Contents:

1. EXECUTIVE SUMMARY 2. INTRODUCTION 2.1 The origins of leasing 2.2 The target audience 3 LEASING EXPLAINED 3.1 What is leasing? 3.2 Leasing types 3.2.1 What is Financial Leasing? 3.2.2 What is Operational Leasing? 3.2.3 What is Fee per use? 3.3 Advantages of leasing 3.3.1 Access to the latest technologies 3.3.2 Financial advantages of leasing and other options 3.3.2.1 Cash purchase 3.3.2.2 Loan purchase 3.3.2.3 Fee per use 3.3.2.4 Overdrafts and other banking arrangements 3.4 Choosing the correct leasing or other financing option 3.5 The leasing process 4 COUNTRY SPECIFICS 4.1 The US 4.2 Europe 4.2.1 France 4.2.1.1 Accounting 4.2.1.2 Taxation 4.2.1.3 Loans 4.2.1.4 Leasing company example 4.2.2 Germany 4.2.2.1 Accounting 4.2.2.2 Taxation 4.2.2.3 Loans 4.2.2.4 Leasing company example 4.2.3 Italy 4.2.3.1 Accounting 4.2.3.2 Taxation 4.2.3.3 Loans 4.2.3.4 Leasing company example 4.2.4 The Netherlands 4.2.4.1 Accounting 4.2.4.2 Taxation 4.2.4.3 Loans 4.2.4.4 Leasing company example 4.2.5 Poland 4.2.5.1 Accounting 4.2.5.2 Taxation 4.2.5.3 Loans 4.2.5.4 Leasing company example 4.2.6 Spain 4.2.6.1 Accounting 4.2.6.2 Taxation 4.2.6.3 Loans 4.2.6.4 Leasing company example 4.2.7 The UK 4.2.7.2 Taxation 4.2.7.3 Loans 4.2.7.4 Leasing company example 5 THE INDUSTRY PERSPECTIVE 5.1 Strategies 5.1.1 Baxter Capital 5.1.2 BPH Leasing 5.1.3 De Lage Landen International B.V. 5.1.4 GE Healthcare Financial Services. 5.1.5 IBM Global Financing. 5.1.6 Leaseurope 5.1.7 Medical Device Leasing 5.1.8 Stryker Financial Services 5.1.9 Philips Medical Capital 5.1.10 Siemens Financial Services 5.1.11 U.S. Bancorp Equipment Finance, Inc 5.2 Strategy overview. 5.3 Industry examples. 5.3.1 Boston Medical Center 5.3.2 Rockville General Hospital 5.3.3 Walm Lane Nursing Home 6 THE MARKET 6.1 General market trends 6.1.1 Countries 6.1.2 Equipment 6.1.2 Companies

Summary:

