Companies that seem to be most affected in their ability to get credit are imaging centers, surgical centers and small physician practices. Group practices, big hospitals and endowments tend to be more attractive to lenders.

But the lack of lending comes also from consumer reluctance. Some banks have noted a reduced demand for loans. And a recent survey of capital equipment leasing found fewer transactions, in number and monetary volume, partly because of “hesitation by businesses to invest in equipment.”


Because the demand for capital purchases is down, Terry said many of his clients have excess cash on their balance sheets. “They’re using that excess cash, I think smartly, to pay down other obligations they have outstanding,” he said.

New strategies for captives
But these trends mean it might be easier to get loans from captives. Because captives want to move products manufactured by their sister companies, they’re often more eager to lend in a downmarket. According to ELFA, captives approved more than two-thirds of submitted credit applications last year, compared with banks, which approved only half.

“I would say there’s more receptivity to closer collaboration between equipment finance parts of a captive house to try to drive business,” John Sandstrom, senior vice president and general manager, health care, of Siemens Financial Services, told DOTmed News. “It’s different when the markets are good, and now that’s driving a closer cooperation.”

Of course, it’s a two-edged sword, and captives also have the fiercest struggle with delinquencies, according to ELFA, “with their current assets representing only 93.2 percent of their total portfolio at risk.”

Still, in Sandstrom’s view, captives are finding out it pays to be creative – attracting customers by not just financing equipment, but also offering financial help for whatever customers might need in order to make use of the equipment, such as construction and real estate.

“If you have a hospital with limited flexibility raising capital, we want to bring in a broader set [of resources],” Sandstrom said.

For example, if a health system wanted to build a new medical office building, Siemens could help finance both the real estate and the equipment leasing. Or if a hospital wanted to move equipment from a mobile trailer in-house, the captive could help cover construction as well as equipment costs, “to finance that as one big project,” Sandstrom said.

With this, Sandstrom said captives aren’t in competition with banks, and that one trend that’s growing is for customers to seek out several financial partners.

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