J Clin Aesthet Dermatol. 2020;13(1):18–21
by Jusleen Ahluwalia, MD; Chloe Gianastano, MA; and Jill S. Waibel, MD
Dr. Ahluwalia is with the University of California, San Diego in San Diego, California. Drs. Gianastano and Waibel are with Miami Dermatology and Laser Institute in Miami, Florida.
FUNDING: No funding was provided for this study.
DISCLOSURES: The authors have no conflicts of interest relevant to the content of this article.
ABSTRACT: Background. Lasers and energy-based devices allow physicians to provide quality care to patients and achieve optimal clinical results.
Objective. We sought to review the benefits and drawbacks of purchasing and leasing energy-based devices and to highlight key factors that are important to consider when incorporating these devices into a practice.
Methods. A PubMed search was conducted for articles on purchasing or leasing lasers and energy-based devices in dermatology. Key reports and personal commentaries on incorporating these technologies into practice are summarized in this review.
Results. Energy-based devices are clinical and financial investments and can provide outstanding results for patients and result in substantial gratification for a practice. There are a variety of factors to consider when selecting specific lasers and energy-based devices.
Conclusions. Capital resources, aesthetic practice values, expertise in using the device, patient demographics, location of the practice, clinic space requirements, and regulations should be considered when buying or leasing a device.
KEYWORDS: Lasers, energy-based devices, service contracts, aesthetic practice values, consumables, disposables
The introduction of aesthetic devices into clinical practice has transformed the field of dermatology. These technologies allow for customizable treatment options, expand the clinician’s knowledge of the principles of energy-based technologies, and broaden the business of the practice with better financial remuneration. However, the decision to purchase versus lease an expensive aesthetic device can be a source of confusion for a practice, especially as there is limited literature on this topic. This article reviews the advantages and disadvantages of buying and leasing aesthetic devices and discusses key factors that should be considered prior to making the decision.
Methods
The authors conducted a PubMed database search for randomized, controlled trials, cohort studies, and case series involving the business of lasers and energy-based devices, using the following keywords: lasers, energy-based devices, buy, rent, lease, contracts, and sale. Seven results were found. Exclusion criteria included papers involving dental and general surgical lasers and articles not written in the English language. Five results remained after applying exclusion criteria. Descriptive summaries of these studies are presented in this review. In addition, our recommendations for incorporating energy-based technologies into practice are summarized.
To Purchase or Lease?
Decisions about expensive commodities, such as aesthetic devices, require meticulous financial planning for a dermatological practice. First and foremost, practices must assess their financial resources when purchasing a device and the corresponding cost-benefit ratio.1 In our experience, most devices typically range from $75,000 to $180,000, with a few lasers costing more than $200,000, which might require months for a practice to accumulate. These costs do not account for extraneous expenses (e.g., consumables, maintenance, protective eyewear) associated with device operations once purchased. Financing options exist in cases where immediate liquid assets are insufficient to support the investment. Depending on the characteristics of a practice, including size, patient volume, financial returns, and practice trajectory, lending institutions might require personal guarantees from practice owners after reviewing the practice’s gains and credit history.2 Practices will need to appraise their willingness to provide personal guarantees to procure required financing.2 Also, because newer models are frequently developed with improved ergonomics, user-friendliness, and functionalities, if a practice elects to purchase the device, discussion about the possibility of future trade-in with the seller should ensue in the event of updates to devices or paradigm shifts within the practice.1,3
Many practices elect to lease their devices.2 Leasing options fall into two categories: operating and financing. Operating leases are those by which practices commit to lease payments and, upon lease termination, the practice has the option to return the device to the lessor or purchase the device at current market value.2 Alternatively, financing leases are paid in installments and, at the end of the lease, the practice has the option to purchase the device at below market value.2 In addition to fixed fees within a lease, there might be a fee based on the volume of procedures that a practice performs. Typically, leases specify a minimum amount of monthly procedures. If this minimum is low, the practice might incur a per-use cost, called a “click fee,” which can result in a higher overall cost.1 Accountants and consultants should be used to help determine the optimal point of this marginal utility curve.
