Leasing companies have been edging away from residual operating leases anyway, because the lessors incur more risk, says Deighan. This kind of lease requires the lessors to make their best guess on the value of the equipment at the outset of the lease.

"If the leasing company guesses wrong in either direction, they end up eating it," he says. "In the leasing company's perspective there is a huge risk that they could be wrong in their projections."


Still, hospitals and imaging centers are going to end up paying more for the usage of that equipment with the fully financed lease than they did with the operating lease, says Detwiler.

In addition, if these proposed changes go into effect, a hospital with $20 million reflected on their line of credit and $20 million's worth of off balance-sheet financing may have to begin reporting $40 million in debt. If a bank or banks were requiring that hospital to stay under a certain level of debt in order to avoid going into forced repayment and these new reporting measures spiked their reported debt to some level above the allotted amount, hospitals could potentially be in some serious trouble.

"It would cause huge problems, because hospitals would be forced to pay back all this debt," says Detwiler. "The Board is still in discussions right now. They keep releasing statements for comment period, but they probably won't be implementing the new rules for two or three years."

Even if those with operating leases are grandfathered-in and thereby sheltered from new debt reporting requirements, the method of financing is going to change drastically.

The most important questions

Thoroughly reading lease documents can be a long and arduous process, but a necessary one. There are five main concerns to take up with your leasing company: the evergreen clause, interim rent, blanket liens, prepayment fees and forced insurance, says Gary Saulter, president of Chase Industries, Inc., a national medical equipment financing company.

"What's happened is that a lot of leasing companies have found ways to get more money," says Saulter. "They might explain it a little, but you don't really know what you're signing. It's not right or ethical and there is no way to say it nicely-they're cheating."

Evergreen clauses indicate an automatic renewal of the lease. They apply to any residual leases with buyouts that exceed one dollar. For instance, if you do not notify the leasing company of your intent to relinquish, upgrade or buyout the equipment within a certain period of time approaching the lease term, you may get hit with an additional billing cycle. Saulter estimates that as many as 30 percent of doctors have evergreen verbiage in their leases.

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