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Automation is transforming how dental practices operate and how they’re valued by potential buyers or investors.

The impact of clinical automation on dental practice valuation

Oct. 10, 2023
Automation is transforming how dental practices operate and how they’re valued by potential buyers or investors.

Automation is transforming how dental practices operate and how they’re valued by potential buyers or investors. Technologies like digital imaging and CAD/CAM have improved diagnostic precision and treatment planning. Practice management software has optimized administrative tasks, while 3D printing has broadened the service range a practice can offer. However, the financial implications of AI and other advancements on practice valuation remain underexplored.

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This study explores that relationship, identifying the key factors of valuation: revenue, patient volume, service variety, and procedure numbers. It investigates the influence of automation on operational efficiency and patient outcomes, demonstrating their implications for practice valuation. Utilizing empirical evidence and a quantitative model, the study links automation to profitability and practice valuation to provide a practical guide for health-care practitioners seeking to navigate new technologies with the potential to improve their practice.

Tech with increasing clinical adoption 

CAD/CAM and digital imaging: Construct precise 3D models of dental restorations, such as crowns, bridges, and veneers to enable the fabrication of customized dental prosthetics with enhanced accuracy and efficiency.

3D printing: Additive manufacturing of dental components, including surgical guides, models, and prosthetics to streamline the production process, offering design flexibility, and cost-effective solutions for various dental treatments.

Robotic dentistry: Perform specific procedures with a higher degree of precision and consistency using robotic assistance. These systems have the potential to assist with tasks such as dental implant placement, reducing human errors and optimizing treatment outcomes.

AI and machine learning: Artificial intelligence (AI) and machine learning technologies are used in dentistry to analyze and interpret complex data sets—assisting in diagnosing dental conditions, treatment planning, and predicting patient outcomes to enhance the decision-making process for dental professionals.

Teledentistry: Virtual dental consultations and monitoring of patients extends dental care to underserved areas, allows for virtual patient assessments, a large potential market, and enables dentists to remotely address nonemergency dental concerns.

Automated patient communication: Tools for patient communication, including automated appointment scheduling, reminders, and educational materials. By streamlining patient interactions, dental practices can improve patient engagement and operational efficiency.

Electronic health records (EHRs): EHR systems digitize and centralize patient records, streamlining data management, access, and sharing among dental practitioners to enhance the organization of patient information, improving clinical decision-making and patient care coordination.

Billing and insurance claim automation: Simplify financial transactions by automating billing processes and insurance claim submissions to reduce administrative burdens and facilitate faster reimbursement.

Quantifying the impact of clinical automation 

Drawing from a combination of sources including industry reports, vendor data, academic research, and expert commentary, we crafted a framework to quantify the impact of automation on key performance indicators integral to the valuation of dental practices.

Literature review: A systematic review of academic literature and industry reports identified viable automation technologies in dental practice.

Data compilation: Data regarding cost, efficiency gains, and potential revenue impact of each automation type were sourced from academic studies, vendor documentation, and case analyses.

Impact analysis: Potential impacts of automation types on key dental practice metrics were derived through comparative studies of pre- and postimplementation data.

ROI calculation: The return on investment (ROI) for each automation was computed by juxtaposing the anticipated revenue increment or cost decrement against the implementation and operational costs.

Payback period estimation: Payback periods were determined by dividing the initial investment by the net increase in monthly revenue, offering an estimate of the period over which an automation pays for itself.

Estimating the value of your practice 

This study underscores that clinical automation can significantly enhance dental practice valuations. While further research is required to validate these findings across diverse practice profiles, the results advocate for the integration of automation practices. As the dental industry continues to digitize, understanding how to implement new technologies influence practice performance and valuation can be pivotal for informing strategic planning and decision-making.

Visit the Dental AI Assistant, a free open-sourced app, to generate an estimated valuation for your practice.

Editor's note: This article appeared in the October 2023 print edition of Dental Economics magazine. Dentists in North America are eligible for a complimentary print subscription. Sign up here.

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