When you own a dental practice, there are many considerations to be made before making investments such as purchasing new machines. How do you know if something is worth investing in? At the heart of this question are three letters – ROI or Return on Investment. This phrase is thrown around a lot when talking about making financial decisions, but a simple ROI formula may not be sufficient as the only guide before making an investment decision. In this article, we discuss the various aspects to consider before making an investment so that you can make better decisions in your dental practice.
Firstly, what is ROI anyway? Simply put, ROI = (Gain from Investment - Cost of Investment) / Cost of Investment. Unfortunately, this ROI formula is not as simple to calculate as there are many factors which are not necessarily computable – for example, patient satisfaction. While not computable, the increase in patient satisfaction is likely to lead to increased revenue i.e. gains, and should hence not be ignored. It is important to look at ROI over the lifetime of the investment rather than just over a short period of time. In doing so, you will be able to get a more accurate picture on whether your initial investment would bring big gains in the long run.
As with any business, the most important point to consider is profitability. Profit = Total Income – Total Expenses. Any investment is an increase in expenses which would cause profit to initially fall if total income remains the same (which is likely for a short period of time). However, that should not discourage you from investing because the profit can increase dramatically after, given the right investment. So, what factors should you look at before deciding whether or not to make an investment for your dental practice? An important question to consider is – “What will this investment do for my practice over the next year and beyond?”
Getting New Patients
Before making an investment decision, you need to first assess your practice in terms of what your weaknesses and strengths are. Will this investment enable you to leverage on your strengths or will it fill in the gaps where your practice is lacking? If the investment is able to do either of the above, or both, you might want to consider making the investment. An investment which allows you to leverage on your strengths and fills in gaps in your practice will not only make it easier to gain new patients but will also improve the experience of your existing patients, which brings us to our next point.
Increase in Patients’ Satisfaction
It is important to cater to your patients’ needs because a high patients’ satisfaction would not only ensure your patients keep coming back but they may also recommend their family and friends to your clinic. Find out what your patients want from your practice by asking them questions such as, “What treatments are important for you?”, “Are we meeting your expectations as your dental clinic?” and “Are there any dental treatments you are interested in that we may not offer?” By finding out what your patients want, you will be able to better decide whether or not an investment is the right one for your practice. Besides treatments, you should also consider investments which will improve the patients’ experience such as reducing chair-side time, reducing turnover time for treatment or even reducing the number of visits required for a treatment plan. These may seem like small things but will greatly increase your patients’ satisfaction.
Increase in Case Acceptance Rate
Most dentists have a case acceptance rate of 20-30%. By simply increasing that to 60%, you would double the revenue on the same number of patients! If your investment is able to inspire patients to want the required treatment, it is a wise investment to make. Remember that patients don’t decide on doing treatments based purely on facts but emotions play a big role. Are they confident that your practice will be able to provide them with the best dental treatment or can they go elsewhere for better treatment at a lower cost? If the investment is able to convince your patients that the quality of treatment they can get from your clinic is comparable or even better than other clinics, the investment might be worth the time and money to implement.
Increase in Number of Cases You Can Process in a Day
Increasing the number of cases that you can process in a day would mean an increase in total income. Hence, any investment which increases the practice’s productivity and efficiency should be considered favorably. This includes automating processes which allows you to streamline the admin process so that more time can be devoted to actual treatment time. For example, investing in technology for digital impressions would bring about a reduction in chair time, allowing you to see more patients in a day. Do take note though that your team should be involved in the decision-making process of any investments which require them to learn new procedures. Only when your staff understand the rationale behind implementing changes and are on board with the decision, will they embrace the change. This will lead to an increase in the productivity of the practice and as a result, the profit as well.
Reduction in Expenses in the Long Run
In addition to increasing your total income, another factor you should look at when making an investment is reducing expenses in the long run. An investment may seem to initially add on to your practice’s expenses when it could actually bring about a reduction in running costs in the long run. For example, if your practice decides to invest in digital impressions, you will eliminate the use of conventional materials and you will require fewer remakes due to a reduction in errors during the impression-taking process. In addition, moving away from traditional impressions means you no longer need to spend on storage space for models and you may even receive discounts from your partner laboratory as they can eliminate steps in their workflow. This will bring about significant cost-savings in the long run.
Not Being Left Behind
With technology advancing at an exponential speed, you cannot afford not implementing new technology into your dental practice. While it may be a risk to implement a new technology as soon as it hits the market, it is an even greater risk not to implement a new technology when a substantial percentage of the industry has done so. The risk is that you may lose your existing patients who may move their business to other clinics which offer better treatment options that your clinic does not provide. The initial investment may be huge but the return on investment will more than cover the cost over a period of time.
When considering investing in a new process or technology, it is always important to consider its economic feasibility. However, don’t get stuck by only focusing on ROI calculation and neglect to consider benefits that can have ripple effects such as increasing productivity or increasing patients’ satisfaction which will eventually lead to increased overall profit.
Never make an investment decision based on what your competitors or colleagues have done. What works for one practice may not work for other practices. Before making an investment decision, it is important to ask yourself what are the objectives that this investment will help the practice achieve, and whether your team can successfully integrate it into their workflow. Be discerning when making your investment decisions and you will be able to increase your profit over time!