By Roger P. Levin, DDS
In this economy, the first instinct of most dentists is to put off technology purchases. However, that may not be the best course of action. Practices need to expand their use of new technologies to stay competitive, but they should do so prudently.
What should technology do for you?
The right technology can produce significant benefits in terms of higher quality patient care, increased efficiency, and accelerated production. The key is to figure out whether the purchase pays for itself in a timely fashion.
Determine Return on Investment (ROI)
Any associated cost of the technology should be measured against its return on investment. Dentists should create a comprehensive framework for evaluating the impact of each technology purchase on practice effectiveness and efficiency. Levin practices successfully add advanced equipment to their offices by using these two questions as part of a technology assessment:
1. If I invest this money in my practice, will I receive a positive return on investment in a reasonable amount of time?
In other words, if a practice invests $250,000 in a new facility, how long will it take to recover that investment plus all added expenses? What will the long-term benefit be? If this is a young or middle-aged dentist who will be practicing for 10 or more years and the new facility will allow the practice to increase production substantially each year after the first year, then there will be a timely positive return on investment.
2. Is this more appropriate than other types of investments?
Remember that the more expensive the technology, the greater the risk that it may not produce a positive return on investment as fast as you require. Evaluate the projected actual increase in practice production generated by the incorporation of a technology, and compare it to the benefits of investing in infrastructure or team training.
Return on investment is an excellent mechanism for evaluating purchasing decisions. Whether you are purchasing a new practice, redesigning an office, recruiting an associate, or adding technology, the one question that should always be evaluated is, “Will this investment create a positive return for my practice and in what period of time?”
At the very least, return on investment considerations allow dentists to evaluate options from an objective perspective rather than making uninformed or emotion-based decisions.
Roger P. Levin, DDS, is founder and CEO of Levin Group, a leading dental management consulting firm that is dedicated to improving the lives of dentists through a diverse portfolio of lifetime services and solutions. Since the company’s inception in 1985, Dr. Levin has worked to bring the business world to dentistry. Levin Group may be reached at (888) 973–0000, or at www.levingroupbp.com.
By Roger P. Levin, DDS