Most physicians lease energy-based devices over five-year periods. Shorter leases than this timeframe might become a pitfall because, as the device becomes fully assimilated into the practice, upon renewal, the lessor might increase the leasing costs, posing a financial dilemma. Negotiating renewal prices prior to signing the contract can often circumvent this situation.1
Exclusivity clauses can be proposed in the leasing contract, which state that the lessor cannot lease the same device to another practice within a certain mile radius;2 however, in our experience, this is not a common occurrence. Likewise, practices should consider specifying a jurisdiction clause that limits the jurisdictions in which legal action involving the device can be invoked.2 Before the practice ultimately signs, discussion of these provisions with a practice attorney can help to clarify the contract and ensure that unexpected or unwanted features do not appear in the future.
Recent tax considerations have introduced a new potential advantage to factor into the decision to purchase or lease a device.2 Discussing tax benefits with an accountant is highly recommended. The accountant might elect to proceed with a Section 179 deduction to write off a major fraction of the purchase in the first year (Table 1). The remaining value will depreciate based on the government’s determination of the “useful life” of the device. In certain cases, these technologies become obsolete before full depreciation. Thus, the purchase price and the “useful life” based on actual and tax-related pricing can help the practice determine the preferred financial method. Considering these tax-related implications, practices that lease devices might balance the financial life of the device with the actual “useful life.”
Device companies and manufacturers often have preferred lenders that can be referred to practices. Some device companies are firmly bound to certain lenders, while others provide the practice with flexibility in selecting a preferential lender. Moreover, it is important to obtain quotes from different lenders to best optimize the deal.4 Purchasing a device requires a practice to evaluate their long-term goals.4,5,7,8 If a practice plans to expand their service, more equipment, and thus, cash resources might be required to meet demand.2
Device-sharing is a relatively new phenomenon among dermatologists and plastic surgeons. Purchased or leased devices are reserved for one practice on select days of the week and then transported to another practice for use on other days of the week. Through collaboration, practices divide costs among each other, enabling diversification of their armamentarium of devices. However, it should be noted that complications can arise with legal implications, contract lease specifications (if applicable), and transferring the device through shipping due to the delicate nature of the devices.1
In most cases, purchasing rather than leasing an energy-based device is the more cost-efficient option if cash resources are available; however, most physicians, ourselves included, advise early career physicians to lease.4 Additionally, it is recommended to negotiate list prices, disposables, shipping costs, warranty costs, and service contracts before finalizing the contract. Moreover, contracts should include a repair clause that states maintenance costs, approximate time frame of repair/replacement of parts, and possibility of installation of a standby system.1 Likewise, adding extending warranty services beyond the typical one year can be beneficial, as the costs to renew warranties after expiration are often high. Finally, when the practice purchases or leases the device, a company representative should be present at the time of installation to ensure proper setup (e.g., air conditioning, movement space, outlets).1–8
Devices to Incorporate
The array of available equipment in a dermatological practice is both vast and highly customizable. The logical and financially viable choices for one office are likely far different than those of another. Before a practice commits to the purchase or lease of a device, it is paramount to consider the needs of the patient population it services. Due to the variety of options, the market of consumers is a vital consideration.6
After determining the basic demographics and corresponding potential treatments of the relevant population, a broad evaluation of the current status and projected future of the practice’s operations should be considered. For an aesthetic practice wanting a single device with multiple functions, a platform device might be beneficial. Platform devices are base consoles with the capacity to operate from 4 to 8 different lasers. Each head piece is an additional purchase, and thus an added expense; however, this option can expand the operation potential of the practice with a single service contract. Additionally, the mobility of this multifunctional device is less challenging than multiple stand-alone devices.1 The drawback to this device, however, is the practice depending on one device. This model also means that if there is an operating error in the machine or a malfunctioning part, every procedure stemming from that device is disabled, which could be devastating to a practice without a standby device. Time constraints need to be considered as well because only one patient can be treated at a time.1 Stand-alone devices, in contrast, offer the ability to treat multiple patients simultaneously if installed in different clinic rooms.1
The values of a practice should also be addressed. Performed procedures should stem from passion. Anecdotally, we are passionate about treating patients suffering from scarring. Therefore, our practice incorporates devices and techniques that address all aspects of scarring, including wound healing, hyperpigmentation, erythema, and associated symptoms, such as pain and pruritus. The authors feel readily equipped to resolve any concern with which patients might present as a result of their scarring. Treating these patients, whether cosmetically or pro-bono, has provided us with an immense sense of gratification in being able to contribute to our community.
