By
Al Hardy
In the October 22, 2014 blog
post, “Non-Capital Equipment Programs, A pithy pitch flawed by pitfalls”
readers were cautioned on transactions that result in 1) liabilities not
captured in financial reporting 2) the cost of debt for some rental agreements can
be far more than bank borrowing rates or through an equipment finance company.
Two very good conversations
came out of the post. They can be summed
up by two more points. First, keep
promoting a greater understanding of the dog-wagging tail associated with some
non-capital acquisition strategies. Second,
make it clear that adopting a policy of cash only acquisitions for equipment purchases generate
waste in money and time.
So, I will make it clear by
repeating “adopting a policy of cash only acquisitions for equipment purchases generate
waste of money and time”… especially if you have it to waste. It’s pretty basic on one-hand. There are technology solutions which are best
not to own. On the other hand, the
pressure to act often causes someone to act in a way that checks a box.
Physician recruitment and
retention are great examples. What is
the market value of assets sitting idle in operating rooms not generating
revenue because they were purchased with cash to attract a certain physician or
physicians? The
physician wants it. Buy it. Get it
done. Attracting talent does
not default to a cash purchase for an asset.
Instead, consider a strategy that allows acquiring the use of an asset for
a cost fractional to the cash price. Safeguard
the purchase decision point closer to a time in which the physician relationship
is cemented or terminated. There are
methods of doing that without suffering a loss.
We can always resell it. I hear
that as a reason to pay cash for equipment. Do you resell it? And if you need to resell it so quickly, why
did you pay cash for it? Reassignment or resell can be good options. Unfortunately, those tend to become choices well after the best option is long past.
