What leasing companies can provide
At the symposium Sabine Eidmann will discuss the type of financing models available and necessary to boost hospital profits and will present:
Sabine Eidmann points out that Comprendium Leasing, which has a track record of 25 years in Germany for individual leasing offers, belongs neither to a bank nor manufacturer. Its refinancing is conducted through capital markets, an independence that, she says, enables creative and new off the beaten track concepts.
Both income and expenses adversely affect profitability for German hospitals. In combination, they reduce the scope of investments, although these are necessary to cut costs and increase revenues. The actual hold up of investments is said to amount to around €50 billion. In many hospitals expenses exceed revenues because treatment costs are far too high due to a lack of modern equipment and processes. There is a clear trend: On a long-term basis, the government will only provide the political framework in which an increasingly market-oriented hospital system will develop.
A recent study by RWI/admed showed that a fifth of all hospitals face closure within the necessary reform process. The hospital that survives is the one that uses intelligent strategies for both internal and external situations, drawn from modern management methods; financing; marketing; cost structuring and revenue generation. It is of minor importance whether the hospital is public or private, or a charity.
To keep up competitively, sufficient financing for necessary investments will be a fundamental requirement for future hospitals.
Two major trends are obvious: Hospital financing will change fundamentally, shifting from public subsidy financing to classic credit financing. In the future hospital, the decision of whether to invest, or not, will have to be calculated by its professional managers, following fundamental and objective cost-advantage evaluations. In all aspects of business economics, including the costs of interest and amortisation, whenever a result is positive investment should be seriously considered. All professionals in a hospital must participate in that decision process.
Privately-owned hospitals give an impressive example of how this should work - their investments are profit-oriented, free from governmental and political regulations, and meet with remarkable success. They often use leasing as an external financing source for their investments.
Leasing for medical equipment and IT includes a variety of contract models; each should be evaluated to find the one that best fits a hospital’s individual needs. The classic well-known method of public bidding can be transformed to a catalogue of financing specifications tailored to a hospital’s needs. In particular, the exchange of medical equipment at several stages of the planned amortisation period must be considered – normally at the end of the assumed period of usage, but earlier exit scenarios should also be taken into account. In this field, leasing is advantageous compared with a loan, because the VAT in leasing is only applied on the effective wear and tear.
Modern instruments of leasing resolve the hold up of investments in a combination of classic loan financing for buildings and floating capital and leasing to finance tangible goods. An advanced financing strategy will enable hospitals to shift from traditional institutions that present treatments to patients, to modern companies that meet the demands of their customers.”
08.03.2007
