If you don't want to depend on a hospital to fund a major technology or equipment purchase and can't quite pay out of pocket, a loan can be a viable option, Gray Tuttle, a principal with Rehmann's Healthcare Management Advisors, recently told Renal & Urology News. In many cases, financing may be the most affordable option, he added, when you consider factors such as income tax on practice profits and your expected return on investment compared to interest rates.
Tuttle and other experts shared the following advice for getting the best deals:
- Make lenders compete. Discuss your financing needs with not one, but two to three banks, letting them each know they have competition, suggested W. Ben Utley, a consultant with Physician Family Financial Advisors in Eugene, Ore. "Just be mindful of politics, saving money and relationships you have," he added.
- Spring for an attorney. Details such as points, interest rate, term, loan length, amortization schedule, closing costs and origination fees are all negotiable, but doctors rarely ask for more favorable terms, Utley said. One surprisingly economical alternative to haggling is to hire an attorney to do it for you. "Spending $400 to have an attorney review it to save $5,000 on the loan contract is worth it," he said.
- Sync repayment with equipment depreciation. Because a practice never knows when it might need an emergency cash reserve, don't rush to pay off a debt, Tuttle said. Rather, retire the loan at the same rate the equipment will depreciate. "What that does is synchronizes cash flow and creates financial equilibrium," Tuttle said.
To learn more:
- read the article