Should You Purchase or Lease Equipment in Your Medical Practice?

Below we will discuss the pros and cons of owning versus leasing medical equipment and some of the impacts it may have on your medical office.

Buying Medical Equipment

Pros

• You own the equipment which becomes an asset of the practice.
• Once it’s paid off you can continue to utilize the equipment without payment.
• You will have more freedom to move, modify, or dispose of the equipment.
• If you decide to upgrade to a different piece of equipment, you might retain better resale value.
• Depending on your business structure and current tax rules, you might qualify for deductions and depreciation.

Cons

• Upfront cash most likely will be required and might impact your working capital.
• Without purchasing a service contract, maintenance and repairs will become your responsibility.
• Technology might become outdated while you still own the equipment.
• If your practice grows, changes specialties, or moves locations you will have less flexibility.
• Capital might not be available in other areas such as payroll, marketing, inventory if it’s tied up in the purchase of equipment.

Leasing Medical Equipment

Pros

• You will be able to preserve your cash flow without making a large initial investment.
• Will free up money to make other purchases that the practice might need.
• Monthly budgeting will be more predictable.
• May become easier to upgrade if technology changes rapidly.
• Maintenance and service contracts might be included depending on the type of lease.

Cons

• Cost of the life of the equipment can cost more.
• Contract terms can be complicated.
• You will have committed to monthly payments even if the equipment isn’t being used as initially anticipated.
• You don’t necessarily own the equipment.
• Return/upgrade fees might be impactful depending on the terms of the lease.
• Tax impact can vary depending on your lease, so a CPA would need to review.

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