MRG Newsletter February 2020

Finding the “Sweet Spot” for Capital Equipment

Healthcare providers and purchasing departments are tasked with questions surrounding when an asset should be replaced in order to minimize exposure from depreciation/book value and generate the highest net return for the asset. Navigating market information to identify resale value can be time consuming and challenging based on price discrepancies that are found on the internet.

This hinders decision making for asset disposition and can cost hospitals more by keeping the asset in service/storage and missing out on potential returns. How do you know when it’s time to sell in order to get the most return on investment?

Factors that help determine the right time to sell: What is the “sweet spot”?

During the equipment life cycle, all assets have what we call a “sweet spot”. Depending on modality, medical equipment can hold different lengths of useful life. Following are factors that can help identify when aging assets are reaching their “sweet spot”:

  • Equipment has served its purposeful life
  • Equipment is fully depreciated
  • OEM no longer supports the equipment
  • Equipment is being replaced by newer/streamlined technology
  • Equipment was bought for a specific doctor who recently left and is no longer being used

How do I use the sweet spot to maximize my return?

To understand viability on the resale market, you’ll want to have equipment assessed for fair market value before it reaches the end of life. This can be done early in the replacement budget discussions or by targeting assets that will fully depreciate during the upcoming fiscal year. Weighing the current market value against depreciation or book value can help with decisions at the time of decommission, giving you an idea of its max market potential. The assessment can also be used to negotiate trade-in credits, minimizes the need to put into storage, and protects hospitals from accepting low offers.

Why not store equipment?

It’s important not to default to putting out of service equipment into storage because the facility can be incurring costs and liabilities for storage and potential resale value depreciates the longer it sits. Once equipment is in storage, it’s usually forgotten about and eventually can only be scrapped or sold for pennies on the dollar. You can consider keeping older equipment if there’s plans for its use in the future, but overall it saves more resources to avoid closet clutter before it begins.

Finally, when you’re ready to sell, confirm that the equipment is not part of a lease or rental program with no liens attached to the asset. Working with a trusted resale partner can help you to navigate these steps and better understand your equipment’s value while taking some of the workload off your hands.

 

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MRG Appraisal of the Month:

Multi Radiance Medical MR4 Physical Therapy Laser

FMV: $5,400.00

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MRG Projects:

  • Stryker insufflator change out for Ohio health system
  • Surgery Center inventory, assessment and appraisal for Kentucky health system
  • Audits for ENT, OBGYN, PT, Neurology, Family Medicine, Digestive Disease, Foot & Ankle practices located in OH, MI and KY

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MRG Fun Fact:

Mardi Gras celebrations are associated with New Orleans, but the first Mardi Gras parade was actually held in Mobile, Alabama. It is also celebrated as “Pancake Day” in Ireland, England, Australia, New Zealand, and Canada. Laissez les bon temps rouler! (Let the good times roll)