Lastly, surveying device offerings of other practices in the neighborhood can help guide decision making on devices to integrate into your practice. If the practice is the first to integrate a new technology, the practice should be equipped to handle a heavy volume of patients. The practice should also implement marketing strategies to advertise the new technology available. If other practices have already incorporated the desired device, marketing the device might not be necessary; however, consideration of competitors pricing for the procedure will influence the practice’s pricing of the device. Surveying the patient and referral bases of the practice will help ensure that there is a market for the desired device.
The expertise of the laser physician, the requirements of the office space, and safety training and comfort levels of staff also play an important role. Training requires time and effort and frequently involves training meetings with device representatives, spending time with an expert in the use of that device, and frequent literature searches of treatments with these devices.
Costs of Purchasing or Leasing a Device
Other than the cash price of the device, there are important costs to consider when purchasing or leasing an energy-based device, including liability, consumable, and maintenance costs.
Adding more devices to the practice can increase the practice’s liability costs. Liability costs are categorized in levels, and adding several devices can alter the category level and add substantial costs to the practice.
Considering the demographics to whom the practice caters and total costs of the device (e.g., cash resources, consumables, service contracts, maintenance fees, safety eye glasses), practices are recommended to consider the return of investment (ROI) on the device and the time each device requires to perform a procedure. For example, we have incorporated cryolipolysis to meet the body contouring and removing excess adipose tissue needs of our patients, both frequent complaints in our practice. Cryolipolysis, however, requires 60 minutes per treatment site (often requiring an average of 4 treatments to the entire abdomen) and includes a disposable insert. Notably, the ROI on cryolipolysis is less than that of neuromodulators, while the latter requires less time to perform the procedure than the former.
Expenditure on consumables requires some thought. Among device companies, manufacturers, and practices, there exists a profit-sharing model in which the device can be a bargain purchase; however, the costs of consumables/disposables are unevenly high. This is similar to the practice of purchasing a $30 razor that requires $10 razor blades every month. The practice must also consider a second source for the consumable if the company files for bankruptcy. Thus, the expense of consumables should be factored into the ROI.
Maintenance and service contracts must be included within the contract for financial consideration and for insurance purposes. Labor maintenance contracts have been estimated to be around 5 to 7 percent of the invoice value for servicing, while annual maintenance contracts are approximately 22 percent of the invoice value, which includes all parts and maintenance, after the warranty period has ended.1,9
Where to Buy or Lease Devices
There are several resources, including the web, device distributor, and device company, that can be accessed to purchase or lease an energy-based device. Anecdotally, we have purchased from all three resources (Figure 1). The standards for premarket testing, advertising, and postmarket surveillance of devices are not as stringent as those indicated for United States Food and Drug Administration (FDA)-approved medications. Device sales representatives are not subject to the same regulations that apply to FDA-approved medications.
We recommend purchasing or leasing devices from credible sources. Of equal importance, warranties and service agreement contracts must be thoroughly reviewed and assessed for reliability of service. Laser companies can offer training sessions in the clinic to providers and staff. Attending local, regional, and national meetings that provide hands-on training can also help improve understanding of these devices.
It is important to identify the point of contact of the organization/company before purchasing or leasing a device and to thoroughly research the organization/company. The point of contact should be registered in their organization/company, have the provision of provident fund account, and have a website that provides full details of the desired device.1 The practice’s mentorship network can help decipher the credibility and reputation of the organization/company.
