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?
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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Multi Radiance Medical MR4 Physical Therapy Laser
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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)