EQUIPMENT LEASING ASSOCIATION

Transcription

1 EQUIPMENT LEASING ASSOCIATION Healthcare Equipment Leasing U.S. Market Dynamics and Outlook, October 25, 2005

2 Healthcare Equipment Leasing Market Size and Growth Leasing Market Drivers Leasing Competitors Opportunities and Strategies 2

3 Market Size and Growth Equipment leasing growth continues Influenced by cost reduction/capital budget pressures Related need for state-of-the-art equipment $7 billion in U.S. leasing volume (2005) Average annual rate of growth estimated at 7% 3

4 Market Size and Growth (Cont.) Market size represents relatively low penetration rate for lease financing U.S. market projected to exceed $8 billion by

5 Market Size and Growth (Cont.) $ Billions $8.2 $7.0 $7.5 $6.3 $6.5 $5.8 $5.4 $ (E) 2006(E) 2007(E) 5

6 Market Size and Growth (Cont.) Imaging diagnostics represents largest share of healthcare lease financing Many other equipment categories where leasing is found 6

7 Market Size and Growth (Cont.) Middle-market ticket sizes predominate. Small-Ticket 15% Large- and Micro-Ticket 1% Middle- Market 84% 7

8 Leasing Market Drivers Healthcare Expenditures Technology Outpatient Care Payors Acceptance of Leasing Equipment Distribution Vendor Attitudes Full-Solution Financing Internet Equipment Aftermarkets 8

9 Leasing Competitors Independent leasing companies enjoy largest share. Captives 9% Bank Affiliates 41% Independents 50% 9

10 Leasing Competitors (Cont.) GE Healthcare Financial Services Bank of America Leasing CIT Healthcare CitiCapital De Lage Landen Financial Services Key Equipment Finance Marcap Corporation Matsco Companies National City Healthcare Finance US Bancorp Healthcare Finance Johnson & Johnson Finance Siemens Financial Services 10

11 Opportunities and Strategies Healthcare industry is multitude of niches Product line extensions: Reagent Rentals Pay-Per-Procedure Financing Tax-Exempt Leasing Outpatient Center Financing Practice Acquisition Financing 11

12 Opportunities and Strategies (Cont.) Market Segmentation Industry Specialization Equipment Vendors Full-Solution Financing Execution Flexibility Internet Capabilities 12

13 About R.S. Carmichael & Co. Marketing research and management consultants Specialists in equipment leasing and other commercial finance industries for 30 years In-depth studies for the ELA and others on opportunities and strategies

14 Long-Term Trends in Healthcare And Their Implications for the Leasing Industry Cindy Eddins Collier, MHA, MSA, CPA, ABV, CVA, CMPE October 25, 2005 Equipment Leasing Association

15 Cindy Eddins Collier, MHA, MSA. CPA. ABV, CVA, CMPE Founder and CEO Valuation Solutions 7760 Olentangy River Road, Suite 124 Columbus, Ohio

16 Richard D. Crawford Managing Director TJ Capital Group, LLC PO Box 5767 Charlottesville, Virginia

17 Project funding provided by

18 Major Categories of U.S. Health Expenditures, 2004 Prescription Drugs, 12% Other, 23% Nursing Home & Home Health, 8% Dental, 4% Hospitals, 31% Physician & Clinical Services, 22% Source: Centers for Medicare & Medicaid Services (CMS)

19 Historical and Forecasted U.S. Health Expenditures as Share of Gross Domestic Product (GDP) Between 2001 and 2011, health spending is projected to grow 2.5 percent per year faster than GDP, so that by 2011 it will constitute 17 percent of GDP. Percent of GDP Actual Projected Calendar Years Source: CMS, Office of the Actuary, National Health Statistics Group.

20 Percent of GDP Spent on Healthcare by OECD Country, The U.S. has had a higher share of GDP spent on health than the OECD median for the past four decades Percent United Kingdom Japan Spain Italy* Sweden** Austria Australia** Greece* Canada Germany*,** Switzerland United States Median: 3.9% 5.1% 6.8% 7.5% 7.9% *For some years, no data was available. **1997 data was used because 1999 was not available. Note: The data is arrayed by spending growth from 1990 to The medians include all OECD countries. Source: OCED Health Data 2002 Source: OECD Health Data 2002.

21 National Health Expenditures Per Capita, National health spending per capita is projected to increase rapidly over the next decade. $10,000 $9,000 Actual Projected $9,216 $8,000 $8,228 $7,000 $6,926 $6,000 $5,000 $4,000 $3,000 $2,000 $2,477 $3,183 $3,698 $4,177 $5,039 $5,757 $1,000 $1,872 $ Calendar Year Source: CMS, Office of the Actuary, National Health Statistics Group.

