"The confluence of economic pressures essentially means that, moving forward, success for medical practitioners, as with most industries, will rely on doing more with less."

 Our Director Todd O’Reilly says; “the evolving economic landscape could be positive for medical practitioners over the next 12 months.”

 The overall Australian economy has been broadly resilient over the past 12 months: despite a rising base rate and continuing headwinds for various sectors of the economy, we have seen continued strength in other areas which show cause for optimism.

Property prices, while being location dependent, have recovered well since the dip in 2022, which has had flow on effects to consumer sentiment – while consumers have had less disposable income, rising property prices have given them additional comfort to spend what they have, albeit with caution.

This has contributed to stubbornly high inflation, which is more likely to kick the can down the road on any potential interest rate reductions by the RBA. Inflation has been the buzzword for some time, and resultant challenges for businesses are likely to stick around.

Supply chain challenges remain, and with unemployment still at unprecedentedly low levels, despite record migrations, recruiting competition is likely to hang around for the short to medium term. As demographics shift over the next decade, there is little doubt resourcing will become the greatest challenge for businesses.

What does all this mean for you?

The confluence of economic pressures essentially means that, moving forward, success for medical practitioners, as with most industries, will rely on doing more with less. Those who look to reinvest in their practices, in new technology, both clinically and operationally, to increase efficiencies will become increasingly more suited to this new paradigm.

“I believe practices that invest will be far better positioned to stay ahead of the curve and capitalise on emerging opportunities” Says O’Reilly

When taking the above into consideration, it remains critically important that practitioners ensure they are investing in technology that sees a positive return on investment, both in the short and medium term.

1. Acquisitions in your business must deliver a solid and timely return on investment

That is, how many procedures a day, a month, a year, is it going to take to see your acquisition cash flow positive. Once you factor in the cost of capital, does it still make sense, when money costs more than it did 2 years ago? It might seem boring but ensuring every aspect and offering in your business is making you money is a critical component to the long-term success of your business.

2. Investment should also drive efficiencies 

Any new technology should, ultimately, make your lives easier. While there is inevitably a short term period of pain by doing things a different way, it is worth having in the back of your mind – is this going to ultimately assist in doing more with less?

3. Consider your finance structures

That is, moving forward, it may be best to fund your needs via other finance structures – finance leases, which have largely gone out of vogue in the past 3 years, are likely to make somewhat of a resurgence. While a lot of lenders have shelved these products as their popularity wanted, there are still a number in the medical industry who still offer them. Additionally, does it make sense to fund each piece of equipment in isolation, or is it more efficient to have a core debt facility within your practice so that you don’t need to waste time on a new application with every acquisition?

With all of the above in play, what could it mean for product costs? The below table illustrates what monthly repayments would be over a variety of common terms and financed amounts*:

Using the table above, you can quickly calculate the number of patients required to break even on a new equipment purchase. For example, a purchasing of an OCT at an average cost of $70k (financed over five years) only requires four scans a week at $85 a scan to become cash flow positive (less than one per day).

There are a number of additional lenders available to the medical community compared to even a few short years ago, with each lender becoming more niche and focused in terms of their strengths and areas of focus.   As the landscape shifts, finding the right lender and structure, which will suit your individual situation, has become increasingly challenging, and takes up a lot more time than it has in the past. 

At MedX Finance, we are a specialist broker in the medical finance space, with all of our finance specialists having at least a decade of experience in the space - we will work with you and your accountant to optimise structures and lending options.

 
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 The information does not constitute financial advice or recommendation and should not be considered as such.

*Finance amounts are based on a cost of $70,000 ex GST at 6.99% pa fixed with payments in arrears.

Michael Fazzolari
Email:    michael@medxfinance.com.au
Phone:  0406 428 996

Todd O’Reilly
Email:    Todd@medxfinance.com.au
Phone:  0419 230 053