Financing a sustainable healthcare equipment industry
3 questions to Thorsten Arp, Vendor Relationship Director at Societe Generale Equipment Finance, in charge of Healthcare sector.
What major challenges have you seen in healthcare provider’s needs in recent years and what does this mean for medical equipment and service providers?
Healthcare providers today are facing enormous pressures: they have to concentrate on their core competency “the treatment of patients” and balance budgetary constraints. Hence many find it difficult to replace aging equipment or make other capital expenditures.
However, these challenges led some of them to look differently at the problem. For example, some hospitals take the opportunity to optimize the lifecycle of their medical equipment slowing down the pace of new investments. Healthcare providers are seeking for partnerships with medical equipment and service providers to make them part of their processes. The objective is to align on improved maintenance in order to extend equipment lifetime and to optimize investment needs. This approach not only reduces costs; it also contributes to a circular business concept and broadly helps make healthcare more sustainable.
Healthcare providers and manufacturers and suppliers are therefore sharing responsibility. Healthcare providers are asking manufacturers to provide service-oriented solutions with defined outcome levels. “Managed equipment service” is a good example: the manufacturer is responsible for the diagnostic imaging systems installed at the hospital site, keeps the systems up and running, and replaces them when needed. All agreed in a bespoke service contract between the healthcare provider and manufacturer.
How equipment finance can support the transition to sustainable business concepts in the healthcare sector?
Offering long-term partnerships, including service-oriented usage models for medical equipment or asset-life-cycle management concepts, is not always fulfilling the business objectives of the manufacturers.
The role of equipment finance is to bridge the different requirements: the end-customer pays based on the performance and outcome, the manufacturer expects upfront payment of the investment to cover production costs and to recognize the equipment sale. And we – as the provider of financing solutions – design the products which will accommodate both requirements. And ultimately, support the transformation towards more service offering and sustainable use of medical equipment.
What is the benefit for the Healthcare provider as end-user of medical equipment and devices?
Innovative and meaningful financial solutions are key to fulfill business objectives for healthcare providers and manufacturers. They can also support and accelerate the transition to sustainable usage of medical equipment in national healthcare systems. As an example, together with a leading manufacturer for medical equipment, we help healthcare providers transition to circular economy with leasing strategies to stay up to date with the latest technologies across the lifecycle of their assets. Our solutions offer flexibility by freeing them from the burden of ownership. Hospitals get access to the latest medical equipment and systems, while our partner provides all the necessary maintenance services and support. And then, the seamless circular flow begins – where systems, components, and materials are fed back into the cycle to be reused or recycled.
Hospitals can optimize their technology investment, knowing that the equipment will be repurposed in a sustainable manner. They end up with predictable payments without any capital investment. They can reduce their expenses because they no longer own the equipment. And of course, they can rest assured that the equipment will provide the performance they expect over the lifetime of the partnership.
Together with our partners, we are able to provide benefits to healthcare providers in improving business outcomes, but we also focus on the sustainable use of our resources – we “care and dare about the future.”