Renting, Leasing, Or Buying?

Which Is Better: Renting, Leasing, Or Buying?

It can be challenging to find out what’s in the best financial interest of your medical practice when it comes to equipment. Often Quest Imaging Solutions is asked by our clients, “Should I buy, lease, or rent?” So, we’d put together a blog article to assist people in deciding. Each approach has benefits and drawbacks; your decision should be based on your company’s situation and financial goals. We’ll go through the advantages and disadvantages of each below so you can make a well-informed choice.

 

Renting Your Medical Equipment

Renting is an excellent option for those who need some leeway in their daily routines. In the healthcare industry, some of the most common situations in which adaptability is required include the introduction of new specialties; the opening of a new office or surgical center with limited cash flow due to the build-out; the temporary need for equipment while waiting for budget approval; the immediate replacement of broken equipment, and so on. The flexibility and convenience of equipment rentals make them a good choice for different kinds of businesses and individuals.

For instance, suppose you want to add a new specialty, but the caseload has not yet been proven (you have an idea of the caseload but have not yet billed anything). When choosing a Rental, you can invest in the equipment necessary to perform the procedures.  This will allow you to get a feel for the success of the new specialty without making a permanent financial commitment for medical equipment by renting first. After a client base has been built and invoicing has begun, the rental may be simply converted to a lease or purchase.

 

Advantages Of Renting Your Medical Equipment

1. Incredibly adaptable for your unique requirements (“try before you buy,” daily, weekly, monthly rentals, etc.)
2. Low initial expenses (Deposit + Rent Payment).
3. You can earn equity in your medical equipment rental over time (up to 50% of rent can be used towards a down payment).
4. No Maintenance Fees (Quest Imaging Solutions will pay for any necessary repairs).
5. Possibly tax deductible (check with your accountant).

 

Disadvantages Of Renting Medical Equipment

1. Typically, payments are more than what one would pay for a lease.

 

Purchasing Medical Equipment

To avoid interest and fees associated with getting equipment on credit, a practice with a healthy cash flow and the flexibility to invest in capital equipment outright might choose the buying option. Businesses with a long track record, a predictable cash flow, and a high taxable income level (eligible for the Section 179 deduction) are more likely to qualify for this equipment acquisition. What is a Section 179 deduction? Instead of capitalizing and depreciating an asset over a period of time, business owners can claim an immediate deduction for depreciable business equipment purchases under Section 179 of the U.S. Internal Revenue Code. (Please speak with your accountant for verification if you qualify)

The Immediate Advantages Are:

1. There are no monthly payments to worry about.
2. Your equipment purchase may be eligible for a Section 179 tax write-off.
3. You don’t pay fees for receiving any credit.

 

Some Of The Disadvantages Of Buying Include:

1. Reduced cash on hand because of the big purchase.
2. The equipment’s value does depreciate over time (if you don’t qualify for the Section 179 tax write-off).
3. Buying equipment outright means you don’t have money to invest in other parts of your business.
4. Once the warranty is completed, you must pay for the equipment’s maintenance and additional service costs.

 

Obtaining Medical Equipment Through A Lease

Leasing is an excellent option for acquiring necessary equipment while preserving liquid assets in the bank and earning interest. You may acquire the equipment you need fast by making a small down payment and the first month’s lease payment. Leasing has drawbacks in that it locks you into a contract for a certain period (often 12, 24, 48, or 60 months) with fixed payments, making it difficult to adjust your budget in the event of a sudden shift in your business’s revenue or expenses. Interest rates, too, are risk-based and may range from very low to extremely expensive depending on the quality of the company’s credit (or the personal guarantee of the owner/director).

Benefits of Leasing Medical Equipment

1. Low initial expenses compared to purchasing.
2. The initial cost may be tax deductible (check with your accountant).
3. Manageable monthly payments.

 

Disadvantages of Leasing Medical Equipment

1. Limited renegotiation options in the event of company restructuring.
2. Based on credit (Business or Personal), Interest Rate Vary.
3. More costly overall compared to buying because monthly payments come with interest.
4. You will have to pay service and maintenance fees when the warranty period of the equipment expires.

 

To sum up, an outright purchase is best for businesses with a lot of cash flow, while a lease is preferable for those with less cash flow but who are willing to commit to longer terms (3, 4, 5 years), and renting is best for those who want the most flexibility or who are looking for the shortest commitments.

We’d be happy to assist you with acquiring your equipment, whichever is the best solution for your facility. You may call us at 702-384-0085 or fill out the REQUEST A QUOTE form.