How Do Paducah, KY Physician Practices Fund Equipment, a New Suite and Billing Gaps?

Ultrasound units, EKG carts, spirometers, in-office lab analyzers and exam tables are long-lived, and they have resale value, so a funding partner can hold the equipment itself as collateral. That is what makes equipment financing a natural fit. The choice inside it is loan or lease: a loan ends with the practice owning the unit, while a lease can end with a return, a renewal or a buyout.

Illustration only, invented figures: a Paducah, KY family practice prices a $58,000 ultrasound system. In this example a 60-month equipment loan at 9.75% a year sets each installment at $1,225.21, and sixty of them total $73,512.60. In this example a lease quotes $1,190 a month for 60 months plus a $5,800 buyout, which is $77,200.00 in all.

In this example, the lease asks less each month and more over the full term. A practice that expects to replace the unit in five years can value the lower payment and the return option; one that plans to keep it longer can value ownership at the end of the loan.

A new suite in a leased building needs a check-in desk, waiting-room seating, exam-room stools and furniture, and a records area. Those furniture and fixture costs can go on a term loan sized to the purchase. Cabinetry, sinks, data and power runs and lighting are room work, which is property work outside this site, and so are a building purchase and work on the shell or exterior.

Illustration only, invented figures: an $85,000 furniture and fixture package on an 84-month term at an annual rate of 10.25% has an installment of $1,422.10 in this example. In this example, the seven years of installments sum to $119,456.40, and interest is $34,456.40 of that.

A practice pays staff every two weeks, but payment on a claim can take weeks to arrive. That billing gap is a timing problem, not a sign of a weak practice, and it is what a line of credit or working capital is for. A line lets the office draw for payroll and pay the draw back as claims settle, with interest only on the days the money is out.

Illustration only, invented figures: a practice with $21,400 of payroll per payday waits 45 days on a large batch of claims. In this example that wait spans 3 or 4 paydays, depending on where the first one falls. In this example a draw of $85,600 held for the full 45 days at an annual rate of 12.5% carries $1,319.18 of simple interest.

For scale: Offices of Physicians (NAICS 6211) in McCracken County, KY reported $163,397,000 in annual payroll for 2023 across 79 establishments (CBP). Divided evenly, that is roughly $2.07 million per office for the year, our arithmetic, which shows how large a two-week gap in collections can be.

A physician joining as a partner may buy a share of the practice: its equipment, its patient records, its staff and its income. A term loan to the incoming partner can fund that share, with the price set by the partnership agreement and a valuation. A funding partner reviewing the request can ask for the valuation, production reports by provider, the draft agreement and the practice’s recent tax returns.

Small offices are part of this picture. For 2023, 24 of the 79 physician offices with employees in McCracken County, KY had fewer than five on staff, a 30.4% share (CBP). Separately, the 2024 Nonemployer Statistics file lists 57 physician offices in the county that run with no payroll at all. ZIP Code Business Patterns places 34 physician offices with employees at ZIP 42001 addresses.

The medical practice funding page covers more uses, from exam-room equipment to a second location. A request can begin with a call to (270) 236-8708 or through the request form. Other articles are on the blog.