4 Best Practices for Obtaining Doctors’ Equipment Financing

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Thursday, January 4th, 2018

While providing medical care is exceptionally complex and requires decades of study and training, the formula for practice sustainability is simple: doctors that cover their overhead and generate sufficient profit to justify their opportunity cost are in good shape. While doctors that cannot cover their overhead costs are at risk of going out of business entirely. Indeed, a survey conducted by the medical reference website MDLinx revealed that 17 percent of doctors felt that shuttering their practice was a real possibility because of factors like massive medical school debt, increasing business expenses and administrative costs, shrinking insurance reimbursements, and excessively costly malpractice insurance.

In light of the essential need to balance quality patient-centric delivery of care with smart and strategic business practices, a growing number of doctors are turning to equipment financing in order to strengthen and expand their practice — and pave the way for long-term sustainability.

If you’re among the medical professionals researching these funding options, then here are 4 best practices for doctors’ equipment financing to point you in the right direction:

Doctors’ Equipment Financing Best Practice #1: Explore the Tax Advantages

Financing allows you to claim tax deductions for the interest paid, and you’ll be entitled to amortize the equipment over its useful life.  Or you may wish to take advantage of the IRS’s Section 179 deduction provision, which lets you deduct the full purchase price of the equipment in the tax year that it was initially obtained (even if it is financed over a period of several years). Speak to your accountant about this for a clear understanding of all potential tax benefits, and how to exploit them to ultimately lower your total cost of borrowing.

Doctors’ Equipment Financing Best Practice #2: Don’t Let a Lender Restrict Your Options

Some lenders that provide doctors’ equipment financing oblige borrowers to choose from a small list of pre-approved vendors. This requirement is arbitrary and not in your best interest, since it limits your options and reduces your leverage (i.e. if you only have 5 vendors to choose from vs. 20, you’ll typically be forced to pay more and get less). To avoid this costly limitation, choose a lender that gives you the full freedom to purchase your equipment from any vendor(s) that you wish.

Doctors’ Equipment Financing Best Practice #3: Understand the Total Cost and Borrow Accordingly

Doctors’ equipment is extremely complex and sophisticated, and vendors typically offer maintenance programs that extend beyond the standard support period (e.g. 1 year). The costs for these maintenance programs vary based on product and package details, and can range from a few hundred dollars a year to several thousand. It’s important to take these costs into consideration and factor the into your borrowing plan, since obtaining them at the time of purchase is often cheaper than waiting until the initial support period expires.

Doctors’ Equipment Financing Best Practice #4: Keep space planning needs in mind.

While some types of equipment are small and portable, others — like sterilization stations — are large and immobile. Ensure that you plan ahead and, if necessary, complete any renovations that allow you to install and start using your new equipment as soon as possible. You can typically cover the costs of this through your initial financing, or in combination with a short or long-term working capital loan (or other funding solution).

Learn More

At National Business Capital, we understand that delivering quality patient care and running a strong, sustainable and profitable practice must go hand-in-hand. That’s why we proudly provide affordable and flexible doctors’ equipment financing to physicians nationwide. To learn more, contact us today for an informative consultation. It would be an honor and privilege to be part of your practice’s success story.

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