Rent or Buy? Weighing the Financial Case for Medical Equipment Rental

The rent-vs.-buy decision is no longer a back-office issue. It’s a strategic lever—one that can improve liquidity, agility, and patient care.

As hospital margins tighten and technology evolves, the decision to rent or buy medical equipment is critical.

According to a Precedence Research survey, some 46% of U.S. hospitals used equipment rental in 2024, indicating a growing trend of hospitals turning to rental to manage budgets. For CFOs, understanding the strategic implications of equipment acquisition is paramount.

With inflation, shifting interest rates, and federal reimbursement challenges, the traditional capital purchase model is being challenged by flexibility, speed, and lifecycle management concerns, according to Bettyann Bird, chief strategy officer at medical equipment company Agiliti.

“It's almost reorienting historically how we've gone about thinking about rental vs. capital,” she says. Bird spent her early years in health care as a trauma and intensive care nurse, gaining first hand experience in using medical equipment.

The Upside of Renting

One of the strongest arguments in favor of renting is financial flexibility. Equipment rental typically requires lower upfront costs, which preserves capital for higher-yield investments or urgent expenditures.

“You can avoid tying up millions [of dollars] in depreciating assets,” Bird notes.

This is particularly valuable for startups, outpatient facilities, and hospitals navigating uncertain volumes. CFOs must think critically about how much their system actually uses its equipment. They must also understand all of the additional costs that come with purchasing equipment.

“The total cost of ownership is so much more than just the device itself,” Bird says. “It's the training. It's the parts. It's the time. It's a whole lot more, and oftentimes that's not taken into consideration. That is something that CFOs and supply chains should certainly be aware of, but I don't know that that's still registering as much right now.”

“Specifically,” Bird says, “we find that hospitals need to incorporate probably an additional 10% of whatever the price of that device to accommodate for that additional cost.”

Another often-overlooked benefit to renting is maintenance and service bundling. Most rental agreements include full service and maintenance, eliminating unexpected repair costs and reducing the need for some in-house staff; this can streamline operations and lower total cost of ownership.

Renting also allows organizations to stay current with technology. With equipment life cycles getting shorter—especially for diagnostic imaging and some surgical robotics—rentals enable easy upgrades without being stuck with outdated machines. Bird says renting can ultimately give CFOs a hedge against obsolescence.

Tariffs have also impacted this space, according to Bird.

“I would say that probably there's been a decrease in capital purchasing because of tariffs and so we're actually seeing rentals go up right now as hospitals try to get their head around it,” Bird says.

Weighing the Factors

Jonathan Ma, CFO of Sutter Health, says he is open about the many considerations that go into the decision of purchasing vs renting.

“It depends on a lot of different factors,” he says. “We're trying to balance obviously the financial considerations of it all, but also the scale of the rapidity with technology changes and making sure we have our physician inputs as well.”

“I think there are different perspectives out there, and for our system we have a mix of both approaches. It's actually a trade-off that we look at frequently,” Ma says.

Ma acknowledges that there is not a universal answer when deciding to buy or rent. Since the factors vary for every system, CFOs must scrutinize and understand the needs of their system through their data and clinical teams.

Another factor hospitals are considering, Bird says, is purchasing revenue-generating equipment, such as ultrasounds, diagnostic imaging or even beds. For a piece of equipment to be revenue generating, it must be a durable device that enables the hospital to provide services and procedures, ultimately contributing to income. Beds, for example, are needed because if there isn’t a bed, there can’t be a patient. Equipment like disposal medical supplies, or training equipment, would be non-revenue-generating. CFOs should be looking at their patient population to uncover what specific equipment brings in more revenue and can be multipurposed not only for inpatient services, but outpatient too.

The Drawbacks and Hidden Costs

Despite these advantages, renting comes with potential downsides. Over time, long-term rental costs can exceed purchase costs, particularly for high-utilization equipment like infusion pumps or patient monitors.

“You’re paying for convenience and risk mitigation,” Bird warns, “but over a five-year span, you may pay twice the asset’s value.”

Another issue is availability and consistency. In peak demand periods such as flu season or during public health emergencies, rental inventory may be scarce. Additionally, rented equipment may vary in quality by brand or model, potentially complicating staff training and clinical protocols.

CFOs must also pay close attention to contract terms; hidden fees for late returns, equipment damage, or extended usage can significantly bloat costs and ultimately hurt the bottom line. Establishing clear payment timelines or setting up an automated payment process can help mitigate this potential pitfall.

A Balanced CFO Approach

CFOs can develop a hybrid acquisition strategy that blends both rental and purchase models, depending on utilization rates, clinical needs, and asset value. Many health systems already do this. High-usage, mission-critical equipment is usually better when bought, while rarely used or rapidly evolving technology can be rented.

To assess the best option, finance leaders should partner with clinical and supply chain teams to analyze usage patterns and projected demand. Bird advises CFOs to look at asset turnover ratios, maintenance logs, and capital budget forecasts side by side, then layer in a total cost of ownership analysis that includes depreciation, tax benefits, and potential resale value.

Furthermore, contract negotiations should be rigorous. CFOs should scrutinize service-level agreements, exit clauses, and escalation terms. Also, they can negotiate a better price point if they’re contracting for a long-term rental.

Bird advises CFOs to not treat rental as an operational expense to approve blindly, emphasizing that it needs the same scrutiny as a capital investment.