Aucnet Sanrad India Private Limited is a joint venture between Aucnet Medical Inc of Japan and Sanrad Medical Systems of India to supply, install and maintain high end medical diagnostic equipment from Japan. The unique pay-per-use model is designed for immediate start-up of diagnostic centres, without heavy capital investment or worries of expensive recurring maintenance costs. Express Healthcare interviews Atul Sasane, CEO to understand the benefits of this scheme
What are the challenges faced by imaging diagnostic centres in India?
The number of imaging diagnostic centres is increasing, driven by strong demand as modern treatment increasingly depends on inputs from imaging centres. To keep up with the growing competition, centres have to maintain equipment to cover multiple modalities – from X-ray, DR, ultrasound, CT scanner to MRI systems. Costs of such equipment, particularly CT and MRI are high.
Arranging the finance for procurement is daunting, and the most difficult part. Annual maintenance costs of these equipment are almost unaffordable for most customers. Any lapse in maintenance can result in breakdowns having severe impact on the operation of the centre, leading to huge revenue loss with every hour of down time of the machine. All these issues are multiplied for customers who own and operate multiple diagnostic centres.
In order to minimise the risk and difficulties to the customer, we are providing a complete solution to cover finance, installation, training and maintenance packaged in one simple ‘pay per use’ rental fee.
What is pay-per-use rental solution offered by Aucnet Sanrad India?
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. The customer need not worry about any of the issues related to the machine. This takes off a huge burden so that customers can focus on optimising operations of the centre and clinical matters.
All costs inclusive plan
How is it 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.
Can you explain in more simple terms about the benefits of pay-per-use solution?
As a simplistic comparison, our pay-per-use solution is like riding a taxi, whereas a financing solution is like buying a car. When we ride a taxi, we only focus on going from point A to point B, without even thinking about the hassles of owning or maintaining the taxi. 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.
Will customers end up paying more if they use the equipment more?
No, 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?
Masayoshi Yamamoto, President of Aucnet Medical, Japan, also stresses the importance of growing business through customer satisfaction. Only the best quality equipment is handpicked for pay-per-use in order to reduce the overhead cost of maintenance.
Our partners Sanrad Medical Systems will 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.
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 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.
Is this solution suitable for the new and emerging imaging diagnostic centres?
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.
Our solution is the best option both for centres who are starting from scratch, as well as for established centres for machine replacement/ upgradation. Long and tedious negotiations with manufacturers, finance companies, service providers are eliminated. Instead there is only one simple ‘pay-per-use’ contract.
Where do you see this market in the next five years?
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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