GE to expand program for tax-exempt financing

Health Industry Today, Jan, 1992

General Electric Medical Systems, Milwaukee, Wis., says it's preparing to roll out lease-financing programs for tax-exempt medical facilities across the country based on a pilot program that has been used to fund purchases of GE equipment by two Massachusetts facilities.

The new programs, which will serve as incentives for providers to purchase GE equipment, are being developed on a state-by-state basis, with programs in Michigan and Indiana furthest along.

"We are the only original equipment manufacturer to offer this kind of program because we are the only one with a captive financing organization," said Margo Fanning, a product manager at GE.

Sources said, however, that other vendors should be able to put together similar financing programs.

The Massachusetts program, run in conjunction with the Massachusetts Health and Education Facilities Authority, provides state funds in the form of low-rate lease financing to not-for-profit medical institutions. It is designed for low-cost-capital expenditures in the $1 million to $5 million range rather than capital expenditures for construction projects.

Hospitals purchasing equipment through the program save money due to reduced administrative costs and by gaining access to funds several percentage points below the prime rate.

"Credit is tighter today than a couple years ago, so this will help relieve the problem for some hospitals," said Jeff Hollister, GE Medical Systems' financial services manager.

Mercy Hospital, Springfield, Mass., was the first hospital to take advantage of the program.

In September, it purchased two radiographic and fluoroscopic units and a mobile X-ray unit and upgraded a computed tomography scanner for $1.1 million.

In November, HEFA approved $2.2 million in financing for magnetic resonance imaging equipment at West Suburban Imaging, Wellesley, Mass., according to Hollister.

Demand for capital from tax-exempt health care facilities totals $12 billion to $14 billion annually and is growing rapidly, he added. About $3 billion to $4 billion of the total is for equipment