Most health care systems around the globe want asset financing

by Lauren Dubinsky, Senior Reporter | November 20, 2014
Over the past two years, almost 70 percent of the top 40 medical equipment manufacturers around the world have noticed an increasing demand for asset financing from their customers, according to a new study conducted by Siemens' Financial Services (SFS) unit.

In order to dodge large upfront payments and better manage their budgets, many health systems are turning to asset finance.

The study also found that there was a 6.9 percent rise in the amount of global medical equipment sales that were financed during that same period. Additionally, more than 60 percent of the respondents think that finance penetration will keep rising over the next two years.

Health care systems in the industrialized countries are challenged with improving outcomes while also reducing costs. They're also being hit with lower reimbursement rates and more competition for patients. As a result, two thirds of the respondents reported that their capital budgets are tightening.

"In the US, intensified competition between healthcare providers is driving the need for greater investment in up-to-date medical equipment in the battle to win patients," Gary Amos, Head of Americas for commercial finance at SFS, said in a statement. "However, budget constraints mean that many health care organizations are limited in their ability to make essential equipment upgrades and replacements."

Meanwhile, health care systems in developing countries are experiencing enormous capital demands due to rapid infrastructural growth as they try to make basic health care service more accessible to the whole population.

The central authorities are influencing health care institutions to avoid unsustainable levels of debt, leaving many of them in search of additional sources of finance once their standard borrowing limits have been reached.

The study predicts that medical equipment asset finance will continue to rise over the next two years, but at a slightly slower rate than the past two years.

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