The outbreak of the Covid 19 pandemic has highlighted the importance of having a sustainable and technologically advanced health care infrastructure. Post pandemic, the medical sector has witnessed an exponential rise in the demand for high-tech medical technology. More customers are becoming health conscious and seeking advanced diagnostics and pre-emptive medical treatments.
Obsolete and outmoded equipment can significantly hamper productivity and impede the revenue-generating capacity of any business, and health care centres are no exception. Equipment leasing is a lucrative option to invest prudently in state-of-the-art equipment and enhance productivity and efficiency without affecting capital reserves.
Equipment leasing is an agreement between the lessor and lessee wherein the lessor allows the lessee to utilise equipment for a specified period in exchange for lease rentals. Leasing companies can finance expensive medical equipment like MRI machines, X-Ray machines, ventilators without investing large sums of capital upfront. The equipment obtained can be returned to the lessor or purchased at the prevailing market price at the end of the lease tenure.
Leasing equipment is an effective tool to adapt to changing market conditions with an edge over the competition. Here’s how health care centres can scale their businesses through equipment leasing:
Limited Upfront Investment
The outbreak of coronavirus has drastically increased the demand for healthcare facilities, diagnostic centres, and hospitals. Additionally, there is a growing need to employ high-tech medical equipment to diligently diagnose patients with complicated lifestyle disorders.
With flexible leasing solutions, health care centres are in an advantageous position to acquire equipment at nominal monthly rental costs. In some lease structures, even the maintenance and installation costs are borne by the leasing company.
Health care centres with limited capital reserves can access desired equipment with an appropriate leasing solution and scale their businesses. Reach out to Tata Capital leasing experts for a variety of tailor-made leasing structures to suit unique business requirements.
Tax Savings
Business expenses are tax-deductible under the Income Tax Act, 1961. Therefore, lease rentals paid are deductible from the gross taxable income. Since lease rentals are treated as operational expenses, health care centres can claim a deduction of the rentals paid to acquire medical equipment. The tax savings reduce the overall cost of the equipment procured.
Further, if it’s a financial lease, the depreciation and interest expense can also be claimed on the equipment, enhancing the tax savings. Reach out to Tata Capital tax experts to receive step-by-step guidance on the tax implications of leasing structures to get the maximum benefit of leasing medical equipment.
Leasing offers access to a diverse range of high-tech equipment. It empowers health care centres to tap into the latest technological advancements to fuel the growth of the business.
Medical equipment is prone to obsolescence with rapidly advancing technological innovations. Leasing equips healthcare centres to employ technologically advanced equipment with the flexibility to frequently upgrade equipment to keep pace with the evolving trends. With leasing, the lessee can acquire new equipment when there is a technology update or change in business requirements.
Cash Flow Position
Leasing medical equipment helps improve the cash flow position of health care centres. The lease agreement clearly specifies monthly lease rentals and enables medical institutions to plan their budgets effectively.
The capital reserves saved from not investing in equipment upfront can be utilised as a buffer amount to meet unforeseen circumstances. Given today’s unprecedented and dynamically evolving market conditions, health care centres can benefit from having deep capital reserves to navigate challenging circumstances. Equipment leasing is an appropriate solution to maintain a consistent flow of cash and keep the business upgraded.
Medical equipment has attained greater importance post-pandemic, and it is undeniable that investing in medical equipment is crucial for health care centres to meet the rising demand. Leasing offers enormous benefits to medical institutions in the form of low investments, tax savings and flexibility. However, the health care centres need to assess their financial stability, carry out cost and benefit analysis, understand tax implications and risk appetite before making the final decision.
To better understand leasing structures and access competitive lease terms, get in touch with equipment leasing experts at Tata Capital.
21 October 2021
4 mins read
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