SIC 7352
MEDICAL EQUIPMENT RENTAL AND LEASING



This classification comprises establishments primarily engaged in renting or leasing (except finance leasing) medical equipment. Establishments included within this industry may also sell medical supplies. Those establishments primarily engaged in finance leasing are classified in SIC 6159: Miscellaneous Business Credit Institutions.

NAICS Code(s)

532291 (Home Health Equipment Rental)

532490 (Other Commercial and Industrial Machinery and Equipment Rental and Leasing)

The medical equipment rental and leasing industry provides an alternative to purchasing equipment outright and had significant growth for much of the 1990s. For many individuals and health care institutions, the advantages of renting or leasing expensive, high-technology equipment — subject to obsolescence as advances in medical technology spawned new, improved equipment — outweighed the advantages of purchasing such equipment. These advantages included preserving cash flow, increased flexibility to replace old equipment, and improved timeliness in acquiring the newest technologies. In the early 1990s, the industry generated roughly $1.5 billion in sales, representing 5.1 percent of the total yearly leasing volume in the United States. According to a 1995 survey, approximately 63 percent of hospitals used some from of lease financing for medical equipment. A similar 1992 study indicated only 14 percent of hospitals used lease financing. Volume of medical equipment leasing is affected by increased cash reserves, attractive bond financing, and the growing market for refurbished equipment. In 1997, sales of refurbished medical equipment were estimated at $240 million; total business activity in this industry was estimated at $3.9 billion, a 3 percent increase since 1993.

Revenues in the medical equipment leasing and rental industry were expected to grow from $5.6 billion in 1999 to $8.3 billion by 2003. In 1998, a marketing study by Finova Copelco Capital and DVI estimated that 25 percent of all medical equipment was leased. Of that, an estimated $2.5 billion of new medical equipment was purchased through leasing. Markets for the industry in the new millennium were hospitals, diagnostic imaging centers, chronic disease treatment centers, and physician group practices/clinics.

The medical equipment rental and leasing industry was comprised of a majority of relatively small businesses. The typical service establishment in the early 1990s employed 13 people, while on average a medical equipment rental and leasing establishment employed only 8. However, by the end of the decade, larger corporate players dominated the market. In 1998, sales leaders in this industry included Apria Healthcare Group Inc. with 8,175 employees and revenues of $933.8 million; MEDIQ, Inc. which posted almost $181 million in sales with 1,271 employees; and Universal Hospital Services, Inc., 462 employees and sales of $69 million.

Nearly 85 percent of the medical equipment rental and leasing establishments in the late 1980s were owned by corporations, compared to about a 60 percent average for other service industries. This preponderance of corporate ownership is due largely to the expensive nature of medical equipment, which at once predicated the industry's existence and limited entry to those individuals or corporations possessing substantial cash reserves. Sole proprietorships constitute 10 percent of industry establishments, compared to over 30 percent in other service industries. The remaining 5 percent are controlled through partnerships.

Despite the large number of establishments located in Texas, the greatest regional concentrations of medical equipment rental and supply businesses are located in the eastern United States, particularly New York, New Jersey, and Pennsylvania, which have 732 establishments. The rest of the medical equipment and rental businesses are scattered throughout the United States.

Further Reading

Darnay, Arsen J., ed. Service Industries USA. 3rd ed. Detroit: Gale Research, 1996.

Dun's Census of American Business 1995. Bethlehem, PA: Dun & Bradstreet Corporation, 1995.

"Financing Capital Equipment: Leasing Looking Better and Better." Hospital Materials Management , June 1995.

Hoover's Company Capsules. Austin, TX: Hoover's Inc., 2000. Available from http://www.hoovers.com/ .

"The U.S. Medical Equipment Leasing and Rental Industry: the Status of the Industry in 1999." Tampa, FL: Marketdata Enterprises, Inc., 1999. Available from http://library.northernlight.com/CK19991221010001774.html?cb=0&sc=0doc/ .

U.S. Department of Commerce, Bureau of the Census. Service Annual Survey: 1997. Washington: GPO, 1999.

Ward's Business Directory of U.S. Private and Public Companies 1997. Farmington Hills, MI: Gale Group, 1997.

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