Contracts or agreements between the practice and the seller before the purchase/lease of a device should include installation details, after-sales service, maintenance of the machine, and costs of the consumables (Table 2).1,9
Many practices will be confronted with the question of purchasing a preowned/used or new device. In some cases, device companies will sell a device that has been under demonstration to other practices. If considering purchasing a preowned/used machine, practices must enforce service contracts, ensure that the warranty of the system is intact (note: most warranties are nontransferrable), review the service reports and the age of the device, and insist that the original user manuals and appropriate safety eyewear are included with the device. A recertification fee might be requested by the manufacturer to offer further service and warranty of the device.1
Office Considerations
Regardless of the demographic and variety of devices that a practice selects, there are several other factors to address before finalizing a purchase.10,11 Energy-based devices occupy a significant amount of space. Not only are they physically large in the context of console size, but also require a dedicated portion of clinic time, space, and consumables/disposables that might not be obvious resources upon initial evaluation.
Most patients undergoing aesthetic treatments require topical analgesia. Patients require a calm office space while undergoing the downtime of numbing. Our practice includes a patient care center to accommodate these patients, where a large room separated by privacy curtains is designated for numbing of five patients at a time. Some practices perform some procedures, such as laser hair removal, without topical analgesia; however, the majority of laser procedures, including fractional ablative laser resurfacing, will not be well tolerated without analgesia.
Furthermore, aesthetic procedures require additional steps in clinic practice. Arguably, the most essential component of the aesthetic procedural process is photography.10 A high-quality camera, appropriate software, and a photography protocol are all required to have comparable before-and-after treatment photos. Photographs are critical to ensure that patients are satisfied with their treatment and to assuage any pre-existing concerns that might arise after the procedure. Our practice requires standardized photographs in which patients remove their makeup and wear a headband to prevent hair interference. For body treatments, robes are provided.
Rooms themselves also have to be equipped appropriately with the proper power supply (e.g., 110V vs. 220V outlet for certain lasers), an appropriate cooling mechanism, a smoke evacuator, ventilation, and mobility, such as cable ergonomics or general customizability, depending on the procedure.5 These features are important for the comfort of the operating physician and fire safety. Occupational Safety and Health Administration (OSHA) regulations should be clearly reviewed, and fire extinguishers should be located nearby in the case of overheating or device malfunction. This is particularly important when multiple lasers are powered on and operated in the same room at the same time.
Many procedures also require rapid follow-up. For example, patients undergoing high intensity, elevated risk procedures, such as ablative resurfacing or photodynamic therapy, typically should have one-week follow-ups in order to ensure healing is proceeding properly. These procedures also result in an intensified patient experience, including redness and high-volume peeling, that will inevitably make some patients uneasy enough to request additional follow ups. However, in most cases, the healing process is completely normal, and patients simply require reassurance.
Conclusion
As we are delving into all aspects of the business of dermatology, dermatologists often face the dilemma of whether to buy or lease an aesthetic device. Practice qualities, fields of interest, capital resources, training, and office considerations contribute to the decision making process. Dermatologists can advance their practice with these devices if proper planning is performed so that conflicts can be avoided and patient care is optimized. Ultimately, these devices provide a source of intellectual interest for the provider and the potential to offer life-changing solutions to the patient.
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- Negotiating your laser lease. The Dermatologist site. September 4, 2008. https://www.the-dermatologist.com/article/584. Accessed January 15, 2019.
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- Mackety CJ. Purchasing lasers and related accessories. Hosp Purch Manage. 1985;10:7–10.
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- Dhepe N. Minimum standard guidelines of care on requirements for setting up a laser theater. Indian J Dermatol Venerol Leprol. 2009; 75:101–110.
- Sachdev M, Britto GR. Essential requirements to setting up an aesthetic practice. J Cutan Aesthet Surg. 2014;7(3):167–169.