Healthcare Providers & Medical Technology Suppliers under pressure to introduce new medical technology Healthcare providers are increasingly under pressure to provide a high quality of healthcare at the same time as adhering to high levels of cost containment. As healthcare spending increases, the need for containment of costs and the drive for efficiency in healthcare delivery become paramount. It has long been recognised that the shorter lifecycle of the more sophisticated medical device products means that continued innovation remains a prime factor in business success in this industry sector. The ingenuity of medical technology manufacturers and their ability to enhance the development of key products through utilisation of the latest scientific and technological advances means that the physician's "toolbox" is expanding. The problem that Health Ministries in the developing world face is that payments for medical equipment, from commodity products through to products requiring high capital outlay, are harder to make. As this is an excuse that patients are unwilling to hear, Governments are seeking ways to purchase medical devices which offer the potential to lessen the burden on tightening budgets. There are signs that ever more healthcare providers are finding the solution to their problems through agreements with manufacturers offering alternative accounting systems. This need for a partnership approach is a hand that has been forced on manufacturers of medical devices. These companies have found that even though customers want their products, and they have skimmed their profit margins down to the bare minimum, they have been unable to find strong markets for their products because of cost constraints. As a result of the pressures on the market a set of needs have developed. The Customer Perspective - Acquire the use of the needed technology as soon as possible - Acquire the technology at a price that can be afforded in the short and the long term - Where necessary, be able to update the technology with a minimum of further cash outlay The Industry Perspective - Find a method whereby they can market their equipment to the customer at a price the customer can afford - Find a method whereby they can market their equipment to the customer at a price that provides them with a profit on the sale - Find a method whereby they can market their equipment to the customer while still adding maximum value to their customers, in comparison to competitor offerings The result of the needs of the healthcare market has been a coming together of customers and vendors to create an expansion in the use of alternative finance methods for medical device acquisition. Emergence of specialised financial groups within medical device and diagnostics companies providing alternative financing arrangements to their customers. If a company or health institution intends to buy a piece of medical equipment then the route to purchase is essentially simple, but can vary between nations and hospitals. Essentially, there are four main methods of acquiring medical devices: - purchasing the device - leasing the device - loaning the device from a manufacturer/supplier/organisation - accepting the device as a donation Each financial option has its own benefits and drawbacks and there are many factors which need to be taken into consideration. A key factor in the decision making process for hospitals is driven by the non-availability of capital funding for acquisitions. It has been noted that despite further increases in government funding for direct capital investment in medical equipment, healthcare leaders have to "think outside the box" in finding creative forms of capital access. A recent study conducted by the Healthcare Financial Management Association in cooperation with PricewaterhouseCoopers revealed that 84 percent of hospital chief financial officers (CFOs) surveyed said they thought it would be more difficult to fund capital expenditures in the future. While historically, alternative financial solutions aimed at the healthcare sector have, to some extent been provided by Financing Organizations and Banks, recently it has been possible to monitor the emergence of an increasing number of financing offerings developed and provided directly by medical device and diagnostics manufactures . Companies such as Fujifilm Medical Systems, GE Medical, Philips, Siemens and Stryker have all developed separate financing operations, and whilst some such as GE Healthcare Financial Services offers working capital and instalment loans, the focus of the majority of these operations is on leasing contracts. Siemens Finance was an early player in the market in 1997 starting as a centre of competence for financing issues and the management of the parent company's financial risks. In 2000 Schroeder Leasing merged with Siemens Finance to form Siemens Financial Services (SFS) a group of Siemens with its own legal status. Offering a wide range of financial solutions, including financial leases, operating leases, lease purchase and software financing, SFS has seen its profits grow from $205 million in 2001 to $349 million in 2003. GE Healthcare Financial Services is a more recent entrant to the market (2002) but arrived through a similar route to Siemens Financial Services. GE Capital Corp. (GECC), the financial services arm of General Electric Co, had made a number of acquisitions in the financial sector before it purchased Heller Financial Inc., in July 2001, for $5.6 billion. As one of the six major lines of lending of the French based Heller was in the area of healthcare the acquisition not only gave GE increased overall exposure in Europe but also a boost in a new direction. Two years after creating a healthcare financial services unit, GE has increased its managed assets in healthcare by 60%. The CEO of GECC Dennis Nayden has stated that although GECC already provided select health care finance, Heller had a more diverse and expansive program that could be used as a lever to create a much bigger business. This has proved to be the case. With assets of $13 billion, GE Healthcare Financial Services recorded a net income of $201 million in 2004 compared to $173 million in 2003 and now has 900 employees worldwide. GE Capital Healthcare Financial Services offers loans and leases for creditworthy customers of GE Medical Systems (GEMS). Generally the amount available is a $5 million cap per customer and financing for the public sector is referred to third party lenders who generally require a sovereign guarantee, whilst for the not-for-profit and commercial sector loans and leasing arrangements are available for creditworthy GEMS customers. Again, a similar route to Siemens was followed by Philips Medical Systems, who with Rabobank Group's subsidiary De Lage Landen International, announced the setting up of a joint venture in August 2002 to provide financing for the purchase of the full range of diagnostic imaging equipment produced by Philips Medical Systems throughout the United States. The established joint venture, Philips Medical Capital, was set up in Pennsylvania in the US to serve North American customers. Further to this, in November 2004, an agreement was made between Philips and the French based Société Générale Group to launch Philips Medical Capital in Europe. The Société Générale Group holds a 60 percent share in the joint venture, with Philips accounting for the remaining 40 percent and the aim is to initially focus on the key European medical device markets of Germany, the UK, France, Italy, Spain and the Netherlands, with the intention of later expanding into other countries in Europe. This joint venture will be implemented within Société Générale Group by Société Générale Equipment Finance (SGEF), its vendor finance specialist and a leading European organisation in asset based finance. Philips Medical Finance offers financing exclusively to customers of Philips Medical Systems and in the public sector Philips Medical Capital finances governments, states, and municipalities globally, whilst for the not-for-profit and commercial sectors Philips provides a variety of leasing products, including dollar-out leases. Although financing is provided to Philips customers only, it can be used to purchase non-Philips equipment or finance infrastructure related to the purchase of a Philips product.

Companies Mentioned

- Baxter Capital - BPH Leasing - De Lage Landen International B.V. - Elekta Capital - GE Healthcare Financial Services. - IBM Global Financing. - Leaseurope - Medical Device Leasing - Stryker Financial Services - Philips Medical Capital - Siemens Financial Services - U.S. Bancorp Equipment Finance, Inc - Boston Medical Center - Rockville General Hospital - Walm Lane Nursing Home - FujiFilm Medical Systems - Olympus America Inc. - AGFA Finance Group - Smith & Nephew - Arthrex - Hill Rom