Every dentist has to answer this question at some point in their career: “Should I open my own dental practice?” When and if you decide to open your own dental practice you will be confronted by business and accounting matters. Dentistry is no different than any other business that must make sound accounting decisions. Accounting jargon such as assets, balance sheets, cash flow, profit and loss statements, and return on investment help measure the financial health of your dental practice. Assets are a key part of this equation, especially concerning your dental imaging equipment.
- current assets like cash and other items which are easily liquidated
- long-term assets such as real estate and dental imaging equipment
- prepaid and deferred assets e.g., monies spent for future bills such as insurance, rent, and interest
After opening your practice, you will need to purchase a substantial amount of dental equipment. Your equipment will need to have a value assigned so you can easily determine depreciation after a purchase is made. Your accountant can help you quantify and exactly measure these values. Dental Imaging equipment is by far the one essential group that has the highest ROI in a dental practice. Diagnosis and a treatment plan are determined much easier when you can easily and rapidly share dental images with a patient. What is a patient’s value or worth? Determining the value of your dental patients is a little more complicated than figuring the value of your dental imaging equipment.
How can you exactly quantify the value of each dental patient? First, you must consider the short term and long term net profit so you can measure against your dental practice as a whole. It’s much easier to validate an investment for a panoramic dental x-ray machine that does PAN, CEPH & CBCT (2D & 3D) dental imaging. Specialty dental equipment like dental x-ray sensors, intraoral cameras, and a handheld mini x-ray generator fall under the same umbrella. In today’s dental world you must have state of the art dental imaging equipment so that you can make any dental patient visit much more fluid and productive.
Determining the exact value of the dental patient must be accomplished first. After you have a value, how do you influence these figures to increase net profits? Working in tandem with an accountant or office manager at your practice will assist you with getting concrete numbers.
Take a moment to consider this hypothetical scenario…
You have a dental patient Jane Doe who generally spends about eight hundred dollars a year for her dental services. Basic math stipulates that in five years she will have spent roughly four thousand dollars. Also occurring during that same time frame are two referrals generated from Jane Doe (aka Chatty Cathy). Both referrals spend the same amount per year at four thousand each. In effect, Jane Doe does not only represent the upfront marketing cost to bring her on board. She is also accountable for the value of both referrals.
When you follow this logic, each and every new and existing dental patient has the exact same potential to cause a reduction of your marketing expenditures. The key is your skill and proficiency to constantly grow your dental practice with effective marketing plans. This will greatly reduce your per patient marketing expenditures thus having a direct and measurable association to the financial stability of your dental practice.
A proven method to get the most financially out of your dental practice is by having a solid marketing plan and state of the art dental equipment. A satisfied dental patient has a tremendous impact on the bottom line of your practice. They will remain a patient generating positive income from initial encounter whether from marketing or a referral. They will also account for family related referrals, colleagues and friends of friends who will also be referred. The lifetime referral tree is vast and should be highly regarded. Don’t neglect your practice by having inferior dental equipment, especially equipment that makes any patient visit more fluid. Dental imaging equipment is one of the few pieces of equipment that the dental patient gets to physically interact with, hold and view.
Part 2 of this article (Dental Imaging and Your Practice) will be continued