Benefits of Financing Medical Equipment and Contemporary Industry Trends

Medtech Business Review | Thursday, March 10, 2022

Maintaining a healthy financial position by financing significant equipment acquisitions will give them room to make lucrative investments and carry out their growth plans.

FREMONT, CA: As a business, health care has been termed recession-proof for generations. However, since 2020, health systems have been severely strained due to economic shocks caused by the pandemic, which resulted in increased patients, a lack of personal protective equipment, a rapid shift to telehealth, and rising wages and labor shortages.

In an era of acute financial uncertainty, large health systems with better cash reserves and more robust assets pivoted better than others and increased their investments. Based on McKinsey & Co.'s recent report, the healthcare marketplace is shifting to address patients' health journeys, improving affordability, quality, access, and experience.

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A healthy cash position allows health providers to staff up their ambulatory sites and support their operational initiatives as they expand their services outside the hospital.

Finance is one way to maintain a strong cash position for these centers. Equipment financing allows a company to purchase the equipment at a fixed rate and for a fixed period without dipping into cash or working capital. This is particularly important for hospitals. Cash on hand is an essential measure of hospital liquidity, and lenders and credit agencies require a certain amount to meet their requirements.

The followings are some trends in health care and the approach taken to serve clients with equipment purchases.

Bringing services closer to patients

McKinsey reports the pandemic accelerated the care movement from high-cost acute and post-acute sites to lower-cost freestanding and non-acute sites, including increased demand for home-based care and virtual care. Health systems invest hundreds of millions of dollars in ambulatory centers to bring outpatient services closer to patients.

Besides the pandemic, other growth drivers for these facilities are medical and technological advancements, such as arthroscopic and robotic surgery, which enable minimally invasive procedures that allow patients to go home the same day. The convenience of ambulatory centers also makes them more appealing to patients, as they offer a more intimate setting that allows them to get more personalized attention.

Ambulatory care will be one of the fastest-growing and highest-margin healthcare segments. Surgical centers will generate $152.6 billion by 2030, growing at a compound annual rate of 6.4 percent from 2022 to 2030.

Investments in technology and telemedicine

Healthcare's transformation relies heavily on technology, both clinically and administratively.

McKinsey's report shows that clinical advances, such as new developments in anesthesia and pain control and minimally invasive surgical procedures, enable numerous procedures (such as knee replacements and tonsillectomies) to migrate into the ambulatory setting.

Telehealth will continue to grow. Telehealth experts say the industry is maturing and moving away from urgent care visits to focus on more specialized care, or "telehealth 2.0."

Digital mental health apps, wearable technology for monitoring health, and women's health apps are also growing.

The Deloitte Global Institute predicted strong consumer demand in 2022 for wearable wellness technology, with 320 million devices shipped worldwide. The figure could reach 440 million units by 2024. A new offering hitting the market and more healthcare providers becoming comfortable with them are likely driving this growth.

The digital mental health sector was increasing even before the pandemic. Still, stress and anxiety brought on by the crisis accelerated the demand for virtual behavioral health services, including mobile mental health apps. The apps will include mental illness and substance abuse disorders.

From primary care to chronic disease management and menopause management, women's digital health will expand to provide more comprehensive care based on new funding for women's digital health.

Additionally, health systems will continue to invest in population health management systems and electronic health records (EHRs). Health IT leaders rely on data from their deployed record systems, and optimizing their EHRs is top of mind each budget season.

Changing staffing models and rising costs

According to a survey by the National Council of State Boards of Nursing, registered nurses in the U.S. are 51 years old, and 52 percent of active physicians are 55 or older. Over the next few years, staffing issues will likely worsen as more professionals retire.

According to NMS Health, a national administrator of occupational health screenings and programs, healthcare staffing companies and traveling nursing companies flourished during the pandemic due to the need for staffing in healthcare facilities. Agency and temporary labor use increased by 132 percent for full-time workers and 131 percent for part-time workers during the pandemic. Expanding temporary healthcare staff is also increasing the number of healthcare staffing agencies. Healthcare professionals are recruited by existing staffing companies that have previously operated in other industries. The survey found that hospitals spend approximately 63 percent more on travel RNs now than at the beginning of 2020.

Health systems must be strategic about their investments to stay competitive and serve their patients well in the future, despite both challenges and opportunities. Investing in crucial equipment will boost their balance sheets, enabling them to invest for positive returns and implement strategic plans to make the business more profitable.

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