"Leases address things that a loan cannot," Frodge said. "With a lease we have the option of who keeps the tax benefit of ownership. If we are dealing with an entity that is unable to utilize a tax benefit, it is possible to structure a lease where the bank or leasing company is able to keep the tax benefit in exchange for a lower interest rate or lower monthly payment."

Your Third Choice: Bank, OEM, or Leasing Company?


In addition to choices of financial instruments, hospitals must weigh the use of different lenders and lessors including the OEMs, banks, and leasing companies.
The big equipment vendors--GE, Philips, and Siemens--each have "captive" leasing and financing programs.

"The benefit of working with us is we are industry specialists. All we do is
healthcare," said Mark Sedlmeier, marketing leader, GE Healthcare Financial Services' Equipment Finance Team. "We understand what the trends are in healthcare and we can bring a better product to the table, factoring the technological obsolescence so we'll take the risk the hospital would otherwise be absorbing if they went with someone who's not a healthcare specialist."

GE is the largest leasing company in the world. Because of its size, it not only backs equipment but just about anything else a hospital needs. GE finances equipment from any OEM, new or used. "We have the capability of providing a complete market basket of financial solutions. We finance equipment, real estate, joint ventures, anything a hospital could look to acquire or finance," Sedlmeier said.

While banks are not healthcare specialists, their very distance from the industry may be a plus. They have no interest, as the OEMs do, in guarding and servicing an installed base of equipment so they come at the transaction from a purely economic standpoint.

"We don't do just the equipment piece. We do their entire bank relationship from equipment to traditional financing to their general banking needs. We're a one-stop shop for our clients, providing more benefits than the manufacturer's
leasing arm or a traditional equipment finance group," said Sammy Abdalla, vice president , Business Banking and Business Development Officer, Bank of America. "If we have a relationship with the client we can be pretty competitive on the pricing because we price off the relationship, customizing our leasing/finance product to what their needs are from a tax perspective."

The little guys, however, still hold their own with the financial giants. For one thing, many leasing companies, though not all, are vendor neutral. They are run by seasoned pros with decades of experience, often providing the detailed

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