Reference no: EM133634997

List and explain the three pros and three cons of owning.
Likewise, list and explain three pros and three cons of leasing.
Using a context from within your own organization as an example, justify why you think your organization should engage in leasing or owning specific equipment.
When it comes to therapy equipment, there are two options - leasing and purchasing.

Many practices utilize a lender and loans to cover the purchase cost of medical equipment. Medical equipment loans involve borrowing money to purchase therapy equipment, and once the loan is paid off, you own the asset completely. On the other hand, medical equipment leasing is more like a long-term rental, where the financing company owns the therapy equipment, and you make monthly payments to use it. At the end of the lease, you can choose to purchase the used therapy equipment or return it.

Pros for leasing:

Leasing equipment allows a therapy clinic to rent expensive machines, like a new a Nu Step, without a down payment.
Upgrade your medical equipment frequently to keep up with the latest technology. Leases typically last three to five years but can be as short as one year. Return the old equipment and upgrade to a brand-new model on another lease. Stay up to date with the latest advancements in medical technology.
Therapy equipment maintenance costs may be covered by the financing company (They want to keep it in good condition).
Cons for Leasing:

Leasing therapy equipment may seem cheaper initially, but over time, the payments can add up and cost more than buying the equipment outright. With a loan, payments stop once the sum is paid off.
Equipment leasing may limit your ability to modify or repair it. Since you need to return the equipment at the end of the lease, you may not have the freedom to customize it beyond factory settings or hire your preferred technician for maintenance and repairs.
Leasing therapy equipment for your practice may not increase its value as you won't own the equipment at the end of the lease. However, leasing can improve your services and attract more patients (Leased equipment cannot be sold with your practice).
Pros of Buying

Lower long-term cost - When you take out an equipment loan, payments may start out higher, but once the debt is paid off, you own the therapy equipment and can continue using it without additional costs.
The therapy equipment is yours to sell - After paying off the loan, your practice will own an asset with potential resale value, similar to owning a building instead of renting.
More flexibility with repairs and modifications - As the equipment owner, you don't need approval from the lender to repair or customize the therapy equipment to your liking or to meet patient needs.
Cons of Buying

Buying therapy equipment may require a high upfront cost. Some lenders may ask for up to 20% of the equipment cost upfront, so you may need to have thousands of dollars ready to complete your purchase.
Buying therapy equipment is a long-term commitment. If your needs change, it's harder to replace it since you'll need to sell the old one first. You can't just swap it out like a short-term lease.
Maintenance is your responsibility. With a loan, you are responsible for scheduling and paying for any equipment repairs. If the therapy equipment breaks down completely and is not covered under warranty, you will need to purchase a new one.