Procurement Fast & Easy
Delaying the purchase of your EMR? Is the delay due to a lack of funds? If you’re bound by cash flow restraints, or looking for tax benefits and protection from equipment obsolescence, equipment financing may be the right choice for you.
There are a number of leasing companies available to finance EMRs; many distributing start-up offers with very low monthly payments.
One of the most popular is the Practice Builder Lease which deferres your payment for 3 months, then 9 payments at 1% of equipment and installation cost, followed by either another 39 or 51 payments at a higher level.
And with financing, your medical practice may transfer the risks and uncertainties of ownership to the finance company while concentrating on using the technology as a productive part of business. Leasing is a great way to jump-start the EMR procurement process. In addition, the government is providing up to $44,000 in incentives if you act before 2011. So you can finance to purchase now then when you get your incentive payments, you can pay them off!
Choosing to implement an EMR system and deciding which one is best for your practice is just the beginning. Training, support, and other services are imperative to a successful EMR implementation, yet they are some of the most overlooked costs involved with an EMR acquisition. By financing you can have everything involved with your EMR purchase bundled into one accountable monthly lease payment. This will make budgeting for all costs associated with EMR procurement easy and manageable. Leasing will also protect you from technological obsolescence, a concern for any physician investing in technology solutions.
EMR Financing Benefits
Some other benefits of leasing EMR equipment include the following:
• 100% Financing — Leasing usually does not require a down payment so it is equivalent to 100% financing. Any capital that would have been used for a down payment can be reinvested into the business.
• Speed — Leasing can allow you to respond quickly to new opportunities with minimal documentation and red tape. Many leasing companies approve applications within a few hours.
• Asset Management — A lease provides the use of the technology solution for specific periods of time at fixed payments. The leasing company assumes and manages the risk of technology ownership. At the end of the lease, if the physician elects to return the technology, the leasing company is responsible for the disposition of the asset.
• Flexibility — As your practice grows and your needs change, you have the flexibility to add or upgrade technology at any point during the lease term.
• Upgraded Technology — An EMR can make your practice more efficient. Technology solutions that could depreciate quickly should be leased to limit your risk of getting caught with obsolete equipment. Plus, leases make it easier to upgrade or add technology solutions to meet ever-changing needs.
• Tax Treatment — The Internal Revenue Service does not consider certain leases to be purchases but rather tax-deductible overhead expenses. Therefore, medical practices can deduct the lease payments from income, thus reducing the net cost of the lease.
• Tax Benefits — Leasing companies can pass the tax benefits of ownership to you in the form of lower monthly payments.
• Expense Forecasting — When you lease EMR equipment, you can accurately forecast the cost requirements since you know the amount and number of lease payments required. Also with leases, there are no floating fees.
• Immediate Write-Off of Spending — With leasing, payments are treated as expenses on the income statement, so the technology solution does not have to be depreciated over an extended term.
• Flexible End-of-Term Options — There are typically three flexible options at the end of a term. You can either return the equipment, purchase the equipment from the leasing company, or extend the lease for an additional period of time.
• Easier Financing than Loans — With a lease, you can avoid requirements like compensating balances, large down payments, client list reviews, and cash flow projections, making the finance process faster and easier.
So You Want to Lease…What’s the Next Step?
The next step is choosing a leasing company. Look for a company that understands your practice’s objectives, is experienced with EMR technology, and has a long term commitment in the relationship. Also important to consider is the financial strength of the leasing company, as their risk of owning the equipment needs to be taken under consideration.
Many EMR providers partner with a leasing company, making it even easier for physicians to get information about their financing options.
In addition, numerous resources are available that provide more information about leasing or aid physicians in the search for a leasing company. For example, the Equipment Leasing and Finance Association (ELFA), a nonprofit association representing companies involved in the equipment leasing and finance industry, has developed Choose Leasing, available at www.chooseleasing.org.
Choose Leasing answers commonly asked questions about leasing and discusses important points to note before signing a contract. The site also offers a search engine for finding nearby or specialty leasing companies.
Questions to Ask
As with any purchase decision, it’s important to get as much information as possible before making a commitment. To help guide people through the process of leasing, the ELFA has developed the following list of 10 questions to ask before signing a lease.
These questions take into account the before, during, and after stages of a lease and should help provide the information needed to make a sound financial decision. Also, physicians should always talk with a tax advisor before making a decision.
1. How am I planning to use this technology?
2. Does the leasing representative understand my business and how this transaction helps me conduct business?
3. What is the total lease payment and are there any other costs that I could incur before the lease ends?
4. What happens if I want to change this lease or end the lease early?
5. How am I responsible if the equipment is damaged or destroyed?
6. What are my obligations for the equipment (such as insurance, taxes, and maintenance) during the lease?
7. Can I upgrade the technology or add equipment under this lease?
8. What are my options at the end of the lease?
9. What are the procedures I must follow if I choose to return the equipment?
10. Are there any extra costs at the end of the lease?
So stop delaying the purchase of your EMR. You’re no longer bound by cash flow restraints if you choose equipment financing. Jump-start your EMR procurement process today, finance your purchase then pay it off with your incentive payments.