10 proven strategies for reducing equipment costs: cutting costs is a way of life in health care. Given the pressure to squeeze out savings wherever possible, senior financial executives would do well to put into practice a number of tried and true strategies for saving money when acquiring and financing equipment and software

Healthcare Financial Management, May, 2005 by Richard J. Henley, Martin A. Zimmerman

Finally, make sure that the overall transaction and costs fit your needs and expectations. Otherwise, ask for a bid resubmission.

The most effective financing negotiations are based on trust, which develops as each party to the negotiation considers the interests of the others and deals in a straightforward manner. Providers appreciate financing sources that help them keep costs low. Lessors, in turn, appreciate the repeat business that comes from mutually beneficial relationships. In the right relationship, both parties benefit.

AT A GLANCE

* It is essential to consider your organization's equipment acquisitions in light of your business strategy.

* In negotiating the financing, share your business objectives with a preferred list of financing sources that can be counted on to recommend alternatives in addition to quoting on the specified financing.

COMMON PITFALLS IN THE FINE PRINT

* Automatic renewal for extended period

* First right of refusal for future financing

* Requirement for maintenance by manufacturer only

* Excessive prepayment penalty

* Adverse tax indemnification language

* Limited commitment period

* Short cure period for technical defaults

* Refusal to finance tax, shipping, and installation charges

* Hidden charges, deposits, or provisions for early lease start

* Ambiguous language of any kind

Richard J. Henley, FHFMA, FACHE, is executive vice president, Health Quest, Poughkeepsie, N.Y., and a member of HFMA's Metropolitan New York Chapter. Questions or comments about this article may be sent to him at rhenley@health-quest.org.

Martin Zimmerman is president and CEO, LFC Capital, Inc., Chicago, and a member of HFMA's First Illinois Chapter. Questions or comments about this article may be sent to him at mez@lfccapital.com.