Exclusive survey: Purchasing

January 2010 | dentalproductsreport.com
Exclusive Survey

You should have a plan

In good times and in bad, practitioners need to know how best to shop for products and technologies and how to get the most out of their purchases.

by Stan Goff, Executive Editor

Photo: Fusion/Getty Images

These can be tricky times for small business owners, with a downward economy making many of you think long and hard about how much to invest in your business as well as try to figure how best to operate and purchase at the highest level of efficiency.

Depending on who you talk to and depending on what type of purchases you’re talking about, dental manufacturers and consultants will offer up varying opinions on whether the time is right to increase your investment in your practice, or if some things are best to hold off on for a while.

For the second January in a row, DPR has reached out to its audience for thoughts on what types of purchases they’re considering, which ones may be on hold due to the economy, and what types of products and technologies might be wise choices in the upcoming year. Last year we conducted an online survey and published the report “Times are tough, but the time is now” in the January 2009 issue. This time around we conducted on online poll (see About This Survey, below) by sending out questions and posting a link on Facebook. We received 106 responses, including 94 from dentists with the remaining responses coming from dental assistants and hygienists.

We’ll share some of the comments and results from the poll in this article along with expert commentary from Henry Schein’s Keith Drayer, Benco’s Paul Jackson and others.

Dental Deals online can help you get the right products

Gavin Markiet, President of DentalDealsOnline.com, believes his company can help doctors with their purchases.

“Dental Deals Online was specifically created to help dental professionals save money on the most frequently purchased products,” he said. “With branded products becoming more expensive we offer alternative  products for less. In addition we significantly discount some of the most popular name brand products.”

Markiet said his company offers high-quality composites at substantial savings, and in today’s world many doctors are looking to cut costs while still purchasing quality.

“Since we buy in bulk, we are able to offer discounts on the supplies they use everyday while offering fast and easy ordering,” he added. “Dental professionals can order everything they need online. Offices can also speak directly to a representative to place an order or inquire about products and prices.
“Dental professional are becoming more cost conscious. They are looking at their invoice more closely and spending more time shopping online to make sure they are getting the best price in the market. In addition, dentists are willing to try alternative brands to save money.”

Advice for 2010

We’ve all heard plenty of tough luck stories about workers and businesses hit hard by the economy over the last year and a half. But the latest poll does show some encouraging signs, including that 48% of the respondents state they’re generally more cautious, but still spending on necessities, and 13% answering the same question said the economy has not changed their purchasing and investment plans. That same 13% figure responded that they’re working with manufacturers/distributors on trying to get good deals.

Drayer, Vice President, Henry Schein Financial Services, said there is reason for optimism heading into the new year.

“One of the key areas we suggest dentists focus on each year is their current fee schedule,” Drayer said. “Unfortunately too many dentists leave thousands of dollars in the hands of the insurance companies every month because of an unbalanced fee schedule. We recommend the dentist set/balance their fees into the proper percentiles for their particular ZIP code. This will not only help to maximize the coverage of insurance the employer has purchased for the employee, but is also the best way to increase profitability as well. Doctors will benefit with a digital practice analysis to find this out.”

The New York-based Drayer also suggests dentists stay on top of the tax benefits allowed to practices making certain purchases and take advantage of the 2010 Section 179 allowance that permits business owners to lower their taxable income by acquiring eligible property (such as dental equipment, technology and off-the-shelf software). “What makes the 2010 Section 179 benefit important is the United States tax code is written that in the year 2011 this generous benefit will come down to $25,000,” he said. “As more and more dentists are embracing all-tissue lasers, comprehensive scanning, designing and milling CAD/CAM systems as well as cone beam dentistry, the time may be right for them to look into these types of purchases. These items make a practice more efficient, productive and profitable. They are also in the sweet spot of the Section 179 benefit (and will not be in 2011).”

Drayer added that Section 199 may also benefit certain practices quite a bit, and that this non-permanent deduction should be explored by doctors, but he does advise practitioners consult their tax advisor regarding their individual circumstances.

“While this is not tax advice, as individual circumstances apply, doctors should find out more about Section 199 (benefit for domestic manufacturing) for their deduction of 9 percent of the lesser of ‘qualified Production Activities Income’ or taxable income from milling activities. Doctors may significantly reduce their tax bill on domestic production activities as a result of the previous American Jobs Creation Act.”

