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Is It Better to Buy or Lease GI Equipment?
Caryl Serbin
Publish Date: October 10, 2007

Caryl A. Serbin, RN, BSN, LHRM Q Would you tell us if we should buy or lease our GI equipment?

A Generally, buying equipment will require the center to either use its cash for the purchase or to borrow money from a bank or other lending source. Leasing the equipment usually requires no cash outlay and involves monthly lease payments to the leasing company. Payments to the bank will generally be fixed based on the length of the loan. Payments to the leasing company can be either fixed or based on the number of procedures (cost per case) performed with the equipment each month.

Caryl A. Serbin, RN, BSN, LHRM\

The interest rate a bank charges is substantially lower than what a leasing company charges. However, if the center owns the equipment, it will usually need to dispose of it when the center is ready for new equipment (by selling it or scrapping it). If the center leases the equipment, it will simply turn in the equipment to the leasing company at the end of the lease.

There are also tax consequences to the center depending on which acquisition method it chooses. If the center buys the equipment, it can write off one-half of the cost in the year it buys it, even if it borrowed the purchase price from a bank. Under certain circumstances, with proper planning, the center can write off 100 percent of the cost in the year of purchase. If the center leases the equipment, it will only be able to write off the lease payments each year.

The information above assumes the lease entered into is a "financing" lease (generally one that requires any purchase at the end of the lease to be the fair market value of the equipment at that time). However, there is also a capital lease (one that has a $1 buyout at the end of the lease). A capital lease will allow the same tax result as an outright purchase.

When analyzing which acquisition method to use (purchase, financing lease or capital lease), you should develop a matrix chart with all the facts listed side by side. Generally, the center's management company and/or CPA should participate in the decision.

Q Two new surgery centers are opening in my market. What can I do to keep my staff?

A Retaining staff in a competitive market is difficult. It helps to know why people leave - and why they stay. Salary is rarely the primary reason people leave. This is not to say that your wages and benefits can't be market-competitive, only that money is seldom the deciding factor.

A secure and satisfied employee is less likely to be looking for options. Employees feel this way when they feel as though they're valued members of the team whose opinions and contributions count. As the leader, they look to you for clear direction. Honestly share issues with them and work with them to set goals and identify ways to change those things that can be changed. Keep them involved and informed. Let them know where the center is doing well and where opportunities remain. Address issues quickly, fairly and consistently. Provide a safe, supportive environment that produces quality outcomes and a sense of pride for all.