Financing vs. Paying Cash for your EMR investment

This question often arises: How should I pay for this EMR solution investment?

The discussion can easily begin with the question: Where am I in my practice? A physician just getting started in a new practice has different financial considerations than that of a long-term, established practice. There are also many factors in between the just getting started and well established. So, with this thought in mind, where do you begin the process? Outlay cash or finance? An argument can be made for the decision on either side.

Before serious consideration into this matter, please consult your own certified financial advisor.

The Pros and Cons of financing: The cost of money. Investing cash while depreciating assets.

Example: The price of $20,000 over 5 years, (estimate).

The investment of $20,000 over five years can grow by about $9,000 assuming an annual return of 8%. $20,000 can become $29,000

The interest paid on $20,000 over the same five (5) year period can cost over $4,000 dollars assuming an interest rate of 8%. The cost of $20,000 can now go up to over $24,000.

Depending on the financial status of your practice, the facts and figures demonstrated by the financial institution can help to determine your best choice.

There are many different financial institutions and varieties of financial products. The choices and rate options can be confusing as well. Payment terms can be negotiated and no penalties for early payment can help to guide you in the process of making a decision.

It may also be important to consider the benefits of the Section 179 tax code. This new law, created in 2003, allows medical offices to write-off up to $100,000 of computer software/hardware expenses in the first year of ownership, even when purchased under a lease or financing agreement. Before 2003 if property for business had a useful life of more than one year, the cost had to be spread across several tax years as depreciation with a portion of the cost deducted each year.

Under the new law there is a way to immediately receive these income tax benefits in one tax year. The provisions of Internal Revenue Code Section 179 allow a sole proprietor, partnership or corporation to fully expense tangible property in the year it is purchased. For more information on the benefits of the Section 179 code, click here.

You can find additional information about financing an EMR as well as how to plan, purchase and implement and EMR in our FREE EMR eBook