What Are Best Practices for Leasing Hospital Equipment & Supplies?

Equipment leasing can be a financially prudent method of procuring equipment and related supplies and services for hospitals and other health care related organizations. However, many medical providers enter into leasing agreements without an awareness of the all-in costs of leasing or the risks involved.

As a medical provider, to protect your organization and secure the most favorable lease terms, you need to approach the leasing of hospital equipment with a systematic, strategic plan for minimizing leasing risks and costs, while ensuring that the equipment needs of your enterprise are met. Yet, the complexity of hospital equipment leasing makes the astute management of the leasing process a challenge.

Central Role of Finance/Treasury in Vendor Selection and Management

It is common for hospitals or other large health care providers to centralize most financial operations except for leasing hospital equipment and supplies. Instead, individual departments often operate in silos, choosing and evaluating vendors and leases with no consistency across the organization, and only involving system level finace when required by policy. In many cases, this is because there is no corporate policy to standardize leasing activity across all areas of the business.

This lack of centralized leasing control inevitably leads to contracts being signed that have avoidable and unacceptable risk. It also often means that efforts to control costs through careful vendor selection have not been followed. Without an enterprise-wide leasing policy, including best practices and centralized lease approval, there is no mechanism for enforcing lease cost containment. While various parts of the organization may make wise decisions about leasing hospital equipment, others may inadvertently make costly decisions.

The solution is to centralize the leasing of all hospital equipment, supplies, and services within the finance/treasury department. The approval process, developed by the treasury/finance department, should be standardized, and implement requirements for lease schedule language by asset type. This centralization should also track performance as leases conclude, to identify opportunities to control risks and costs, as well as to evaluate vendor performance.

Implementation of Company-wide Best Practices

It is crucial that all areas of your organization follow the same best practices. To identify these, your company, led by treasury/finance, needs to perform an analysis of past leasing performance and truly understand the all-in costs of leasing, not just the sum of the rental payments.

This historical lease performance analysis will bring to light data that enables your enterprise to effectively conduct lease vs. buy analyses to determine if leasing is, in fact, the best option to meet your company’s objectives and needs.