October 02, 2023

Navigating Higher Interest Rates: Buying Equipment for Your Practice

As a dental or medical practitioner, the decision to purchase new equipment or expand your business is crucial to staying competitive and providing a high level of care to your patients. However, the current economic landscape may present some challenges, as interest rates have risen and the cost to borrow money is higher than it was a few years ago. In addition, the banks’ lending requirements have tightened as the money supply has shrunk through steps taken by the Federal Reserve. In this article, we will explore how medical professionals can effectively navigate the impact of higher interest rates when buying equipment for their practices.

Understanding the Impact of Rising Interest Rates

Before delving into strategies to manage higher interest rates, let's first understand the implications of this economic shift. When interest rates rise, the cost of borrowing money increases. Loans for purchasing equipment or expanding your practice become more expensive. Additionally, higher interest rates can impact the amount of your monthly loan payments, potentially leading to reduced cash flow within the practice.

As a medical professional, it's essential to be proactive and well-informed about the current financial climate. To make wise decisions about buying equipment for your practice, consider the following steps:

1. Assess Your Current Financial Situation

Is your practice running efficiently and are cost categories within the industry benchmarks? Before rushing into any financial decision, take a step back and assess your current monetary situation. Review your practice's revenue, expenses and cash flow. Evaluate how much debt you currently carry and how much of your budget is allocated to loan payments. Understanding your financial health will give you a clearer picture of what you can afford in terms of new equipment.

2. Prioritize Equipment Needs

Now that you have a distinct understanding of your financial situation, it’s time to prioritize the equipment needs for your practice. Identify the critical pieces of equipment that will enhance patient care, improve efficiency or boost production. By lining up your needs, you will be able to implement upgrades in a proper sequence without a drag on cash flow. Focus on the essentials first and consider postponing non-urgent purchases until your cash flow stabilizes or the cost of borrowing decreases.

3. Explore Different Financing Options

Higher interest rates do not necessarily mean that borrowing is off the table. It is essential to explore various financing options to find the most favorable terms. Approach different lenders and financial institutions to compare interest rates, loan terms and repayment schedules. Don't hesitate to negotiate to secure the best deal possible by having multiple banks compete for your business. You may also consider leasing equipment instead of purchasing outright, as leasing can offer more flexibility and lower upfront costs if borrowing the dollars is not feasible.

4. Refinance Existing Loans

If your practice already has loans, you may find more attractive rates by refinancing your existing debt. Lowering your interest rates can help reduce the financial burden and free up funds to invest in much-needed equipment. Although you may be refinancing a lower interest rate loan as part of a repacking of debt, the effect on cash flow may be beneficial to your practice.

5. Set Realistic Budgets

In the face of rising interest rates, setting practical budgets becomes even more critical. Analyze your projected cash flow and consider how much of it you can allocate to loan payments without jeopardizing your practice's financial stability. Avoid overextending yourself financially, as this can lead to significant challenges down the road. Knowing the practice expense benchmarks and where your office stands is a critical exercise for business owners.

7. Consider Second-Hand or Refurbished Equipment

While it's tempting to buy the latest state-of-the-art equipment, consider exploring second-hand or refurbished options. Pre-owned equipment can often be just as effective as brand-new items but come at a fraction of the cost. Make sure to research reputable sellers and verify the quality and condition of the equipment before making any purchase.

8. Delay Non-Essential Purchases

In a period of higher interest rates, it's prudent to postpone non-essential purchases. Focus on investing in equipment that directly impacts patient care and practice production. Delaying non-essential purchases can help you conserve funds and better prepare for potential economic fluctuations. If you are considering a practice sale, buying new equipment will likely not provide a positive return and the debt will have to be paid down before a deal can close.


The impact of rising interest rates on buying equipment for your practice requires careful consideration and strategic planning. By assessing your financial situation, prioritizing equipment needs, exploring various financing options and setting realistic budgets, you can navigate the challenges posed by higher interest rates. Moreover, don't shy away from refinancing existing loans as these actions can significantly impact your ability to secure favorable financing terms.

Remember, it's essential to strike a balance between investing in the growth of your practice and maintaining financial stability. With prudent financial management and a focus on patient care, your practice can thrive even in times of economic change.

Buckingham’s practice integration advisors help practitioners achieve financial success by incorporating a thought-out and customized approach to managing your practice. We are happy to help you understand how a capital investment fits into your business and can help support your professional and personal financial plan. Schedule a conversation with us today!

About the author

Brian is a member of Buckingham’s practice-integrated wealth management team, providing comprehensive financial planning services to help clients understand and achieve their wealth goals. He is enthusiastic about his role on a team that strives to deliver an exceptional client experience. Brian appreciates the importance of a well-rounded team working collaboratively to develop, implement and monitor a plan that helps clients achieve their distinct goals.

For informational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third party data and may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article. R-23-6272

This commentary originally appeared October 2, 2023 on dentaltown.com.

About the Author

Brian Roemke

Practice Integration Advisor

As a practice integration advisor, Brian supports the practice-integrated wealth management team, providing comprehensive financial planning services to help Buckingham Strategic Wealth clients understand and achieve their financial goals.

Brian is enthusiastic about his role in supporting a team that strives to deliver an exceptional client experience. He appreciates the importance of a well-rounded team working collaboratively to develop, implement and monitor a plan that helps clients achieve their distinct goals.

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