March 20, 2009 – In a time when the economy seems down for the count, hospitals and healthcare centers are finding themselves in the same position as other businesses and even homeowners – the lack of available financing is putting a damper on major projects and capital budgets.
At Elekta Inc., a leading manufacturers of oncology and neurosurgical devices and software, a financing program put into place a few years ago is getting new attention as hospitals battered by the economy still work to improve patient care and remain competitive.
Elekta Capital, a program of Elekta, with the support of global finance company De Lage Landen Financial Services Inc.*, makes it possible for hospitals and treatment centers to acquire Elekta equipment without worrying about capital expenses and credit lines.
"We offer three types of financing through Elekta Capital," said Mark Symons, senior vice president of Elekta's Neuroscience business unit, "a capital lease, a loan, and an operating lease. A capital lease or a loan is a pretty standard financial instrument, but we're seeing an uptick in interest in the operating lease."
"Under an operating lease agreement, the finance company owns the equipment, which is deployed and used by the hospital," explained Symons. "An operating lease removes the burden of having to budget for capital investments. And because the economic viability and return on investment of our systems are proven, the investment risk is well quantified for all parties involved."
"Increasingly we're seeing hospitals trying to take acquisitions of any value off the balance sheet," said Nick Santore, De Lage Landen’s vice president of Healthcare Middle Market Sales. "That way, they can act on an immediate need for the system without waiting for months or years for the item to be funded out of the capital budget."
Another recent trend to accommodate for shrinking budgets is bundling all aspects of a system into a single lease, said Santore, "Hospitals are shopping for equipment, service, software and financing to be arranged all from one source, thereby helping to improve efficiency and reduce costs. So while hospitals still seek to diversify the sources of financing, they are making fewer leasing agreements for larger bundles." He adds that, leases – operating or capital – often help hospitals avoid equipment obsolescence, which can help to prevent loss of volume to other hospitals, treatment centers and physician offices. The manufacturer benefits also because it expedites both the sales and payment process.
Operating leases are receiving renewed interest not only because of the economy. Federal Stark regulations, which limit the extent of physician/hospital joint ventures, will make those arrangements even less common when a new version of the law takes effect on October 1, 2009.
*De Lage Landen and Elekta, are unrelated entities and credit decisions are made by De Lage Landen on a transaction-by-transaction basis.
Note: This release is the first in a three-part series on how hospitals are exploring financing alternatives and/or leveraging current assets to maintain a competitive edge. For the complete series, visit Elekta.com.
For more information: www.elekta.com