Mechanisms for nonprofit hospitals to acquire new equipment

The expense of new technologies and current high costs of capital financing have combined to encourage hospitals to acquire the use of new equipment by having a group of private investors purchase the equipment and make it available for use by the hospital. However, tax exempt healthcare providers are inhibited from pursuing this alternative because of current Internal Revenue Service policies prohibiting Investment Tax Credit (ITC) for property used by tax exempt organizations. This article discusses some approaches a nonprofit hospital and a group of potential investors can take to enable the investors to claim ITC.