Financial strategy considerations in the acquisition of biomedical instrumentation

Equipment financing by conditional sale, lease-purchase, and true lease transactions is discussed with emphasis on equity and third-party reimbursement. Use of available funds, bank loans, and leasing are compared on a quantitative basis with an incremental cash flow (ICF) analysis. The ICF analysis involves cash accrual and present value techniques. It is demonstrated in a parametric study of lease rates, equipment useful-lives, and reimbursement levels that leasing is the preferred financing route when there is an expectation of obsolescence and when lease term maturities are significantly less than equipment useful-life. Once the decision has been made to lease equipment, it is important to structure the transaction to achieve the optimum mix of rate, term, buy-out options, and available tax shelter. Specific lease situations are given to illustrate the problems that should be considered by the lessee. Lease terms and conditions tailored to the requirements of the users of biomedical instrumentation are discussed in detail. Lessor selection and the importance of a professional working relationship between lessee and lessor also are explored. The capabilities of the lessor (financial, technical, and administrative) can be tapped by the hospital/clinic staff to develop significant advantages in addition to the financing.