or 18 months ago. Hospitals and physicians with solid credit histories can generally expect the environment to be competitive.

Increasing activity and optimism prevails in equipment finance overall. The Monthly Confidence Index for the Equipment Finance Industry, which reports a qualitative assessment of prevailing business conditions and future expectations, reached its highest level in March 2011 since the index originated in May 2009. The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index, which reports economic activity for the $521 billion equipment finance sector, showed new business volume for February 2011 was up 28% over the same period last year.

Benefits of Equipment Financing In Uncertain Conditions

Despite the tangible gains businesses are experiencing, economic recovery is being hampered by unemployment, the housing market slump and durable goods data, among other issues. A Duke University/CFO Magazine Global Business Outlook Survey noted that CFOs are concerned about consumer demand, pressure on profit margins and the difficulty of planning during uncertain economic times, with half of CFOs planning to hold onto cash.

These are conditions that are well-suited for equipment financing, since they:

  • enable expense planning
  • maintain cash flow
  • preserve capital
  • require no down payment
  • can provide 100% financing
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