Investing in Practice Growth with Equipment & Technology
By: Kent Murphy
Investing in your practice with equipment and technology upgrades is one of many ways to grow your business. By expanding services, you are poised to not only provide benefits to your practice, but also to patient care. Yes, that’s right – benefits to patient care. That alone may be the best reason to upgrade equipment and technology. While there are no rules for exactly how much investment might increase your bottom line, investing done right can increase your practice’s growth potential.
When considering an upgrade to your practice, begin by asking yourself:
Will production increase, increasing cash flow?
Productivity has the potential to increase significantly with integrated computer systems that link to your insurance companies. This allows for immediate access to patient charts and billing data, connects operatories with the front desk, provides patient education and deliver patient emails. New laser equipment and digital technologies may also save valuable time at each chair.
Will the upgrade improve daily work life for me and my team?
You may find that you enjoy your practice considerably more after integrating new high-technology systems. Your new system can enhance teamwork and make dental care easier, not only for the patient but for the doctor and staff. Team members often feel proud of the high level of services the practice provides, contributing to a sense of enthusiasm in learning and practicing new techniques. This can lead to overall increased employee morale.
And, perhaps most importantly, Will the purchase improve patient care?
Much of today’s dental technology is focused on delivering more effective oral care less invasive procedures. With enhanced equipment now available for early detection of tooth decay, treatment of cavities, periodontal diseases and cleanings, patients experience significantly greater comfort. Advanced technologies also create more convenience for patients to maintain their oral health, meaning less chair time and fewer repeat visits.
So how do you know if it is the right time to invest?
Decisions about upgrading your equipment and technology are among the most important you will make as a practice owner. The financial investment can be substantial, and logistics must be carefully planned. To successfully formulate your next steps, analyze the opportunity. Two classic tools for this are the Strengths, Weakness, Opportunity, Threats (SWOT) Analysis and the Weighted Pro/Con ranking worksheet. Both of these resources are available online. Next, consult with your advisors (tax advisor, attorney, lender, etc.) and share your findings. You may see things in a whole new light, impacting your timing and investment.
But the decision does not end with one purchase or investment. Dental technology is advancing every year with new materials, equipment and software being introduced continually. For that reason, purchasing advanced technology will likely not be a one-time investment. To stay at the forefront of the industry, consider developing a technology and equipment upgrade plan that allows for investment on a schedule you create.
Setting meaningful goals for productivity improvements to offset your technology investment is another way to evaluate and plan for upgrades. For instance, track how long it currently takes to perform each practice function – from billing and sending out appointment reminders to scheduling hygiene appointments and specialty procedures. How many additional patients could you see if the team had extra time? What services can you perform in-house that you previously outsourced? By answering questions like these, you can begin to see how your investment costs translate for you, your team and your patients. Decreasing chair time and increasing patient and team satisfaction is hard to measure, but you will see it in smiles every day! You might even have time to implement that marketing plan you created when you opened the practice.
Consult your tax advisor when making an investment as they should be able to help you outline a comfortable technology investment program that keeps your practice current and competitive. Tax laws change, so keep this advisor close when making purchases to ensure your return accurately reflects your investments. To help ensure a smooth implementation of your program, you might consider working with a lender that specializes in dental practice financing and understands your particular business needs.
Once you have a plan, your lender will help you determine whether your project is financially feasible. Expect to provide two years of personal and practice tax returns, current profit and loss statement and your preliminary plan. Credit decisions for practice financing are typically based on an assessment of a practice’s cash flow and your ability to repay your loan with enough left over to cover your livelihood and other expenses. A credit evaluation can vary depending upon the lender you choose. Generally speaking, however, low debt yields higher credit limit decisions and high debt results in lower credit decisions.
Another reason to have an upgrade plan is to simply keep up with the competition. With new doctors graduating and possibly having worked on the most up-to-date equipment, you might find yourself faced with a high-tech neighbor. Investing in advanced technology demonstrates an important first impression to your patients: you take their oral health seriously, are up-to-date with current techniques and have the knowledge to assist with their dental needs.
And, don’t forget your team. Advanced equipment and technology may make the workday easier, but it also brings change to the office environment. Don’t assume they are all on board. Include your team in the process from the beginning. Discuss your thoughts and reasons for the change(s). Listen to their concerns. Remember everyone will need to be trained, so allow for different learning styles and be prepared for some resistance. In the end, if you have done your homework, listened to everyone’s concerns and communicated your vision and goals, your team should understand how a little disruption can make a wonderful change for the better. Take time to celebrate and recognize your team for their efforts during this process. Celebrating can build synergy and momentum within the office.
With everything you need to consider and still keep your practice running, it is important to take time and do your homework. Working with your trusted advisors is the first step to potential success. So if it’s at all feasible for your practice, now may be a good time to start investing in some of today’s advanced technology.
Kent Murphy is the Business Development Manager for Wells Fargo Practice Finance in Colorado, New Mexico and El Paso TX. He enjoys speaking doctors at all stages of their careers and with students to introduce the nation’s next great clinicians to important business concepts and speakers.
The Metro Denver Dental Society is a not-for-profit component society of the American Dental Association and the Colorado Dental Association.