How a Finance Vendor Program for Healthcare Can Transform Cash Flow

Breakthroughs in diagnostics and patient care require healthcare providers to keep pace with rapidly evolving medical equipment and technologies. With those purchases, they also need to invest in appropriate technology infrastructure, incorporate needed education and training, and financially plan for the changing needs of patients and the healthcare landscape.

All of that comes with costs – costs that can range from a few hundred dollars for basic in-office devices to millions of dollars for advanced imaging and other equipment. Making these purchases is critical to delivering quality care and to staying competitive, yet challenging. Doing so while also preserving cash flow can add another layer of complication.

Vendor financing
Vendor financing programs for the healthcare industry, though, can provide an answer. These financing programs partner with vendors and manufacturers to provide healthcare equipment financing to their customers – the providers and practices that need and use the devices and equipment.

Several types of vendor financing programs are available for providers and practices in everything from radiology and pharmacy management to dental and veterinary sectors. These programs include:

• Equipment loans. As with other business loans, a loan to purchase healthcare equipment provides a lump sum that the provider repays, with interest, over a set period of time. Loans typically require down payments, but vendors may sometimes offer 100% financing.

  While interest rates are important, there’s more to it. Providers and practice managers will find it worthwhile to work with a financing business that knows the industry and with whom they can develop a solid long-term relationship. A financing partner that understands the intricacies of both healthcare equipment and financing will be able to dig in and learn each customer’s business model and goals. That way, they can structure terms to help optimize cash flow – or suggest other options that will better achieve individual cash-flow goals.

• Equipment leases. Leasing preserves cash flow by avoiding the major cash outlays needed for major purchases. Plus, in the medical field, it’s often critical to stay up to date with the latest devices and equipment. With purchasing, it’s often impossible to have the cash to keep buying new equipment. But with leasing, a provider has the option to return, upgrade or purchase the equipment at the end of the lease term.

  In addition, the provider’s business can record lease payments as operating expenses on an income statement instead of listing the asset and liability on its balance sheet. This may help keep debt-to-equity and leverage ratios low, resulting in the ability to borrow for other needs at lower interest rates – and preserve cash.

• As-a-service financing. By offering a product or service on a subscription basis, as-a-service finance solutions can help optimize cash flow for healthcare providers that must stay current with technology and advances. Acquisition on a subscription basis allows access to the latest technologies while reducing expensive up-front outlays.

  Plus, as-a-service contracts include maintenance and service. In the case of large equipment, this can include preventive maintenance. Removing the cost and time burden of handling service and maintenance can go a long way toward optimizing cash flow, and frees up time a provider can use to focus on its core business.

The value of customized financing programs
Medical advancements are improving diagnostics, treatment and patient outcomes. The ability to obtain the equipment and technology to deliver better care and stay abreast of the latest advances is crucial, yet demands careful attention to cash-flow management.

Mitsubishi HC Capital America develops strategic, customized financing solutions that help clients throughout North America generate long-term growth and achieve sustainability goals. With experts in healthcare, we understand the industry’s unique financing challenges. Contact us to learn how to transform your cash flow and bottom line.