Ask Dr. Kaye about digital dentistry: Digital dentistry and the ROI 'lens'

When we as practice owners think about investing in new technology, myriad questions arise.

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When we as practice owners think about investing in new technology, myriad questions arise. Are we ready to embark on a new learning curve? Is our team ready, willing, and able to make the journey with us? Is the office technology environment strong enough? What will our patients think? What will the financial impact be? How can we get the best bang for our buck? How do we choose the right digital system vendor from the bewildering array of options in the market? These and many other questions need to be considered as we evaluate the cost and benefits of each opportunity.

ROI: Practical tool or arcane financial calculation?

If you ask any two financial professionals or manufacturers to guide you on your ROI calculation, you are almost certain to get different results! There are many variants in the details and scope of ROI formulae. Much depends on the assumptions that are made about the impact on revenues and the total costs of the new technology. It is helpful to evaluate pessimistic, most likely, and optimistic scenarios. Results differ based on the evaluation period chosen. Tax position and the financing package are critically important too.

However, I believe that the power of the ROI thought process lies less in the actual ROI number and more in the systematic due diligence that we undertake. Due diligence is identifying and evaluating the main benefits and costs in our specific situation relative to our individual goals for our practices and for the investment. I think of the ROI calculation and the underlying cost-benefit analysis as a "lens" that we can use to improve our and understanding of the investment opportunities and what they mean to us and our practices.

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Quantitative or qualitative?

Acquiring new technology for our practices is an investment. Investment evaluation needs to take full account of both quantitative and qualitative factors. Predictions of the impact on revenues, costs, workflow efficiencies, productivity, and profitability can be expressed in quantitative terms.

However, the qualitative side of our investment analysis is also crucial. The impact of the investment also needs to be considered relative to the following:

• Our personal and professional objectives, mission, and values

• The strategic positioning of our practices

• The patient experience

• The degree to which our team is ready, willing, and able to embrace the required changes in workflow and individual skills

• Our ability to provide the requisite leadership and change management

• What you've learned from previous technology investments and projects in your practice

• What could go wrong

For these types of factors, I find it useful to categorize our qualitative ROI conclusions using a rating scale (e.g., high, medium, low).

Improving the probability of successful investments

The harsh reality is that investment success is far from guaranteed. My experience, as a dentist and at the New York Center for Digital Dentistry, suggests that outcomes of major investments are distributed as follows:

• 20% at most are a full success (the project is on time, on budget, and achieved its goals)

• 50% of the projects underperform to a significant degree

• 30% seriously underperform or fail

Major reasons for ROI underperformance include poor strategy decisions and deluded, misinformed ROI evaluations and expectations; poor project organization and implementation plans; practice owner sponsorship that is not sustained; unclear objectives; weak team engagement; and vendor problems.

Systematic cost-benefit ROI evaluation can help us think through our investment decisions and identify the key success factors to track, monitor, and achieve during implementation.

Ultimately, it is the actual ROI achieved that is all important. Planned ROIs and good ideas and intentions will not build the value of our practices or elevate our patient service. Great investment decisions that are superbly implemented will! The ROI lens and cost-benefit methodology help us see the best options and stay on track.


Gary Kaye, DDS, FAGD, founder of the New York Center for Digital Dentistry, has practiced comprehensive dentistry in New York City since 1993. He graduated from Columbia University of Dental Medicine in 1993 where he received awards in endodontics, prosthodontics, and geriatric dentistry. Dr. Kaye consults with other dentists and dental manufacturers and lectures on topics including ceramics, occlusion, and digital dentistry. He is on the guest faculty of Planmeca University in Dallas, Texas.

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