Few companies practicing health care leasing have not been touched by the effects of the credit crunch.
Not unsurprisingly, some bank-based players and independents are under greater pressure because of funding shortages. Most, sources say, have become less aggressive because of the need to prioritise to whom they lend.
Siemens Financial Services (SFS) CEO, Jonathan Andrew, says there is the possibility the market may start to wane, but since captives have maintained a strong focus, and are diversifying their lines, and medical equipment leasing is increasingly being performed with the private sector, the market should retain much of its strength.
There have even been some moves in the market that suggest health care leasing is not going off the boil.
SFS, for instance, which runs white label products, recently established a new practice finance service aimed at the primary care health sector, which is currently challenged in investing in updated technologies and facilities.
David Martin, SFS public sector general manager, says: “Many GPs have learned the hard way that it is simply not sustainable to keep large amounts of capital tied up in rapidly depreciating equipment.
“For more than 40 years innovative organisations, both within the private and public sector have utilised leasing to avoid equipment obsolescence and maximise productivity…
“There is simply no reason why the NHS, and in particular GPs, cannot reap the same benefit as private sector advocates of leasing.”
The move by SFS into the primary care sector reflects lessors’ habit of specialisation in the health care finance market.
Philips Medical Capital Europe, of which 40 percent is owned by Phillips and 60 percent by SG, concentrates on the German, UK, French, Italian, Spanish and Dutch markets, as well as, more recently, some key CEE markets. Its US equivalent, a joint venture between Philips and De Lage Landen International formed in 2002, concentrates on financing diagnostic imaging equipment.
In terms of scale, SFS is one of the biggest players in the European health care leasing market. Within the UK it provides over 50 percent of health care equipment financing to the NHS.
SFS, GE Commercial Finance, and Philips Medical Capital Europe constitute 90 per cent of the large ticket medical equipment leasing market – predominantly CT and MRI scanners, or assets that comprise €0.5 million and upwards, according to Jonathan Andrew, CEO of SFS.
As the table on page 31 illustrates, the main players in the market have some key vendor finance partnerships.
However, the real wealth of their multiple partnerships is difficult to quantify, given the general sentiment of secrecy and competition amongst lessors who refused to comment on various individual joint ventures or vendor finance arrangements.