Equipment Finance Advisor recently spent time with Larry Stevens, President and CEO and Brent Allen, EVP of Sales at Utah-based Med One Capital. In the following interview, the two discuss Med One Capital’s simple and straight forward prescription for success: offering a suite of comprehensive medical equipment related products tailored to the specific needs of hospital borrowers.
In April of this year, Equipment Finance Advisor spoke with four leaders at bank affiliated leasing companies to get a sense of how of the industry was progressing in 2014. The general consensus was that the equipment leasing and finance business is headed in a positive direction in nearly every sector. One notable exception was in healthcare equipment, which one executive characterized new business volume as being on the lighter side. With their observations in mind, Equipment Finance Advisor decided to take the pulse of healthcare equipment finance from the perspective of an independent. We therefore took the opportunity to speak with Larry Stevens, President and CEO of Utah-based Med One Capital and his long-time colleague Brent Allen, Med One’s EVP of Sales.
While Med One Capital was launched in 1991, Stevens and Allen are seasoned equipment leasing executives. Stevens, who landed his first job in the industry in 1967 at IDS Leasing notes, “Brent and I have witnessed a lot of changes and turmoil though the years. Be it the very first introduction of FASB 13 and the end of the Investment Tax Credit to the accounting boards trying to change the accounting rules, there has been a good deal of upheaval in our industry.”
In spite of the industry upheaval, the two persevered and worked with one another first at FMA Financial, a small-ticket vendor leasing company based out of Salt Lake City and then again for a medical equipment rental company called Medirec. Stevens recalls, “Medirec was a peak need provider of critical care equipment to hospitals. They had a great business that covered a good share of the U.S. but they were strictly a medical equipment rental company. When Brent and I joined, they had wanted us to round out their offering by starting a leasing company, which we did very successfully until 1990.”
Allen continues, “That company we started for Medirec was called Cura Financial and when Medirec was sold, Larry and I both saw the handwriting on the wall … the new owner didn’t bring much to the party. It was at that point that we launched Med One Capital.”
A Straightforward Approach Pays Off
Today, Med One has more than 3,000 leasing customers of which 95% is comprised of acute care hospitals. Its footprint is nationwide and extends northward into Canada with most of its leasing operation located in Utah. While Med One Capital’s staff exceeds 100 employees, the executives note that 40 associates are dedicated to the company’s equipment leasing business. Through its numerous vendor finance programs, the company casts a much wider net. Stevens explains, “While we have a relatively small footprint directly in the hospital world, we have somewhere between 2,000 to 3,000 vendor sales reps who introduce our financing programs when they are out selling their products to hospitals.”
“Because we serve only hospitals, our underwriting approach and equipment acquisition models are specialized for that market. Rather than taking a blanket approach, we try to tailor every situation to meet the needs of our customers.”
As such, Med One Capital’s mission statement is a simple one: We make medical equipment available. With that in mind, Stevens notes that transaction sizes range from $10,000 upward to several million. “We do the gamut of transaction sizes and we aren’t locked into any particular ticket size. For example we booked a $13 million lease at the beginning of this year, but our average ticket size is probably around $250,000.”
In terms of Med One’s mission, Allen adds, “When we started Med One, we realized that we needed to be different than everybody else. We adopted an innovative approach in which we are extremely responsive to our customers and do whatever it takes to get a deal done … that has been our goal and our philosophy. For example, our documentation has gotten simpler and simpler over the years.”
Med One’s approach in this regard hasn’t gone unnoticed. In a recent article discussing the ways in which specialty leasing companies had changed the landscape of vendor finance, Med One was mentioned for its “audacious approval rates and seemingly unsophisticated documentation requirements.” Steven says, “I had to chuckle … we do have a high approval rate, and that’s because we specialize in one kind of customer. Because of that specialization, we can generally find a way to get a deal done.
“To add on to what Brent mentioned earlier, in our first few years of being in business, we used to propose deals with some standard, heavy duty lease documentation. We had a return ratio of 10% or less. We didn’t understand why and when we followed up as to why deals weren’t closing, in almost every case, we found out the documents were sitting on top of the hospital CFO’s or attorney’s desk. So we started to simplify our documentation and once we did, we saw that things began to turn.”
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