According to most forecasts, hospitals won’t be the best customers for new equipment and technology in 2024, thanks to squeezed revenue cycles and surging labor costs, not to mention challenging bond markets for hospitals looking to raise low-cost capital, interest rates 500% higher than 18 months ago, and far tighter underwriting standards.

With challenges like those to contend with, it makes sense that hospital capital spending budgets are getting slashed. But could some creative thinking on the part of equipment and technology sellers change that?

If equipment and technology sellers approach 2024 like any other year, it won’t be surprising if most healthcare providers cut capital spending. However, equipment manufacturers and dealers willing to embrace two fresh approaches could see growth while others stand still or even fall behind.

Let’s start with some creative thinking around as-a-service offerings:

As-a-Service: From CapEx to OpEx

Any business that has ever sold capital goods to a hospital understands the complexities and bureaucracies of the capital budgeting, bidding, and approval process. While painful at times, it’s rational for a hospital network to thoroughly evaluate how much capital to invest in depreciating assets and technologies according to a formally structured, centrally managed, and highly accountable approach to CapEx. As financial challenges and economic headwinds have multiplied in recent years, CapEx has become a target for cuts.

But now let’s consider OpEx (operating expenditures). OpEx is often decentralized, controlled by multiple department budget managers instead of a few centralized financial managers. And because it generally avoids the balance sheet impact of CapEx, OpEx lends itself to a “pay for use” rather than a “pay to own” mindset.

“Pay for use” is precisely what many equipment and technology sellers are moving toward. As-a-service and subscription-based programs essentially create a use-based model, as opposed to an ownership-based one. And by offering a solution with a simple monthly payment for a given period of time, you can often take your proposal off the financial manager’s CapEx desk and put it instead on a department manager’s OpEx budget.

Building OpEx, aaS, or use-based solutions can give hospitals the power to acquire the solutions they need now instead of waiting for easier CapEx cycles. It can also create stickier and more profitable relationships since it’s easier to bundle services and obtain renewals without difficult CapEx RFP processes.

Why Not Lease It?

A second way to support stronger sales amid the challenges facing the healthcare industry involves rediscovering the power of a financial strategy that used to be far more prevalent than it is today: leased equipment and technology.

When hospitals are flush with cash and borrowing money through bond issuance at near zero percent interest rates, anything other than financing with their own cash or bank credit makes little sense. But at a time when rates have ballooned 500% higher, bond markets are messier, and credit is tighter, it’s time for another look at leasing.

For over 30 years, hospitals leased everything from imaging equipment to trucks to laundry facilities. Then we began nearly 20 years of virtually free money. But now that times have changed, more hospitals are opening up old playbooks and rediscovering the benefits of leasing. Again, the “pay for use” nature of the solution lowers cash outlay, maximizes cash flow, minimizes pressure on capital reserves, and becomes a more affordable way to stay on the cutting edge of technology.

Are your hospital customers stuck in an ownership mindset that’s no longer serving them? Leading with a leasing solution could be the key to changing minds and making inroads with these customers.