Justin Tabone, SVP, 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 from EverBank Commercial Finance discusses how the medical equipment financing landscape has changed and strategies that can help traverse the new terrain.
In the five years since the signing of the Affordable Care Act, the landscape of the medical financing industry has shifted from being primarily focused on physicians’ needs to now include the interests of financial decision makers. Meanwhile, lenders are still adjusting to a new way of doing business with hospitals and medical practices.
While in the past, our most significant relationships were often within hospital departments and with physicians, today it is more often the chief financial officer or business manager who is making the major equipment purchasing decisions. This new era for medical equipment financing has rendered at least some of the tools of the trade for lenders working with hospitals and private practitioners less relevant.
Understanding how this significant shift in the decision making process impacts your approach to new medical equipment transactions is essential to maintaining your role as both trusted counselor and the go-to source of financing for our most important customers. To this end, it’s time for lenders in the medical space to become conversant in CFO.
In a lot of ways, working with healthcare industry CFOs is actually less of a challenge than what many medical equipment lenders first experienced upon entering the healthcare sector. As lenders, we know the numbers. In my experience, it’s normally the medical-side of the business that lenders need to learn on the job.
From my conversations with CFOs and business managers working in the healthcare sector, there are four key tactics that they appreciate when evaluating a prospective financing partner.
Take a more consultative approach and avoid offering conventional proposals. This may seem like a no-brainer, but going into individual transactions with healthcare facilities with a highly customized proposal specific to their needs is still a differentiator. Taking the time to have a conversation with the key stakeholders, including the CFO, but also with your physician contacts, will allow you to appropriately translate the facility’s needs and goals into an effective multi-year plan.
Tap into high tech. Modeling return on investment based on patient volumes, reimbursements and other variables that are significant to the facility with which you’re working can provide the CFO with valuable insight into how new equipment makes sense for the business and how it will be amortized over time.
Being able to provide financial tools through which CFOs can evaluate equipment purchases both pre- and post-purchase can equip them with the evidence they need to make a purchasing decision and an accurate assessment of the equipment’s usefulness long term.
Understand the new metrics that matter. Through-put, cost-per-procedure and the lifetime value of equipment are of much greater importance now to CFOs and business managers considering an equipment purchase. Modeling these metrics can help seal the deal on a new equipment transaction, or shape further discussions about the facility’s unique financing situation.
Fulfill your role as the financial expert. The equipment reps will “own” all the bells and whistles of the technology, but where you can be most useful is in actively understanding – and translating – the myriad of factors affecting hospitals and practices. Reimbursement trends, electronic health record requirements, budget allocation, equipment amortization and other hot topics in the highly regulated healthcare industry are all factors that play into the decision making process for new equipment.
Your ability to transition from a physician-led decision making process to a CFO-led approach will determine your continued success within the healthcare sector, and ultimately make you an indispensable partner to the CFOs and business managers you work with going forward.