Hospital administrators are inundated with announcements of the latest and greatest advancements in information technology that help enhance administrative operations, drive throughput, increase efficiencies, control costs and ultimately improve patient care.

While these healthcare professionals understand and recognize the benefits such technologies bring to their facilities, they are often plagued with the question: "How do I pay for them?" This dilemma will intensify as spending on healthcare information technology continues to grow by nearly 9 percent per year, reaching an estimated $30.5 billion by the end of 2006.

In making critical IT spending decisions, providers must consider a growing number of capital issues, including cutbacks in reimbursement, rising insurance rates and ongoing governmental mandates. While providers generally understand why they need to invest in IT, cash flow issues can make budgeting for these expenses difficult.

Fortunately, organizations have even more equipment financing options than they’ve had in the past. Whether your organization wants to own a piece of equipment for good or just for the short term, financiers now offer a variety of loan and lease options. So with all of the options out there the question becomes: To lease or to borrow?

Advantages of a loan

Besides giving you full ownership benefits of a piece of equipment without large upfront outlays, the loan route can afford your organization other benefits. First, ownership gives you the opportunity to build equity in an asset with a long useful life. Second, your organization may receive tax benefits – both in first-year deductions that you may be able to utilize and amounts that you may be able to depreciate over several years.

In addition to the financial benefits, healthcare organizations now enjoy more flexible loan terms. In fact, many lenders will work with your organization to craft customized, affordable equipment purchase plans that conserve your funds and protect your cash flow.

Advantages of a lease

Today, healthcare providers recognize the value of leasing their major capital equipment acquisitions. In addition to keeping equipment current, it eliminates the question of what to do with older or obsolete equipment, or the need to resell used equipment in hopes of recapturing some of the value.

To keep pace with customer demand, many healthcare lenders offer flexible lease contracts to help you acquire the healthcare equipment you want, without hindering your financial flexibility.

While lease terms vary, some of the most popular features can include:

• Competitive rates

• Ability to choose from among a variety of lease terms, often ranging form 36-84 months

• Flexible payment plans

• Lease contracts that begin when equipment is installed and ready for use

• Multiple end-of-term options which may include upgrade, renewal, purchase, or return

• Choice between operating and capital lease structures may be available for some or all of the leased assets

The flexibility of both

Whether you lease or loan, odds are that you will have options to add a little flexibility to your plan, such as:

• Graduated or step-up plans that have lower payments in the beginning. This solution enables you to use available working capital to finance business growth.

• Deferred plans – an ideal solution if any unexpected expense comes up and you simply don’t have money to spare in this year’s budget

• Skip-payment or seasonal plans that have payments that vary to match your cash flows. This solution can be advantageous to businesses that have a lower cash flow during certain months of the year.

The bottom-line when making the decision to invest in new equipment is: Research your financing options just as carefully as you research the equipment. Whether you choose to use a loan or a lease on the equipment, there are many options out there that can fit your business strategy. HPN