Purchasing Prowess

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January/February 2004

By Julie Ellis, PT, SCS, CSCS

Choosing equipment for your facility can often be a stressful and frustrating experience. It does not have to be that way if you follow a few guidelines. Purchasing bigger pieces of equipment for your facility will be one of the largest decisions that you will make, as the capital outlay for such pieces can be huge. Take time to follow the steps outlined here and realize that purchasing equipment can be an ongoing effort that takes place over a period of several months. For the purpose of this article, we will define facility-based equipment as the larger pieces of equipment that will stay in one site, rather than smaller modality-type equipment such as ultrasound machines that can be transported from one base to another.

Equipment considerations
To determine the equipment you require, you must first define your practice. Consider the following factors:

How many physical therapists do you currently have?
Does your practice have a niche?
Which programs do you want to offer?

It is evident that a pediatric-based practice would have very different equipment needs than a practice that sees a lot of workers’ compensation cases and Functional Capacity Evaluations. If your practice happens to be very generalized and sees many diagnoses, then your equipment will need to be versatile and tailored for many different ages and patient populations. After defining your practice, create a basic list of facility-based equipment. This list may include the number of mat tables, treatment tables, and large machines that you will need for exercise-type activities, as well as any specialty equipment that might be needed. Facility-based specialty equipment will range from isokinetic machines to treadmills to hydrotherapy needs such as whirlpools and/or therapeutic exercise pools.

The Wish List
The second consideration you need to work on is making a “wish list.” This is where you define the vision of what you would purchase if you had no monetary or space constraints.

For this list, brainstorm as you would for any large project. During this process, anything goes. Be as creative as you want to be, as this is the list that you will narrow down with the next steps. While your wish list is created, you may want to visit the exhibit hall at your local or national conventions to gain more ideas. Also consider networking with other professionals, asking their opinions of some of the equipment that they are utilizing at this time. It may help you to travel 2 to 3 hours to a larger area that is not within your competition range and visit some clinics in that area to see what kind of equipment they have been utilizing and to interview the professionals there on the pros and cons of their equipment.

To narrow down your wish list, first you must identify space considerations and look at your budget.

When identifying space considerations, look at the current square footage of your clinic. Measure the ceiling heights and any other areas or rooms that will contain certain pieces of equipment. If you are building a brand-new clinic, it is very helpful to choose your large equipment list prior to building the facility or around the same time that you are working with the architect. In this way, you will not run into problems of not having enough room for a major purchased piece of equipment, such as a hydrotherapy tank.

Budget Constraints
Consider your budget, but don’t let your budget rule your decisions. If you are going to do something, it will pay more in the long run to do it well. Purchasing the most inexpensive piece of equipment will not always be your best decision. When looking at purchasing equipment that fits within your budget, first establish a relationship with a local representative who sells large, durable medical equipment. Many times these representatives have visited or will visit your clinic and will get to know your needs and goals. Some representatives work for a large company and some will be independent. The independent representatives will shop from several different companies to help you find the type of equipment that you want for your clinic. Representatives can usually expedite the process and save you some time and effort. Buy in “bulk” if you own several facilities.

In addition, consider lease versus purchase. There will be advantages to purchasing a machine, of course, because you will be the owner, but there may be times when you are starting a new program that leasing would be a better decision.

For example, if you are interested in starting a small aquatic therapy program, you can lease a hydrotherapy pool and market your program for 1 to 2 years. During that period, you can track your expenses versus the revenues made from this program. If, in the end, you decide that you may have too much competition for the aquatic therapy or the program is not worth your efforts, you are not the proud owner of a piece of equipment that you will not use.

Purchasing has many advantages as well. As mentioned before, you do not want to let the budget rule you if you are envisioning some large pieces of equipment. Although you may not feel you can afford the equipment, with the help of your accountant, who will help you establish a budget, you may find that, in the long run, it will be best to borrow money and purchase the equipment. Your banker may be able to find excellent sources of loans that you had not previously considered. It is also important to talk to your accountant about the timing of your equipment purchases. Equipment that you own can be depreciated over time and this is a tax advantage. It is also important to note that in the next few years, from 2003 to 2004, you will receive a 50% special depreciation allowance on your tax return. Alternatively, there is section 179 of the Internal Revenue Code that allows you to expense $100,000 of capital purchases in 1 year. Talk to your CPA about the details. In addition, our clinic has taken advantage at the end of the fiscal year in the past several years in purchasing the equipment before the year-end. In this way we were able to gain depreciation advantages.

Final considerations
Other considerations include the maintenance cost of the equipment that you have just purchased. Certain pieces of equipment, such as a pool or an underwater treadmill, have some special maintenance needs. When purchasing isokinetic equipment, be sure that you check on the warranty and the location of the nearest maintenance person for this equipment. For example, I have found that in rural Idaho, the nearest isokinetic repair person may live as far as Salt Lake City, which is 3 hours away by car. This has cost us some extra maintenance fees.

Another factor to consider is to look at purchasing used equipment. Physical therapy equipment can be much like an automobile. As soon as you drive an automobile off the lot, its value decreases markedly. Judging by the experience we have had in our clinic, we have found that many pieces of physical therapy equipment, such as high/low tables, have lasted for 15 years and are still going strong. It would benefit you to look into purchasing these types of equipment to save yourself money that can be used for other purchases. Contact your local representative, as many times they know of clinics that have closed down and want to sell their used equipment.

Reference

Glinn JE, McMenamin P. Private Practice Physical Therapy: The How-To Manual. Vol 1. Washington: American Physical Therapy Association, Private Practice Section; 2002.

Julie Ellis, PT, SCS, CSCS, has been a private practice owner in Twin Falls, Idaho, for 16 years. She is active in the APTA Private Practice Section and was responsible for the task force that wrote the Private Practice How-To-Manual. She can be reached at jept@magiclink.com.

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January/February 2004