Making advanced medical equipment and services accessible for healthcare providers
Supporting leading medical equipment solution providers in healthcare financing: Best practice: Philips Capital
Building long-term partnerships with healthcare providers
Over the last years, we have seen an increasing demand on building long-term strategic partnerships between healthcare providers (both public hospitals and private practices) and medical equipment solution providers such as Philips. For hospitals, providing high quality patient care is the ultimate goal and in parallel hospital decision makers have to balance budgetary and financial challenges. In addition, medical technology evolves, and investment decisions have to be taken. Building a long-term partnership between healthcare providers and medical equipment manufacturers contributes to solve these challenges.
In this context, the private or public healthcare provider enter a long-term strategic partnership with Philips, as medical equipment manufacturer, and both partners agree on an investment strategy to keep the existing medical equipment technically up-to-date and even agree on technology upgrades and replacement cycles to access the latest medical equipment and systems. In addition, Philips provides the required equipment maintenance services and trainings for an optimal use of the medical equipment infrastructure. Long-term strategic partnerships are usually defined over a period of 10 – 15 years with defined roles and responsibilities for both partners. For these services, the healthcare provider remunerates the medical equipment manufacturer with a monthly fee. The contract structure also includes clear processes to assure flexibility over the contract term. An embedded financing structure is key for the implementation and allows the medical equipment manufacturer to recognize sales revenues while the care provider benefits from a solution that bundles the provision of services and deliveries under predictable payment terms.
Together with Philips Capital, the financing service provider for Philips, we have already executed several long term strategic partnership agreements with integrated equipment finance solutions in France, Germany, Spain, and the US. Deal sizes depends on the medical equipment investment, and they can reach hundreds of millions over the entire contract duration.
During almost 20 years of collaboration with Philips Capital across Europe, partly through direct joint venture relationships, we have provided healthcare providers with access to affordable medical equipment financing. Together, we have developed flexible financing solutions adapted to the local market needs of the healthcare sector and their requirements for predictable and long-term investment opportunities. Our financing program manages a total asset portfolio of over 350 million EUR of leased medical equipment in various countries across Europe.
Offering “service-based finance solutions”
Leasing medical equipment is the critical component of a service-based finance solution. It allows the manufacturer, like Philips, to focus on a proactive, asset-lifecycle management to ensure an optimized use of resources, including responsible end of use management process at the end of the finance period, which in turn allows healthcare providers to focus on their core competency – the treatment of patients.
In our service-oriented finance solutions, we can create finance structures with a contract term of up to 10 years with preventive maintenance and other services included. During the contract term and together with our partner Philips Capital, we have embedded a proactive management of the asset which can lead to an exchange or upgrade of the medical equipment in the event of technology innovation or new requirements of our end-customer – private and public healthcare institutions. Today, we are managing thousands of individual contracts with focus on a proactive asset-lifecycle management, including asset risk in our program. For healthcare providers, we provide predictable monthly operating fees for the usage of medical technology and our partner is able to recognize sales up-front and keeps the control on the asset.
Integrated equipment finance solutions as driver
It is important that both public hospitals and private clinics can invest in medical technologies without budgetary limitations. As a finance solution provider in healthcare, we are acting as an integrator – combing the strength of different partners for the benefit of our customers, and ultimately their patients.
We believe that the proactive management of medical equipment to extend their useful life, and to manage resources ecologically and economically at the end of their funding, are crucial factors for sustainable financing solutions,