Over the past year, we’ve seen a rapid acceleration in healthcare innovation. Digitization and telemedicine have cemented their place in a sustainable healthcare model, with patients expecting more convenient access to healthcare. Nearly $ 4 trillion is spent on healthcare in the United States, with CMS projecting spending growth of more than 5% per year through 2028. The US medical device market of approximately $ 200 billion is also expected to grow at a similar rate. Until 2022, we expect patients to continue to demand more control and transparency in the healthcare system, personalized care and increased connectivity. For healthcare providers, there are many opportunities to meet the demands of these patients, stay in touch with clients, and improve the quality of care.
Pent-up demand for health care equipment
Over the past couple of years, many healthcare providers have tended to keep the equipment in place for longer. Several factors have contributed to this, including the desire to preserve more capital amid the most recent economic uncertainty and software updates extending the useful life of assets.
Although more recently concerns about supply chain challenges and equipment availability have also pushed customers to hold on to existing equipment. For leasing companies and sellers, however, this presents an opportunity to stay connected to the customer for longer.
To give an example, consider a car dealership. The finance contract in place on the leased vehicles gives the dealer more control and several options. If a dealership is running out of inventory, one option that the dealership may have is to buy back the vehicle. Especially if the vehicle is in good condition, it can be resold or re-let at an even greater profit. Another option available to the dealership is to extend the lease of the customer’s existing car, allowing them to stay connected to the customer for a longer period. These options provide more opportunities to the dealer than to comparable cash customers – and likewise, the rental customer enjoys similar flexibility. These principles apply equally when considering medical devices rather than cars, and remain particularly important as the New Year approaches.
While future supply chain challenges remain uncertain as we approach 2022, we can possibly anticipate a return to normal, the Omicron variant notwithstanding. Although Covid has proven to be impossible to predict, we know that both routine and elective surgeries take place and the equipment in place is not getting any younger. Meanwhile, we see healthcare providers facing labor shortages and overall higher labor costs. With the expiration of the CARES Act funds, cash will continue to be valuable as providers still have to deliver on their mission to the communities they serve beyond the pandemic. As supply chain constraints ease and the economy normalizes, we expect more customers looking to replace older healthcare equipment by funding new assets.
As we have seen in recent years, we expect patients to continue to demand increased convenience and easier access to care. After booming during the pandemic, telehealth will remain a staple, with adoption rates remaining significantly above pre-pandemic levels. Telehealth use is 38 times higher than pre-Covid levels, according to McKinsey, with between 13 and 17% of all office and outpatient visits occurring virtually. Even with patients returning for office visits, virtual options have expanded access for patients who would have more difficulty seeing a doctor in person.
But in addition to virtual care, we expect other changes in the delivery of physical health care to allow greater flexibility and access to patients. In hospitals, we expect to see increased investments in areas that allow greater modularity, giving them the ability to quickly adapt spaces to different uses based on workload and patient count. Some examples include modular walls, ceilings and doors that can be easily taken apart and reconfigured.
While we have already seen the provision of care for some specialties move away from the hospital setting, we expect this to remain a growing area. We will continue to see more care moving to ambulatory care facilities, as well as an increase in mobile hospital services. For example, a healthcare system that only offers mammography services in limited brick-and-mortar locations may deploy a mobile mammography van to expand access to underserved areas.
Shifting from the traditional financing nomenclature to customer solutions, we expect a continued increase in requests for bundled services, supplies and support with equipment, as well as greater simplicity of contracts. Just as patients want convenience, our customers want easier to do business. Bundled service with equipment provides greater predictability around budget, reduces the risk of equipment downtime, and offers easier monthly payments that include maintenance.
But, contracts need to be streamlined, quick and easy. Customers don’t want pages on pages of fine print – simple, fast, digital contracts are the way to go.
Evolution of digital transformation
To meet the demand for convenience and simplicity, the healthcare industry must continue to advance digital transformation efforts. While this transformation was required of all industries with the onset of the pandemic, the healthcare industry is still lagging behind – although we are seeing steady progress.
There is vast potential to improve preventive care as more patients take advantage of digital services and connectivity. For example, patients today can buy a personal ECG monitor from Amazon for under $ 100 that connects to their phone. Patients can easily take ECGs every day, from anywhere, and immediately share the results with their doctor.
With an aging population, a greater emphasis on easy solutions for preventive care can ease the strain on the healthcare system. It also increases the information available to physicians, enabling them to be better informed to make diagnoses. This increased connectivity and patient information can also lead to more analysis and testing, making it even more imperative for hospitals and healthcare systems to have the right equipment in place.
In a context of growing demand for digital services, the equipment financing sector must evolve to better support interactions with customers. As consumers, we expect it to be quick and easy – we can order pizza any way we want in 30 seconds through an app on our phones and track its progress to our front door. This demand is also reflected in the expectations of companies.
We need to improve the ease of doing business through streamlined digital solutions and reduce the complexity of acquiring capital goods. The more we can facilitate the competition between the financing process and cash, the more leasing companies can enter the healthcare arena, as customers and patients alike expect more convenience and simplicity.