Atul Sasane, CEO, Aucnet Sanrad India in an interview with Express Healthcare, talks about the unique pay-per-use model, which has been designed for immediate start-up of diagnostic centres and also updates about the company’s future activities
How does Aucnet Sanrad India help imaging diagnostic centres?
Diagnostic centres are facing immense competition due to increasing number of new centres, and newer technologies becoming available. To keep up with competition, they have to keep investing and procure the full range of equipment – from simple X-ray to CT scanner and MRI. But not all centres can afford to invest large amounts required to procure and maintain high- end equipment, particularly 1.5T MRI.
That is where Aucnet Sanrad India helps diagnostic centres by offering pay-per-use rental solutions. We supply and install our CT/ MRI machine imported from Japan, as suitable and desired by the customer. Cost of machine procurement, installation, annual maintenance, and even cost of replacing parts (in case of failure) is borne by us. Customers can focus on optimising operations of the centre and clinical matters.
What are the equipment offered on pay-per-use rental contract?
We offer X-ray tubes for CT scanner, CT scanners and MRI systems on pay-per-use rental contract. X-ray tubes include the full range from 2MHU, 4MHU and 7.5MHU tubes. For CT scanners, the focus is on 4 slice, 16 slice CT scanners. We also offer other CT scanners, depending on the customers’ requirements. Leading edge 1.5T MRI systems from Japan are also included in our company’s offering.
How is the response to the pay-per-use rental offering?
In the past one year, we have customers for all three types of equipment – 1.5T MRI, CT scanner as well as X-ray tube for CT scanners.
The trend among customers is to get 1.5T MRI systems on the pay-per-use contract. The acquisition cost of 1.5T MRI systems is high in case the customer purchases it from the market. Over and above the cost of the system, the maintenance costs can be prohibitively high. Our solution is particularly suited to solve the issues of getting and maintaining MRI system.
Over the next year we expect more and more diagnostic centres to subscribe to our solution for MRI.
How is your pay-per solution different from the leasing solutions offered by manufacturers and finance companies?
Leasing solutions are based on charging ‘interest’ on the cost of the equipment. Eventually, the customer ends up paying the full cost of the equipment plus the interest cost for the term of the lease.
Aucnet Sanrad India is not a financing company, so our solution is not based on charging interest. Instead, we share revenues with the customer, based on usage of the equipment. In this way we share the risk and rewards. Thus for a low usage in any month, the total rental fee for that month will be lower.
Another difference is that we bear all the costs related to the machine, including parts. In case of CT machines, replacement of X-Ray tube is a major issue. Customers have to keep a constant watch on the condition of the tube to ensure smooth operation of their centre. We take full responsibility of the tube replacement also, which is one of the major advantages of using our pay-per-use rental. All costs related to the machine are covered in a single ‘per slice’ fee. There are no hidden costs, and customers can be assured that the machine in their premises is always in best operating condition, at our responsibility.
Our solution also offers the same peace of mind to owners and operators of imaging diagnostic centres. They can focus on the scan, while we take care of all other hassles related to the machine.
Why use pay-per-use?
100 per cent financing: No down payment, unlike other financing.
Maintain cash: Hold on to cash so it can be used for other areas – expansion, improvements, marketing or R&D.
Manage risk: Mitigate the uncertainty of investing in equipment your business needs, until it delivers a return.
Hedge against inflation: you don’t pay the total cost of equipment up front in today’s dollars.
Plan expenses: For cash flow and business cycle fluctuations. Maintain greater certainty in budgeting by setting customised rent payment to match cash flow and even seasonal cash flows. You pay only for what you use.
Keep up to date with new technology: Acquire more and better equipment than you could have without financing and even upgrade or replace it within the term.
Avoid getting stuck with out-of-date equipment: We bear the risk of the equipment from becoming obsolete.
What are the financial terms and conditions?
The pay-per-use rental fee is based on a variable tariff card. For high usage the rate per slice goes down. So customers end up paying a lesser portion of the patient scan fee to us. More the number of patients seen by the customer, more is the share of the scan fee which he gets to keep for himself.
How do you ensure that the machine will be working in good condition?
Our partners Sanrad Medical Systems support us for all installation and maintenance activities. As you are aware, Sanrad are the leaders and the most trusted name for supply and maintenance of CT and MRI. Sanrad’s infrastructure and skilled manpower ensure that the machine which we offer is always leading edge, and maintained in the best condition.
What are the tax benefits of pay-per-use as compared to the benefit of claiming depreciation when purchasing equipment?
When a customer purchases equipment, he can claim tax benefit for depreciation of the value of the equipment. However, according to the tax regulations, there is an upper limit on the maximum depreciation that can be claimed by the customer. Usually the limit is only 15 per cent of the residual value of the equipment. This benefit is fixed and is not related to the revenue which the equipment is generating.
In case of pay-per-use, the full amount which is paid out as rental fee is treated as expense, for tax benefit. Since pay-per-use fee is linked to business volume, more the patients seen by the customer, more is the tax benefit.
Which type of diagnostic centres are benefitting from your offering?
New and emerging diagnostic centres face the biggest challenges in finance for procurement of CT and MRI systems. Not only is the total capital cost large, but the lending and leasing terms are also harsh on these newcomers. But at the same time, established diagnostic centres also have to keep upgrading their equipment and in many cases have to start “satellite” centres to cater to their increasing work load.
We have customers and enquiries from both centres who are starting from scratch, as well as from established centres looking for machine replacement/ upgradation. Initially, we are offering this solution in Western and Southern parts of India and would slowly scale up to cover whole of India. As the costs of imaging diagnostic equipment keeps rising, pay-per-use rental solution will become the preferred solution for most of the entrepreneurs in the medical profession.
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