I know most of you won’t be able to identify with this memory, but every fall when I was a kid, the Sears Christmas Catalogue would arrive with full-page color photos of every toy available for the season. It was remarkable. It got my mind reeling with the possibilities of Christmas morning. It was subtle, but it always moved from anticipation of what might be in the catalogue, to hope that Santa might bring me the desires of my heart. I looked forward to that two months of searching the catalogue leading up to the day.
Fast-forward to our current situation as dentists and much the same thing takes place. With the exception of the last 14 months, as a dentist, I always looked forward to seeing the large national and state dental meetings so I could troll the endless rows of new products and equipment. With COVID and a challenging start to the New Year, I exchanged the travel and walking the exhibition halls to looking at Dental Economics and other publications hawking their wares of the new, the best, and the extraordinary new systems, equipment, and dental supplies. Certainly, a poor excuse for the Sears Christmas Catalogue but many of the same feelings arose.
Far too many of us become enamored with the latest and greatest as if throwing money at a shiny object could turn around our mediocre practices into the next level Super General Dental Practice. Just today, I got a got a text from Bill Ladd from my go to dental CPA team of Duckett and Ladd (www.duckettladd.com). What started off as just a text about a client wanting to purchase some equipment ended up with me calling Bill Ladd back and we were off to the races. The question was how I looked at dentists purchasing new equipment and this scanner in particular. We spoke and after hanging up I sent him an abbreviated outline of my thoughts. I wanted to share this with each of you, hoping that rather than chasing the shiny object syndrome, you would approach the purchase as a strategic action based on historical data and future plans so that rather than an expense, this would be an investment returning at least a 4:1 return (ROI).
NOTE: This happened to be a scanner and I knew nothing about the practice or doctor but you can still use this format to become an educated consumer and consummate businessperson, making the decision from a profit first perspective.
The ideal way to approach any purchase other than basic supplies should be:
- Define what you would use this equipment for.
a. Crown and Bridge for in-house or remote milling
b. Orthodontics for a Clear Choice or Invisalign appliance
c. 3-D scanning for lab fabrication
- Compare this brand of scanner to every other scanner available.
a. Length of design for the software and the actual scanner
c. Reviews for comparison and quality perception by the long-term purchaser
d. Longevity of the software: 18-24 months is normal (lease might be better)
e. Number of units sold and in use: Many CEREC units gather dust because of not being utilized in a real dental setting due to cost compared to outside lab, time cost in turnover of an operatory, or diminished demand by the customer.
- What is the lifetime cost of manual impression compared to digital scanner?
- Which gives a superior final product?
- What percentage and what dollar amount is the office currently spending on this procedure to justify making a major purchase like this?
a. There may not be enough usage or demand to warrant the extra cost when results are not superior for time savings and final product.
b. It is a mistake to think that the “shiny object” or technology will grow your practice. It should be an adjunct to an already profitable office. Buying new stuff will not push patients to your practice.
- Overall profitability of the office when looking at overhead.
a. Overhead debt is zero or approaches a steep trajectory of arriving there.
b. Bread and Butter dentistry is profitable and creates a cushion for expanding your services or purchasing of other technology. Profit is built and sustained on doing the fundamentals well. At that point you look to expand the range of services that might primarily fulfill an existing demand from your demographic. Never assume the opposite: Having the technology increasing the demand. It never works that way.
c. Make sure that there is not a historical trend of the office buying shiny objects only to see them languish in a closet with no track record tied to the increase of new patients and production accompanied by a lowering of overhead as the production as a direct result of that purchase increases.
d. There should not be a history of not seeing a ROI of at least 4:1 (marketing, staffing, technology, etc.). Dentistry is filled with dentists who are looking for the next best thing while never exceeding being just another average practice.
- Is there a clear understanding by the doctor of the cost benefit ratio of such a purchase? A spread sheet should supply a “check the boxes” type of verification to make this a foundational piece of homework to ensure that this is a strategic purchase and a planned step in growing market share and increasing productivity, while lowering overhead.
- Simply stated: Does the purchase make sense? In the book The Goal by Eliyahu Goldratt (see reference last week), the author makes a strong argument against “common practice” (everybody is doing this so I need to do it. Herd mentality or becoming a “sheeple” vs. “Common Sense”. Actions, purchases, and strategies that are common sense will always pay huge dividends.
I do think a spread sheet to compare the cost/benefit ratio would be doable, but there is also some important self-examination that each doctor should do before running out to buy the latest greatest whiz-bang new technology. Scanners are the wave of the future, but I would argue that there has not and is not a clear winner when we look at the designs and software of competing companies. I anticipate that a clear winner will appear within the next 6 to 18 months. They will have the depth of research, feedback from users, and financial resources to grow the product and provide the demand with a fair price and great support.
Don’t be blinded by the flashy ads and sales pitches. Don’t be persuaded by the slick sales person working on commission to sell something to you because they are just interested in the sale. Do the research, process the data, and if you can get that 4:1 return on investment in the first year, go for it. This is how you Summit.
Mike Abernathy, DDS
Jared Duckett (Duckett & Ladd) has created a great tool for assessing the return on investment for your purchases. In the form of a spreadsheet, The ROI Calculator will allow you to automatically do the math and come up with the conclusions: To buy or not to buy. Just contact him at [email protected]. You will be glad you did. (MA)