The Demise of Medical Equipment Finance Pioneers

Medfin and Experien pioneered specialised finance for Healthcare Businesses and Professionals and did it so well that they have been slowly taken over by National Australia Bank and Investec, respectively.  The pioneers recognised the very low risk of lending to doctors personally and to their businesses in view of their being highly intelligent, of the highest integrity, among the most affluent, and having government guaranteed incomes.  The credit criteria applied was therefore quite flexible, many doctors became accustomed to almost unlimited credit, and defaults were extremely rare.

But, the changes imposed on the banking industry as a consequence of the GFC has resulted in Medfin being now totally absorbed by NAB, and it’s now unclear as to how the bank will view the Healthcare market in terms of credit policy.  The situation is similar at Experien, where the name (and autonomy?) has been phased out by Investec.

While this may further extend tight credit policies for financing things like Medical Equipment, it should represent an opportunity for a new lender or lenders to fill the void in Healthcare.  It is also a good reason to retain the services of a broker with extensive knowledge of the Healthcare market and with access to private lenders, because without Medfin and Experien, you’re dealing with just another big bank in which the staff is always changing.

Capital Sensitivity

Capital Sensitivity is the term the Federal Dept of Health & Aging is using to described new rules relating to the age of Diagnostic Imaging Equipment.  In essence, the Government will reduce rebates by half for studies done with equipment over a certain age per the table below.

Modality ATO depreciation
New effective
life age
Maximum extended life age (including 5 year extension
for upgrades)
Ultrasound 5 years 10 years 15 years
OPG 15 years 15 years 20 years
Mammography 7 years 10 years 15 years
Fluoroscopy 15 years 15 years 20 years
X-ray 15 years 15 years 20 years
Nuclear Medicine
(excl. PET)
10 years 10 years 15 years
MRI 7 years 10 years 15 years

Many of the questions about this change are addressed on the link below, but some details will be ironed out in fiscal 11-12.