HOW TO PROFIT FROM...technolgy

Dec. 1, 2000
In today`s practices, particularly those geared toward the 21st century, technology is becoming an important factor for practitioners worldwide. Practices are now attempting to develop information control with the available information-based technology systems.

Don`t forget the training!

John Jameson, DDS

In today`s practices, particularly those geared toward the 21st century, technology is becoming an important factor for practitioners worldwide. Practices are now attempting to develop information control with the available information-based technology systems.

Important decisions must be made by practitioners daily about these systems as they look to upgrade their current capabilities. One of the most important decisions is which practice-management software will be used. What software will be the hub for the entire practice? A second important question is who will provide the practice with its network. Many companies are offering dental networks, but their success rates have not been extremely high. It`s very important to consider which company will provide the network, and then make sure that company has experience with dental networks since the multiplicity of softwares running on the network makes it very difficult to ensure smooth operation.

A variety of activities can occur in the information-based, dental-technology system. Intraoral camera and digital extraoral images can be stored, and cosmetic enhancements on the images can later be shown to the patient. We can capture digital radiographs in a number of ways, including direct-wired sensors or scanning existing radiographs and adding enhancements. This makes sure that there is no degradation in the lifetime of the existing radiograph. Patient education and entertainment programming can be provided as well.

Important things to be considered when choosing a network and software include the possibility of adding Internet capability. The Internet can give dentists online service with laboratories, dental supply houses, while e-mail allows for the direct and immediate transmission of digital radiographs or images.

Many dentists do not have Internet access in the office. They feel the World Wide Web should be reserved for their homes. I believe that having Internet capabilities in the office is crucial. Online services are a plus for any office. E-mail capabilities allow for things to occur at lightening speed. This is an important mode of communication for any dental office. Why take time on the telephone when e-mail is available? Using the phones or jotting notes on paper causes disruptions in the daily schedule.

For some dentists, it`s very difficult to understand why technology is needed in the practice. With the help of Dr. Charles Blair (see next page), I think you will be able to see the impact of technology on your practice`s business. Securing this technology and making it a profit center enhances your daily activities and your bottom line.

Despite the enormous possibilities, many doctors do not provide adequate technology training to their staff members. When proper training is omitted, technology can not be used to its fullest. Whether it`s a young or experienced doctor, technology is an area where the practitioner short-changes himself or herself if the need for training has not been considered. Training before using technology is imperative to the success of a practice.

Another important area to consider in technology is the history of the company that will be providing services for your practice. How old is it? What financial resources are behind the company? How does the company service its existing client base? These are important questions to answer as your practice becomes more involved with technology. Companies that are here today and gone tomorrow can be extremely harmful to the success of a practice.

Adding technology or making changes in existing technology is not easily done. There must truly be a "team effort," where every member of your staff buys into the goals and philosophies of this new technology. This must be accomplished prior to implementing the new technology. Showing the staff how technology can increase case acceptance and patient understanding, as well as transforming the view of your practice in the eyes of the public in your town, is a good way to begin the team-building process.

Following is an interview with Dr. Charles Blair, a nationally known consultant and lecturer, and a member of the American Academy of Dental Practice Administration. Dr. Blair joins forces with tax attorney and MBA John McGill as the editors of the Blair/McGill Advisory, a monthly newsletter helping dentists to maximize profitability, slash taxes, and protect assets.

Dr. Jameson:

What kind of basic decisions must be made by a practitioner as he or she brings technology into the practice, and then again later as more technology is added?

Dr. Blair:

From a technology perspective, the dentist must look at investing on an annual basis. In the 1950s and 1960s, dental equipment was basically lights, chairs, and units. Dentists could survive a direct hit from a tank because there really wasn`t anything high-tech in their offices. Today, things are much more fragile. The idea that someone will get out of dental school, buy some equipment, pay it off, and practice happily ever after for the next 30 years is gone. Dentists must sit down with their staff members every year and look at two things: the facility and the available technology.

From a tax standpoint, if you buy technology on an annual basis and bite off as you chew, there are expense elections and fast tax writeoffs that will subsidize the purchase of the equipment. For an average practice ($450,000-$500,000), it takes an annual budget of 2 to 5 percent to keep up with technology.

From a financing perspective, I don`t like stacking two-year leases on top of each other if the doctor doesn`t have the cash-flow. When you buy a piece of equipment, hopefully it has a five- to 15-year deal so that you are buying capital. One mistake that I`ve seen dentists make is trying to pay for the technology too fast with multiple leases. This makes the dentist lose his or her cash-flow as well as the funding for retirement.

We also need to look at the facility cost related to dollars per square foot. Our goal is $300 per square foot. If a dentist says that he or she will build a 2,000-square-foot building, he or she should be thinking in terms of a $600,000 practice. If you try to shoehorn a $200,000 practice into a $500,000 facility, it just won`t work. In the old days, overheads were low and dentists didn`t need to buy technology.

Dr. Jameson:

How do you recommend that your clients upgrade their hardware? How should dentists budget for technology upgrades?

Dr. Blair:

If you`re going to be leading-edge, you should expect to pay a premium for that technology. I find a lot of doctors are expense-oriented rather than revenue-oriented. Most dentists don`t have a lot of wasted expenses. I think they need to leverage more on the productivity side than the expense side.

Technology must be able to increase productivity and case acceptance as well as answer other questions. Will it reduce the stress on the doctor? Does it improve customer service? Does it improve efficiency? Will it help the practice in terms of marketing? Look at the CEREC machine. It makes a major impact in several of these areas. It doesn`t just sit there and make a crown.

Obviously, different types of technology will mean different learning curves for the staff. X-rays are simple; you turn the button on and snap the switch. Intraoral cameras require much more training. You have to go through an orientation on the focusing process and the various buttons, as well as orchestrating patient education on the product. Dentists often cut the check for the technology, but won`t budget for the training. This is a problem. Your team can`t learn about the technology by osmosis. There are some practice-management systems out there that have so many bells and whistles on them that they are wonderful, but they are also impossible to learn without training.

It`s almost a never-ending cycle for a practice. Turnover on the staff makes training a necessity for new employees, and new technology requires more training.

Dr. Jameson:

What type of return on investment should dentists expect to see from the addition of technology?

Dr. Blair:

I don`t know that there`s a rate for that. I think you have to look at the impact of the technology on the practice as a whole.

Let`s look at an intraoral camera from a technology/ cost perspective. Look at its value in terms of helping with insurance claims by giving your staff the ability to send in photographs with the claim. If you have an intraoral camera, you can monitor the crown and bridge to operative ratio. Invariably, we find this ratio accelerates with an intraoral camera. That`s a procedure mix change that a lot of doctors don`t examine.

Dr. Jameson:

For a doctor in his or her late 40s, 50s, or 60s, can he or she purchase technology to get better control of the information as the practice is being transitioned?

Dr. Blair:

If I am thinking about selling my practice in five years, I would be looking at ways to improve efficiency. Do you get a dollar for dollar on equipment when you sell your practice? I look at it like selling the swimming pool in addition to the house. It can be a $20,000 pool, but you still can`t add $20,000 to the value of the house prior to selling it.

Keeping the facility up will make the practice more sellable. If you have what appears to be a modern practice, you will attract more buyers. It can make the difference between making the sale and not. However, the time to upgrade is not the year before you sell the practice. Why not enjoy the technology before you retire?

Having the technology and the information system in place helps the astute buyer who is looking for a practice. He or she can look at the practice-management system and see what percentage of the revenues are laboratory-related, how much perio work is being done, etc. Technology can give potential buyers the fingerprints and the DNA of the practice.

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