Healthcare financing

How to Obtain Financing in a Challenging Environment

Reading Time: 3 minutes read

Healthcare financing experts offer insights for small and rural hospitals.

By Jonah Michael and Michael Gsellmeier, healthcare financing experts, First American Healthcare Finance.

All hospitals face the challenge of financing and implementing the latest, ever-changing medical equipment while carefully managing budget dollars, but this challenge is amplified for small and rural hospitals. With higher demands from patients and an increased focus on improving the patient experience, rural hospitals must find new ways to keep up with their larger, urban counterparts when it comes to technology.

First, it helps to understand exactly why rural hospitals have a different set of challenges. Research from the American Healthcare financingHospital Association reveals that rural populations tend to have lower incomes and are, on average, older than urban populations. This combination translates to a high percentage of patients with Medicaid and Medicare. Furthermore, the research shows that there is a higher rate of chronic diseases in rural populations, meaning that more treatment is required with less hospital resources.

Hospitals, then, must deliver high-level, ongoing care to a population that may or may not be able to pay for their services. Beyond that, rural areas are also typically not high growth areas, so hospitals struggle to bring in new patients.

Another important element that can create both challenges and opportunities is a renewed focus on the whole patient experience. Simply put, patients have higher expectations than ever before. They are aware of emerging technologies—through the Internet, social media, TV and movies—and expect their hospital to have these technologies on hand. This puts an enormous amount of pressure on hospitals to obtain state-of-the-art equipment and technologies to maintain and attract patients.

An added cost for all hospitals, especially rural hospitals with fewer resources, is the overuse of hospital emergency rooms. Based on data reported to the NYS Health Department, Excellus BlueCross Blue Shield estimates that out of the 6.4 million visits to hospital emergency rooms in New York state in 2013, 2 million of them were for preventable conditions that could and should have been treated by primary care physicians. This influx of patients comes at a significant cost to hospitals, especially with the added struggle of a population that’s aging and financially unstable.

Yet, in spite of all these challenges, rural hospitals still need to upgrade and add the necessary equipment and technology to operate effectively. Telehealth, efficient Electronic Health Records (EHR) systems, and remote monitoring tools are areas of investment for rural hospitals, allowing them to provide a wider reach to their communities without increasing physicians and staff.

Through the right financing options, rural hospitals can meet these needs while cutting capital expenses. Financing companies that specialize in equipment leasing can help rural hospitals acquire equipment that’s needed with a capital lease or operating lease. These are great options for all types of equipment purchases, especially equipment or assets that are turned over on a short-term basis. For example, if a hospital needs equipment but prefers to spread out the payments, a fair market value (FMV) lease allows the hospital to pay for a machine over the course of several years. This option also means that hospitals only pay for a portion of the cost throughout the term of the lease, and then return the used equipment to the leasing company and upgrade to the latest equipment. This scenario gives hospitals the ability to utilize state-of-the-art equipment without taking on new debt—keeping payments low and removing large expenses from the balance sheet.

The process for hospitals to obtain financing through equipment leasing is simple: contact a leasing representative within your region, provide basic financial information and details of the project or equipment needed, then explore the different leasing options available.


Jonah MichaelJonaMichael Gsellmeierh Michael and Michael Gsellmeier of First American Healthcare Finance are healthcare financing experts who work with healthcare organizations throughout the U.S. to help them obtain required medical equipment and healthcare technology through financing solutions.


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