BUYING VS. LEASING: WHAT’S RIGHT FOR YOUR PRACTICE?

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The Optos Daytona, available for buying or leasing, has a wide field view of the retina.

There are a host of pros and cons to consider when it comes to purchasing retinal imaging equipment.

Obtaining state-of-the-art retinal imaging devices to incorporate into your practice sounds like a no-brainer. Right? Wrong. While it’s true most eyecare professionals (ECPs) want to keep up with the latest technology and offer their patients the very best in diagnostics, it’s also true that these machines can be expensive. All of which begs the question: Is it worth buying or leasing? Here’s a list of pros and cons to help guide your decision.

BUYING PROS
Ownership: Practice equipment that allows increased productivity yet rarely gets outdated is beneficial to own (i.e., slit lamps, phoropters, etc.). Newer technologies that may appear attractive yet have low practicality, however, should be carefully evaluated before purchasing.

Resale value: Gently used OCTs and fundus photographers continue to be in high demand. Depending on the long-term practicality of your acquisition, these machines may have a high resale value.

Tax deductions: Section 179 of the federal tax code allows you to write off your entire purchase in one year (for qualifying equipment and/or software purchased). In 2013, there was a deduction value cap of $500,000. Another advantage of owning retinal imaging devices is that you can donate them to education institutions or charities and receive a personal tax deduction. (Keep in mind this is only if your practice is set up as a “pass-through” entity, such as a LLC or S Corporation.)

BUYING CONS
Greater initial cost: New practices or practices that have limited cash available may not have the luxury to finance purchasing such expensive equipment.

Rapid advances in technology: Those in the market for new retinal imaging devices need to be careful with their selection. Does your purchase have trade-in value if newer technology arrives? Are there maintenance costs? Will you obtain enough return on investment and improve efficiency with this new technology? Devices that are likely to become outdated or that have poor software upgrades are not ones you want to purchase.

LEASING OPTIONS
There are two main types of equipment leases:

  • Operating leases (aka service leases) are short-term leases which are often for equipment that has highly evolving technological advances (i.e., OCTs).
  • Capital leases are long-term leases for equipment less likely to become obsolete (i.e., fundus photographers). Capital leases provide an option to purchase the equipment at the end of the lease for substantially less than fair market value.

LEASING PROS
Less initial cost: When capital is tight, leasing is generally the less expensive option to obtain retinal imaging equipment. Once utilized as an efficient and profitable tool in a practice, it shouldn’t take long for ECPs to recoup their investments and turn a profit.

Flexibility: Leasing terms are often more flexible than loans.

Simpler replacements: If you’re looking to lease advanced technology equipment (such as an OCT), operating leases are a great option (since these devices are continuing to improve). Leases make it easier to upgrade.

Tax deductions: This depends on the type of lease. While operating leases do not qualify for Section 179, capital leases do (for qualifying equipment and/or software purchases).

LEASING CONS
Higher long-term cost: Short-term flexibility often leads to greater long-term cost. Purchasing retinal imaging devices outright will cost you less in the long run.

Lack of ownership: Although capital leases do provide an opportunity for ownership, you are investing more money than purchasing the equipment outright.

Ryan Corte splits his time between two private practices in metropolitan Charlotte, NC.

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