Ownership or usage? How to make the best decisions when financing medical technologies
By Philips ∙ August 2023 ∙ 2 min read
In an increasingly high-tech world, healthcare providers need to procure the most advanced medical technologies to stay competitive and provide quality patient care. As providers invest in innovative technologies, medical equipment and infrastructures, they must carefully consider their financing options. In an environment of constrained budgets for capital investments, choosing how to finance new technology can be as important as choosing the technology itself.
At a glance
Whether a provider is looking to finance to own or use its next MR, ultrasound fleet or telehealth solution, finding the right financing partner is crucial, in order to attain a longer-term strategic partnership to improve investment value and return.
Today, financing mechanisms have evolved towards consumption, capacity, usage-based and risk-sharing models. However, the finance decision to own or use medical equipment usually depends on the financing structure, capital position and business strategy of the healthcare provider. There are pros and cons for both options.
How to weigh up ownership versus usage financing options
Usage-based: Financing through vendor leasing or healthcare-as-a-service models
New financing structures and healthcare-as-a-service models offer flexibility, cost efficiencies and improve sustainability in today’s dynamic healthcare environment
Pros include:
Cons include:
New financing structures and healthcare-as-a-service models offer flexibility, cost efficiencies and improve sustainability in today’s dynamic healthcare environment.
Ownership-based: Financing with a loan or extended payment terms from vendor, bank or other credit institution
Pros include:
Cons include:
Which financing structures maximize equipment lifetime value?
There are many innovative financing structures that solve a broad range of healthcare procurement issues, from hospitals requiring frequent equipment upgrades to practitioners setting up or expanding their facilities, and for all care providers facing capital constraints.
Strategic partnerships enable equipment suppliers and healthcare providers to share responsibility for planning and managing the complexity of medical technologies based on current and future needs. Similar to leasing models, they combine equipment, devices, maintenance and services into a flexible offering with transparent financing terms and conditions.
Benefits of usage-based financing models for healthcare providers
New financing structures and healthcare-as-a-service models offer flexibility, cost efficiencies and improve sustainability in today’s dynamic healthcare environment. Financing contracts can be structured to provide more lifecycle options, such as equipment upgrades, capacity management, preventative maintenance, and additional services to best serve the needs of care providers and ultimately, patients.
The lifetime value of financed technology is maximized by sustainable management and maintenance programs integrated into financing solutions, including cost-effective upgrades or replacements and end of contract trade-ins, extending the lifecycle of the equipment.
As the equipment supplier owns the equipment, payments are simply linked to usage or service-level performance indicators, and the equipment supplier also ensures high operational uptimes for the care facility.
