Any time you’ve been to a dental conference, you’ve seen all of the equipment being exhibited. The sales reps can spin a great line about how much faster and more efficient you’ll be by upgrading to what they have to offer. Also, these conferences frequently have presentations on new procedures and the latest technology, methods and tools that can improve the profitability of your practice.
While a young dentist can afford to take a long term view of investments in new technology, given that they have time to recoup the investment, for an older dentist, with an eye toward transitioning their practice, this might not be the case. The question is whether the investment will add value before you sell your dental practice or whether you’ll just eat the cost.
As the pace at which technology is improving keeps getting faster and faster, it’s harder than ever to know when is the right time to upgrade your equipment. After all, you don’t want to invest in something only to have it quickly become obsolete. And while it’s imprudent to get infatuated with every new technological improvement, it can be essential for your practice to stay up to date on new developments in your field and understanding what will impact your practice for the better.
Sticking too closely to what you know, what you’ve always done, will keep you in the past. This could cost you patients. Sometimes it best to stick with what’s worked, but sometimes you have to change. The trick is how to know when.
Even the best equipment will wear down. It’s imperative to keep an eye on how each piece is functioning and know when it’s time for a replacement. If you keep the following thoughts in mind as you assess your equipment, it can help you determine the right time to invest in upgraded equipment.
- What is the true cost? There are two costs to consider for every piece of equipment. The first is the sticker price—how much does it sell for. Second, what will it actually cost you? Here is where you factor in the cost of financing (how much will you ultimately pay when interest is included), fees for any training you’ll need, the cost of installation, and any other related costs to getting the equipment, getting it installed, getting yourself familiar with its functionality, and having access to technical support, or related accessories or supplies. All of that added together is the true cost.
- What will I earn from it? Once you know the true cost, consider how the equipment will impact your practice. Will it make you faster? Will your practice be more efficient? Will you be able to perform any new procedures or keep diagnostics in your office instead of sending the patient’s money somewhere else? You can use the answers to these questions to project whether the equipment will increase your collections either in the form of added services or ability to see more patients. Then, take that projection and compare it to the true cost of the equipment to figure out how fast the equipment will pay for itself. It may be sooner than you think. It also may not.
- What could I do that I couldn’t do before? This is fairly straightforward: if the equipment allows you to perform procedures you couldn’t before, then, instead of referring them to other doctors, you keep that revenue for yourself. Also consider whether the new procedures are an opportunity to grow your practice, either through attracting new patients or by bringing in an associate (younger dentists will look for offices with newer equipment, with which they will be more familiar).
- Is it cheaper to fix the old equipment or buy new equipment? If you have equipment that is frequently breaking down, even if the repair costs seem low, they add up over time. Also consider whether the malfunctions are impacting your ability to see patients or perform procedures—that is, whether your old equipment is costing you money. Look over your books to add up what you’ve already sunk into the old equipment and track when you have to reschedule patients. Take those numbers and compare them to the true cost of new equipment.
Equipment Upgrades Should Be Driven By Financial Rationality
If you’ve considered all of these factors but are still undecided, here are a few other considerations about new equipment and whether it’ll be good for your practice. As above, these points are all about whether the new equipment will earn you money or cost you money. If you think you will be transitioning your practice in the next five years, you also have to consider whether you can recoup the cost before you sell your dental practice, or make up the difference in the sale. For those considerations, you may want to consult a business valuator or dental broker.
- Will it make me more efficient? Generally speaking, new equipment is faster and easier to use than old equipment. This means you can do more, with more ease, in less time. While you may have a learning curve, newer equipment is also typically easier to use once you adjust to it. Plus it’ll be more likely to be easily integrated into your other software systems, which may save your staff time.
- Will it make me able to do more things? The more things that you can keep in office, whether its procedures or diagnostics, whether it’s digital radiography or a machine to make crowns, the more you do yourself, the more you earn.
- Will it bring in new patients? This can work in two ways. Some patients, as consumers, are attracted to new technology, making your upgrades a selling point. Also, if there are patients who need certain specific procedures or tests, new equipment open up that market to you.
- Will it enable me to provide better care to my patients? You want to provide your patients with the best care that you can. Your patients want this too. And they sense when you are making an effort to do that. It can help with patient retention and building goodwill for your practice. This area also includes improvements that directly impact your own comfort and quality of life at work, or that make your own work more enjoyable, as these factors also improve the patient experience.
To be sure, not all equipment upgrades are equal. Some of these questions will be tougher to answer than others, but going through this exercise can help you make the choice that will be the best for your practice and your patients, which will translate into higher earnings for you.
Get a Practice Transition Assessment Before You Sell Your Dental Practice
If you are considering transitioning your practice in the next five years, DDSmatch Southwest offers a free, no-obligation Practice Transition Assessment. During this assessment, we find out your goals for your practice transition and offer professional, experienced advice on how to best prepare to sell your dental practice, including potential investments to increase value and physical and image improvements. We never advise a doctor to upgrade simply for the sake of upgrading, but only if the cost of that upgrade will have a related increase in the value of the practice when sold.
Contact us today and arrange for your free Practice Transition Assessment.