Medical equipment increasingly likely to be leased, financed

A report finds medicine is becoming a bigger player in the market, as its technology needs require more frequent updating.

By Victoria Stagg Elliott — Posted Aug. 7, 2009

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The amount of health care equipment being leased or financed has grown, according to an annual survey of Equipment Leasing and Finance Assn. members.

"There's less demand for equipment in general, but health care is a growing segment of the industry," said Ralph Petta, vice president of research and industry services for the association.

The "2009 Survey of Equipment Finance Activity," released July 14, found that new business in the industry as a whole decreased 2.2%. But the proportion of leasing and financing to the health care sector increased from 8.9%, or $8.2 billion, in 2007 to 9.2%, or $8.6 billion, in 2008.

Medical equipment leasing and financing also grew from 6.3% or $6.3 billion of total annual new business in 2007 to 7.2% or $7.2 billion of new business volume in 2008.

Experts suspect that health care leasing and financing business is growing because, although the sector has not been immune from the recession, it is still faring better than others. Also, health care technology needs to be constantly updated.

"Health care groups understand the value of leasing and financing equipment," said Petta.

The survey covers business arrangements such as tax-oriented finance leasing, short-term operating leases, leveraged leases, conditional sales agreements, off-balance sheet loans and tax-exempt leasing. Other business segments that expanded the amount of equipment leased or financed included agriculture, forestry, fishing, finance, insurance, real estate and utilities.

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