Impact of Affordable Care Act (Obamacare) on Capital Spending

As the implementation year of Obamacare rolls on, we are seeing a slow down or delay in typical capital expenditures. Medical equipment is no exception. Typical replacement cycles or upgrading to newer technology simply isn’t getting done in a “normal” buying cycle. Status quo is the norm.

Due to higher taxes for high income earners (oncologists, business owners), the Medicare tax imposed on capital gains, the reimbursement cuts and the mandatory implementation of health care benefits for employers that have 50 employees or more, capital spending has slowed significantly. So much so, it has become a major topic of discussion in the business papers, Wall Street and in Washington. The argument being this economy isn’t growing north of three percent due to the lack of capital spending by small businesses. This is in spite of historically low interest rates and accelerated depreciation tax benefits for purchasing and implementing new equipment.

The belief is the economy will “muddle” along and the Federal Reserve will keep interest rates at historically low levels for an “extended period of time”until something changes. I.E. changes in Congress in 2014 and/or more financial data on the impact of Obamacare on businesses. Businesses will figure out first how Obamacare is impacting them. This will take a year or two. Once those numbers are understood, businesses should be more inclined to move forward with capital expenditure budgeting and implementing new technology.

In the meantime, businesses and practices have been unlikely to upgrade to newer technology unless they have been presented with a value proposition that can help them generate additional revenue, or improves patient care while at the same time lowering operating costs.

Right Way Medical understands the unique dynamic of today’s credit market and is very creative in making sure that we meet the demands of all customers. Don’t let the unknown slow your decision process down. Do your homework, find the right business partner and make a calculated decision.