Mobile dental units: Leasing or buying? A dollar-cost analysis

Oscar Arevalo, Daniel M. Saman, Alice Bonaime, Judy Skelton

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

The decision to acquire a mobile dental unit is based on a standard capital budgeting analysis. The next step is to determine whether to obtain the use of the mobile dental unit by borrowing and purchasing or by leasing. As a financing mechanism, leases are simply another way of borrowing money to pay for the asset. Objective: To compare lease vs. debt as financial vehicles to acquiring a mobile dental unit. Methods: An estimate for a new mobile unit was obtained. Lease and loan proposals from financial lenders were collected. A cost of capital rate was chosen for comparison. Cash flows associated with borrowing and leasing vs. buying were determined for two different scenarios: for profit (FP) vs. not-for-profit (NFP), at 5 years. A dollar-cost analysis was utilized to determine the option with the lowest capitalized value. Results: There was a net advantage to buying vs. leasing for both for FP and NFP organizations. Due to tax advantages, owning and leasing were substantially less expensive for FP than for NFP. Slight decreases in the monthly lease payments would make leasing competitive to the buying approach. Conclusion: Exploring alternative financing vehicles may allow dental programs to expand their services through the acquisition of a mobile unit. Though programs generally own assets, it is the use of the asset which is important rather than the ownership. Dental programs can find leasing an attractive alternative by offering access to capital with cash-flow advantages.

Original languageEnglish (US)
Pages (from-to)253-257
Number of pages5
JournalJournal of Public Health Dentistry
Volume70
Issue number3
DOIs
StatePublished - Jun 2010
Externally publishedYes

Keywords

  • access
  • financial management
  • healthcare economics and organizations
  • oral health

ASJC Scopus subject areas

  • Dentistry(all)
  • Public Health, Environmental and Occupational Health

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