Financing healthcare capital expenditures

Healthcare Purchasing News, Nov, 2004 by Bill Zadrozny

Conclusion

To recap, a hospital needs to be as creative as possible in the quest for capital. Some sources are more available and sustainable than others. Diversification of the capital mix is a hallmark of a healthy enterprise. Once the capital plan has been authorized, the next task is to assess the value retention of each asset in fulfilling the vision the hospital has adopted. Long term projects such as investments in the physical plant may best be handled by cash and bond issuance. Other assets may have a shorter useful life, be prone to fairly rapid obsolescence, and warrant financing on a flexible plat form, such as a master lease designed to achieve specific financial and operational objectives for the hospital. Due to ever-changing accounting guidelines and tax regulations, it is advisable to discuss specific equipment applications as early as possible with financial sources expert in both the healthcare industry and in the equipment to be financed.

Footnotes:

(1) Healthcare Financial Management Association, "Financing The Future", How Are Hospitals Financing the Future, Copyright 2004

(2) Source: Equipment Leasing Association and R.S. Carmichael & Co. estimates, Copyright 2003

(3) Source: Equipment Leasing Association and R.S. Carmichael & Co. estimates, Copyright 2003

Bill Zadrozny, President and CEO, Siemens Financial Services, Inc.