Justin Tabone leads originations for TIAA Bank’s vendor equipment financing team, which specializes in financing solutions for U.S. businesses originated through a select network of manufacturers, dealers, resellers and distributors, and is supported by private label and co-branded programs.
Justin Tabone explores three trends that will shape the market for healthcare equipment finance in 2021 — safety, flexibility and convenience.
Last spring, when the coronavirus first hit, dentists throughout the U.S. saw their practices devastated.
Amid the lockdowns, 76% of dental offices shuttered for all but emergencies, while 19% halted patient visits altogether, according to a survey by the American Dental Association. While most of their offices have reopened since then, 62% of dentists reported that the number of patients remained lower than usual in mid-December.
As the difficulties for dentistry suggest, the effects of the pandemic are likely to continue reverberating across the healthcare industry in the coming year as dentists, physicians and hospitals find their footing and reconsider how to deliver care in a safe and financially sound manner.
They’ll do so amid signs of hope, including the vaccinations against COVID-19 that are underway. Lessons learned from the first wave of the crisis further hold the potential to reinforce resiliency for providers.
With that in mind, here’s a look at three trends we think will shape the market for healthcare equipment finance in the year ahead.
Investing in safety and technology
Even with the immunity a campaign of mass vaccination confers, it is likely that the economy will take time to get back on track. The timing will depend on a variety of factors, including the pace of rolling out immunizations, the prospect of COVID-19 surges and restrictions and the availability of additional fiscal stimulus. The Federal Reserve has said it anticipates keeping interest rates near zero for at least the next two years.
Hospitals and providers that are planning to finance purchases of medical equipment may be waiting for insight into the pandemic’s impact on patient volumes and reimbursements. Still, certain changes in the delivery of health care are likely to take priority. They include investments that allow patients and personnel to feel safe, whether, for example, by reconfiguring sites, supplementing equipment for sterilization and disinfection, or improving the quality of indoor air.
Practitioners also are likely to maintain their focus on both digital health and efficiency. We expect hospitals and providers to continue investments in technology that allow them to diagnose, counsel and care for patients online. That includes systems for managing patient records and exchanging electronic information, together with the network infrastructure and telecommunication that supports it.
Outpatient care has seen the largest drops in revenue during the pandemic
Providers in the year ahead will do their best to make sure they are capitalized to withstand whatever comes their way. That includes having enough cash to meet their obligations and to cope with change.
As partners to both vendors and providers, we have an obligation to offer approaches that allow both groups to achieve their goals. Instead of a one-size-fits-all approach, lenders can empower providers to select how they wish to pay. That may mean, for example, financing that allows providers to acquire the technology they need without knowing whether patient volumes will parallel in lockstep. It may mean tying repayment of equipment financing to reimbursement. Or it may mean capitalizing purchases of equipment on a subscription basis, in which providers pay for equipment based on use.
While lenders will continue to offer loans and leases, we need to approach every transaction with a focus on putting providers in control. That begins with replacing notions about what approaches providers want with a conversation about how we can address their needs.
Flexibility will be essential. During the depths of the pandemic, we teamed with vendors to extend help to providers facing the crunch. For some providers, that meant deferring repayment, in some instances more than once. Lenders will need to remain ready to offer support.
We’ll also need to continue to connect. For us, that includes simply reaching out to vendors and providers to ask how they’re doing. We believe that the way you treat customers in rough times matters for years to come.
The pandemic adds to the imperative of improving the speed and convenience of equipment financing. Providers want to obtain quotes, apply for credit and be notified of approvals quickly. They require a holistic view of reporting and remittances. While everyone aims to minimize in-person meetings, technology also translates to safety.
The year ahead will see an acceleration of equipment finance built to support the unique needs of both vendors and providers. Besides access to credit, providers with whom we speak expect technology that unites financing with such functions as accounting, tax and payroll to help them anticipate cash flows and needs.
As one of the nation’s first online banks, TIAA Bank has invested in harnessing technology on behalf of clients from the start. From software interfaces to visualization tools, we will continue to invest in technology that streamlines financing and improves clarity and convenience for clients.
Though science knows how pandemics end, we don’t yet know what changes will endure. Whether measured in lives lost or livelihoods undone, the coronavirus leaves a path of destruction in its wake. But with the benefit of a vaccine and a series of lessons learned, there’s reason to hope that the year ahead will be better than the last.
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