When to repair vs. purchase a new medical device or cart?

When to repair vs. purchase a new medical device or cart?

An interview with Matt Barrett, Finance Manager for Capsa Healthcare Capital.

Matt Barrett, Finance Manager for Capsa Healthcare Capital
Matt Barrett, Finance Manager for Capsa Healthcare Capital

Should you have that older Capsa product repaired, or buy a replacement? It is an age-old question. Just as we wrestle with throwing good money after bad with an aging furnace at home, many of the same factors must be considered when the product in question is medical equipment. Whether you have a 7-year-old M38e computing workstation, a 10-year-old Avalo treatment cart or a 15-year-old Kirby Lester KL1 pill counter, all mechanical items eventually need maintenance and wear out.

We consulted with an expert to help navigate the question, “Should I repair my Capsa product, or should I replace it?” Matt Barrett, Finance Manager for Capsa Healthcare Capital, has helped thousands of healthcare customers navigate this decision using finance programs to acquire equipment affordably. He says no mathematical equation or Magic 8-Ball exists to identify at what time medical equipment is cheaper to repair or replace. However, he shared his checklist that helps healthcare customers work toward the best decision for each scenario.

10 Questions: Should You Repair Or Buy A New Medical Device Or Cart?

  1. Is the Product Discontinued or Obsolete? Companies frequently cannot repair or provide parts for products beyond a certain age. Moreover, a discontinued item is obsolete anyway as the manufacturer replaced the outdated product with a superior design. This usually makes for an easy decision: acquire new equipment.
  2. Is the Product Computerized? New products are often significantly better than the old version with more features and included upgrades. In some cases, older versions pose interfacing, cyber-security, or compatibility problems for the IT environment. Things move faster for a higher-tech product versus a strictly mechanical product. Most people will want to upgrade tech sooner.
  3. Is Patient Safety Affected? If yes, then I usually advise upgrading to new.
  4. Are Controlled Medications Involved? Certain medical devices have new technology specifically for narcotics. I advise to go new instead of repairing a product that doesn’t include safeguards. If it helps avoid employee diversion, or patient errors, or inventory holes, it’s worth the spend.
  5. Is Employee Productivity Affected? Time is money. Staff efficiency is money. When faulty equipment starts to affect productivity or workflow, ask yourself, “How many people on the team does this affect? How much time could we save? How much longer does this equipment have before I need to replace it anyway?” These questions will help you analyze the situation and decide if it makes more sense to replace and immediately improve productivity, or if you can wait.
  6. Will New Equipment Cost Less to Operate? Can the latest version save in indirect ways (aka, soft ROI)? New designs may use less power, prevent costly errors downriver, or alleviate a problem for the maintenance staff. Compare the savings (both time and money) to the overall expense of replacing.
  7. Can You Benefit from Tax Savings or Incentives? If you are purchasing outright or leasing to own, Section 179 tax deductions provide a real savings for for-profit organizations. If you are unfamiliar with Section 179 (truly a gift from our government), ask your Capsa rep. Manufacturers also may offer seasonal incentives that ease the pain of buying new versus repairing.
  8. Do You Have A Devoted Maintenance Crew or Handyman Skills? Not everyone is good with a wrench or has budget for a repair team. Small businesses run across this issue more than larger corporations. A pharmacy owner’s time is money. Negotiating and then waiting for repairs may become more expensive to your business than replacing.
  9. Is the Product Breaking Frequently? Medical equipment is not like a car where you can squeeze out a few more good years. Equipment gets ricketier over time. Replace the device if downtime is increasing.
  10. Are You Already Leasing?  If your equipment is close to the lease end, upgrading to new equipment and removing outdated equipment is simple and seamless – just roll over your existing lease agreement to avoid paying the up-front acquisition costs. (Applicable Section 179 tax deduction benefits can still apply to leases).

We hope the suggestions above help your decision-making between repair-versus-replace. You always have a strong advocate in Capsa Healthcare Capital for any questions. We frequently receive feedback like this: “Matt (Barrett) helped me obtain financing for a recent expansion of services to two new facilities. The subscription product I chose to finance my equipment helped me with cash flow and the whole process was quick and easy. If I bring on any new facilities in the future, I will be sure to contact Capsa’s Capital team.” – Jamie Gunnells, RPh – Owner, Mississippi Senior Care