Pre-Owned Medical Equipment: A Tool in Cost Control

Medical practices, clinics, and hospitals face significant financial challenges. Startup expenses and ongoing operational costs are sometimes staggering for the unprepared. Without attention to cost containment, even the most experienced administrators and practitioners may find themselves on shaky financial footing.

Overhead Expenses Drain Away Revenue

Physicians in private practice usually estimate their overhead at about 40 to 50 percent of income. The reality is that medical practice costs can eat up as much as 70 percent of revenue. Many of these expenses are process driven and necessary, but they are not part of the core income-generating job of providing health care.

A medical practice is a business, and all businesses must generate sufficient revenue to cover expenses and return a profit. However, the inherent fixed costs in medical practices drain away time and resources. While staffing, insurance, licensing, data entry and other costs are necessary, wise administrators take the time to identify the variable revenue-generating expenses they can influence and reduce.

An Opportunity

Equipment expenses are directly related to patient care and income generation. Unlike fixed operating expenses they are variable and offer cost containment opportunities. For example, one new, high-grade infusion pump may cost as much as $1,700. A refurbished, pre-owned pump can be obtained at about a third of that price.

The cost benefit is obvious. In this scenario, every pre-owned infusion pump purchased returns about a thousand dollars in value directly related to income generation. The return on investment can significantly accelerate the retirement of equipment financing debt, and any business that lowers its debt to income ratio is on firmer financial ground.

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Pre-Owned is Not the Same as Used

Some practitioners hesitate about buying pre-owned equipment, concerned about performance or ongoing maintenance and service issues. The key to satisfaction is purchasing the equipment from a reputable supplier that ensures that all pre-owned equipment is refurbished and fully operational. They also provide warranties and money back guarantees on equipment sold.

There is a natural tendency to consider anything that is labeled “Used” as risky and of low quality. It is important to understand the distinction between pre-owned and used equipment. Pre-owned medical equipment purchased from a reliable supplier is not used in the traditional sense of the word.

Although it may have been operational in another facility, pre-owned equipment purchased from a trustworthy supplier is refurbished and restored to original specifications before resale. Reputable suppliers like provide extensive refurbishing that includes:

  • Decontamination
  • Refinishing where necessary
  • Replacing worn parts
  • Recalibrating

The Right Equipment and Sound Finances

Reduced cost is not always a reason to purchase equipment. Buying anything simply because it is less expensive is not a good deal if there is no need for the item. All medical equipment purchases should have a real application to patient care. When an equipment purchase is appropriate, pre-owned, refurbished equipment can help keep a practice on a sound financial footing.