The role of rental programs in sleep center expansion and boosting patient volumes.

With the sleep industry beginning to rebound from the economic slump, your lab is likely recovering from a decline in patient volumes, or if business has picked up and you are considering expanding, you find yourself facing a tough credit market. Both dilemmas have the same root and, surprisingly, a similar solution. Rental programs can help boost patient volumes for labs that have seen patient capacity drop and offer a low-cost-of-expansion solution for growing sleep centers.


Jonathan Devlin, owner of Practice Services, Dalton, Ga, is currently assisting a client that is looking to expand their practice. Devlin says that businesses that he works with are looking to add additional revenue, but the cost of equipment is a big concern. Numerous manufacturers offer rental programs. For Devlin, a rental program offered by SleepVirtual has helped0 to provide a solution to the up-front cost issue of equipment. “SleepVirtual allows a lab to start with minimal investment in equipment and prevents the lab from having to take on additional debt to finance the equipment purchase,” he says. “The rental period is 1 year, so the lab is able to ‘try it out’ for a year. If they choose to buy the equipment at the end of that year, or any time during the rental period, the rental fees paid will be credited to the purchase price.”

Besides the low start-up cost and lack of long-term commitment, labs that choose the rental route have less worry about the cost of repair or support. “When you do the math, you realize that warranty, 24/7 tech support, and most of the services are actually covered in our rental contract,” says Ed Faria, chief executive officer at NeuroVirtual/SleepVirtual, Doral, Fla. “Also, when you rent, you can deduct the full rental as a business expense on your taxes, instead of only a fraction of depreciation, giving you an extra incentive to rent instead of buying.”


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For labs faced with a decline in patient numbers, equipment rental, especially with regard to home testing monitors, can open up a new revenue stream. “The interesting fact in regard to the economic slowdown in 2009 was that it made sleep labs take a closer look at their traditional in-lab business models,” says J. Kevin Dorcak, senior marketing manager, Diagnostics & CSA, Philips Respironics. “Faced with patient cancellations due to financial difficulties or high co-pays or no insurance, sleep labs have had to look outside their four walls to see if they can gain back access to these patients. Portable testing provides one way to capture these ‘lost’ patients without affecting their in-lab business. More and more sleep labs are using our PT rental programs to trial equipment without needing to invest in a long-term capital expenditure. It affords them some flexibility before committing to purchase.”

The move to rent equipment ultimately depends on the individual financial situation and the business model of the lab. Rental may not be the perfect solution to declining patient volumes or labs facing a tight credit market, but in today’s economy manufacturers are offering programs that can improve profitability for sleep labs. “Rental options may afford them some accounting or budgeting flexibility that conventional purchase or leasing does not,” says Dorcak. “It does not work for all customers, but it does provide both financial and trial options that are so critical in today’s economic environment.”