Monthly Archives: March 2017

Medical equipment financing: Should I lease or buy?

For those who work in the purchasing departments for hospitals, medical offices or other organizations that use medical equipment, one of the most common questions is not so much what do we need to purchase, but what advantages might leasing medical equipment have over purchasing it?

There is no easy way to answer this question, but a review of the following key pros and cons of leasing vs. buying should help you decide what type of medical equipment financing is best for your situation.

Leasing pros:

  • Low upfront cost
  • Services, maintenance and warranty are often all wrapped up in the leasing price
  • When properly structured, leasing payments are fully tax deductible as an operational expense
  • Easy turnover if you want updated equipment

Leasing cons:

  • Not a good option if you plan to use the piece of equipment for a long time
  • The life of the lease may end up being far more than if you had purchased the equipment
  • You build up no equity, and with no option to resell the equipment, you cannot make any money back
  • Not all equipment can be leased

Purchasing pros:

  • Owning the equipment allows you make needed modifications or adjustments without violating the terms of a lease
  • Various tax incentives under Section 179
  • You don’t have to deal with contracts
  • Many medical equipment manufacturers have fantastic warranties
  • You can recoup some of the costs by reselling the equipment

Purchasing cons:

  • The initial cost can be considerable. This can prevent you from buying exactly what you want as well as tie up funds you may need for other purchases
  • Equipment may become outdated, especially digital technology
  • You must keep up with maintenance and front the cost of most repairs