Financing: The Right Therapy for the Region’s Growing Healthcare Sector
There was one word on many lips during the recent Arab Health exhibition in Dubai and it wasn’t a medical term. It was “financing.”
Capital optimization and financing solutions are top priorities for governments and private sector operators due to budget constraints, national economic diversification goals and a move away from large front-end capital expenditures.
Whether purchasing an asset, adopting long-term financing or securing a service and planned replacement program, the healthcare sector in the Middle East, North Africa, Turkey and Pakistan (MENAT) region is changing – and GE Capital Industrial Finance (IF) is evolving with it.
During January 2018’s Arab Health trade show, an area of the GE Healthcare stand was dedicated to highlighting GE Capital IF’s regionally-focused financing solutions. GE Healthcare customers could speak with top global executives from GE Capital IF about financing options for GE equipment, services and solutions.
While each customer’s needs are unique, Jonathan Wainberg, senior managing director, global sales for GE Capital IF, identified several financing models that are particularly appealing to MENAT GE Healthcare customers.
Managed Equipment Services
Managed Equipment Services (MES), also known as an integrated service model, is based on a long-term financing, service and planned-replacement program with an equipment-vendor partner like GE Healthcare. In addition to receiving GE Healthcare’s equipment – such as MRIs, CT and PET scanners and ultrasound equipment – customers can also access financing, training and education, servicing and maintenance, refurbishments, and upgrades – all for a fixed monthly payment.
Not only does the arrangement address payment challenges that arise when purchasing large equipment for a hospital or wider healthcare system, MES helps eliminate some of the burdens of ownership, such as maintenance and upgrades.
“This program isn’t going anywhere anytime soon either,” said Wainberg. A research study by Global Industry Analysts projects that the global market for medical equipment rental and leasing will reach USD$70 billion by 2024.
Governments are turning to Public-Private Partnerships (PPPs) to buy healthcare equipment, and build and/or equip entire hospitals. PPPs not only reduce the upfront capital required by the government but it gets “other people involved with skin in the game,” Wainberg explains.
GE Capital IF not only helps customer access the latest GE Healthcare equipment but offers some equity, and helps secure additional equity partners and financing through local and international networks of operators, investors, banks, and export credit agencies.
As GE Healthcare redefines its go-to-market strategy, it’s also expanding its channel partners. However, some may not have the cash flow required to access today’s advanced healthcare technologies.
To address this growing trend, GE Capital IF can work with channel partners and distributors to secure the necessary financing needed to purchase inventory. The business is also helping partners secure financing so they can offer it to end-user customers seeking financing options.
“There are clinics and smaller hospitals that only require a few pieces of equipment but struggle to secure the working capital to make these purchases,” Wainberg said. “We work with them to model their needs and then help find the right capital structure and financing.”