22 Healthcare Spending Per Capita by OECD Country, $4,500 U.S. spending is significantly higher than other OECD countries. $4,373 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 $3,080 $2,739 $2,428 $2,451 $2,226 $2,144 $2,058 $2,061 $1,844 $1,882 $1,836 $1,748 $1,666 $1,676 $1,600 $1,469 $1,492 $1,517 $1,321 $1,300 $1,206 $1,245 $1,083 $1,058 $972 $813 $850 $824 $881 $658 $662 $701 $710 $522 $577 $444 $328 $270 $240 $14 $83 $74 $144 $89 $130 $151 $26 $48 $87 $159 $64 $130 $206 $260 $223 $288 $349 $53 $72 $109 $90 $136 $144 Spain United Kingdom Sweden*** Japan Italy** Australia*** Austria Belgium France Canada Germany Switzerland United States Median: $64 $146 $591 $1,270 $1,798 *Expenditures in U.S. dollars using purchasing power parity rates. **For some years, no data was available. ***1998 data was used because 1999 was not available. Note: The data is arrayed by expenditure levels for The medians include all OECD countries. Source: OECD Health Data 2002.

23 Table 3.23 Personal Health Expenditures by Type of Service and Percent Medicaid Paid, 2000 Total personal health spending in 2000 was $1,130.4 billion; Medicaid accounted for 17% percent. Hospital Care $412 Billion Medicaid pays 17% Physician and Clinical Services $286.4 Billion Medicaid pays 7% Prescription Drugs $121.8 Billion Medicaid pays 17% Nursing Home $92.2 Billion Medicaid pays 48% Dental Services $60.0 Billion Medicaid pays 4% Other Professionals $39 Billion Medicaid pays 4% Other Personal Health Care $36.7 Billion Medicaid pays 65% Home Health Other Medical Nondurables $32.4 Billion Medicaid pays 18% $31.2 Billion Medicaid pays 0% Medicaid Spending Other Payers Medical Durables $18.5 Billion Medicaid pays 0% Personal Health Spending (Billions of Dollars) Source: CMS, Office of the Actuary, National Health Statistics Group.

24 Major Forces Impacting the Future Growth of the Healthcare Industry There are six major forces impacting the future growth of the Healthcare industry. These are: An aging U.S. population Growing labor shortages New medical treatments Technology Globalization Government policy

25 Projections on U.S. Population Over 65 Number of Medicare Beneficiaries The number of people Medicare serves will nearly double by Medica re Enroll ment (millio ns) Disabled & ESRD Elderly * * * Calendar Year * Numbers may not sum due to rounding. Source: CMS, Office of the Actuary.

26 Changing Share of U.S. Population in Major Age Groups % Under 18 31% Years 61% 65+, 20% Under 18, 24% Years, 56% 65+, 12% Under 18, 26% Source: U.S. Census Bureau Years, 62%

27 Healthcare Employment Growth Projections, Over the next decade, Healthcare employment is expected to grow at a rapid rate. 100% 90% General Healthcare Occupations Fastest Growing* Specific Healthcare Occupations Employment Growth 80% 70% 60% 50% 40% 30% 20% 15% 19% 25% 33% 62% 57% 53% 47% 26% 10% 3% 0% T o tal Emplo yment Gro wth Service Secto r M anufacturing Secto r Health Care P ractitioners & T echnical Occupatio ns Health Care Suppo rt Occupatio ns P erso nal & Home Care A ides M edical A ssistants P hysician A ssistants Home Health A ides R.N.s *Note: Five of the nation s top 10 fastest growing occupations are in Healthcare. Source: Dept. of Labor, Bureau of Labor Statistics. Monthly Labor Review. November 2001.

28 Healthcare Lease Contracts by Industry Classification (SIC Code) Specialty Outpatient Home Health Care Outpatient Care Fac. Medical Laboratories Hospitals Nursing Facilities Health Practioners Office Dentists Physicians Health Services No SIC Code

29 Healthcare Lease Contracts by Contract Size Unknown size, 51 $1 million and over, 29 $500, ,000, 42 $100, ,999, 251 $50,000 99,999, 409 $25,000 49,999, 731 $0 24,999, 4069

30 ELA Report and Article Available October 2005

31 Questions or Comments? Cindy Eddins Collier, MHA, MSA. CPA. ABV, CVA, CMPE Founder and CEO Valuation Solutions 7760 Olentangy River Road, Suite 124 Columbus, Ohio