This report originally appeared in the November 2009 issue of DOTmed Business News

Last year, the medical equipment industry saw the country plunge into a financial crisis. First, it was the sub-prime mortgage debacle which led to the dramatic fall of more than a few financial giants - including Bear Stearns, Fannie Mae, Lehman Brothers Holdings, and AIG, which in turn led to a new wave of government buyouts and regulation. The medical equipment finance and leasing segment, while not hit as hard as others, has developed some new trends in the wake of these upsets. Most notably, there has been a gradual shift away from bank financing of medical equipment and more toward leasing from the OEM and dedicated leasing companies. On the regulatory front, more transparency is going to be required of hospitals and imaging centers as they may lose the ability to keep leases off the books.

Finance and leasing companies as a whole have been daunted by what the industry terms "scarce liquidity," or an almost industry-wide lockdown on capital, which happens naturally from time to time in a fluctuating market, except this time it's due to financial institutions' incapacity to lend, and not just a preemptive freeze or "unwillingness" to lend. The Equipment Leasing and Finance Association's 2008 annual report states that the medical sector experienced an almost eight percent increase in new business volume in 2007, whereas 2008 saw that growth slide down by about one percent. It may be a noticeable step back, but the medical sector is still experiencing growth and it represents one of the top five performing categories in the $650 billion equipment leasing and finance industry.

"Financing has not eased in the general market in the past year, and it has not necessarily eased in the medical market either, but the fact that everything else is compressing and the medical market is not means that, relatively speaking, the medical market is getting better," says Dan Deighan, founder of Deighan Financial Advisors, Inc. and regular contributor for Medical Economics and Physician's Money Digest.

Baby boomers a boon for medical equipment financing

The baby boomer generation is said to be to blame for an increasingly inundated Medicare system, but on the bright side, for financing companies they represent the stability and growth of the medical equipment industry. Financing companies look to economic demographics in order to gauge where their dollars should be going. Historically, consumer spending accounts for 70 percent of the U.S. economy and wherever the largest slice of the population is spending their money, those are the financing hot spots for years to come.

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