What type of lease does a hospital not have ownership rights during or after the leasing period?

An operating lease is characterized by the lessor retaining ownership rights of the asset during the lease term and typically at the end of the lease period, as well. In this arrangement, the hospital, as the lessee, has the right to use the asset but does not gain ownership, allowing for flexibility in asset management. Operating leases are often associated with short-to-medium-term usage and do not appear on the balance sheet in the same way capital leases do, making them financially advantageous for entities looking to avoid long-term financial commitments associated with asset ownership.

In contrast, a capital lease, also known as a finance lease, indicates that the lessee effectively acquires ownership rights at the end of the lease term, or that it assumes substantial risks and rewards of ownership during the lease. A finance lease is characterized by similar elements, where ownership is typically transferred to the lessee at the end of the term. A service lease, on the other hand, generally pertains to the provision of services rather than the leasing of an asset, further distancing it from the context of ownership rights. Thus, the operating lease clearly delineates the lack of ownership rights for the hospital, making it the accurate choice.