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57%
plan to purchase new technology in the next 12 months

67%
state colleague recommendation as the most helpful source when preparing for a purchase

58%
state dental industry magazines as a most helpful source when preparing for a purchase

24%
said the economy played a role in holding off on purchases because of restricted cash flow 

Source: January 2010 DPR Purchasing Survey

Digital divide

Utah dental CPA Cynthia Mattson believes this is a great time for practices to step up and add technologies and products that can help their practices shine when compared to others.

“Now is the time to differentiate yourself from other practices so you want to make sure that you are staying current or ahead of the pack,” she said. “If your schedule is lighter, that is a good time to adopt new technologies because you have the time to spend with the training and learning curve. You will want to integrate your discussion/marketing plans with current patients.”

According to Mattson and Benco’s Jackson, digital radiography is one technology that should become a part of all practices. Many of you seem to agree, as several survey respondents stated that digital x-ray was the one purchase you benefited from  most last year. (Other items with multiple responses in the poll included implants, VELscope, CAD/CAM equipment and DIAGNOdent).

“If you haven’t gone digital, this is a great time to do it because the wow factor will help you convert your treatment plans into scheduled appointments,” Mattson said. “With this economy, it is a great time to stick to basic procedures and market them-being responsive to the needs and concerns of your patients both in their mouth and in their finances. At the same time, you need to suggest treatments that they might consider down the road.”

Just like some dentists, a number of patients also have been hit hard by the tough economic stretch. “It is not a good time to push third party financing for elective procedures,” Mattson said. “Your patients will remember that you helped them get into more debt. In that same vein of thought, I don’t advocate going into debt without investigating what it will take to make the purchase work in their office.”

Jackson, the VP of Marketing for Benco, said technologies that help doctors and patients connect better- like digital radiography-can be critical these days. “Things that allow them to offer new services or devices that allow them to communicate better with their patients are important,” Jackson said. “I think that there’s still this growth in digital radiography. It’s a way that your patients can see the diagnosis and you can communicate better with them and so that the communication helps the patient accept the treatment and you also save time so that’s efficiency for the office. That’s what we are seeing is more products that help the efficiency of the office and help with communicating with the patients, either helping communicate the treatment plan or communicating value.”

Positive signs

Jackson said one trend in 2009 was that some dentists postponed doing new office startups, whether that’s a first-time office startup or if it’s a dentist with a current location and was maybe looking to move to another location with more operatories. But all in all, he said business has been solid, and Benco enjoyed a strong Greater New York Dental Meeting (GNYDM) and is hopeful for more of the same this year.

“We had a good New York meeting and it does seem that things are beginning to change and I guess, people are like the consumers and are loosening the pocketbook a little bit,” Jackson said. “I poll dentists pretty much all year and I visited a lot of dental offices personally and talked to the dentists and most of them actually were marginally impacted.”

That’s not to say that some practices have indeed struggled and that others long for higher profit margins. Jackson said some signs at the GNYDM indicate dentists may be looking closer at smaller purchases that may save them time. 

“I think they’re probably doing less full-mouth reconstructions, but they’re doing more 1- and 2-, or 3-unit bridges or more preventative dentistry,” Jackson said. “The practice might be filled in with a little bit lower-fee dentistry but they’re still busy. So what they seem to be focusing on is smaller purchases.”

The poll also offered some good news. Fifty-seven percent of the respondents said they plan to purchase new technology (digital radiography, lasers, computers) in the next 12 months, while 53% plan to purchase new materials. Just under one-quarter indicate they will purchase new equipment (delivery systems, operatory cabinets, lights) in the next year.

Sales for cone beam systems and digital impression taking devices were strong the last quarter of 2009 and Jackson said, “It really goes back to what I’ve said about adding services, if they were referring out some number to an imaging center, they can count that and so now if they can keep that in-house...we sold more cone beams this year than we did last year and the same with sensors and digital pans. ”I think digital communicates many things to patients. Not just a diagnostic tool, but something that allows the patient to co-diagnose.”

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Influences

When preparing to make a purchase, our readers tend to take advice from colleagues they trust. According to the poll results, 67% believe a colleague’s recommendation is most helpful when looking to make a purchase, with CE courses (65%), dental industry magazines (58%) and sales reps (55%) also proving to be quite influential.

The results did not surprise Jackson. “We survey our customers and every year that comes out the highest,” he said referring to colleagues and well known lecturers. “Gordon Christensen study clubs or courses that they attend are the top influences. I haven’t seen any change in that.

“The only thing that’s changed is that more dentists are using the Web than before.  DPR is higher than the Web, so we look at that as well, but  more doctors are using the Web not to buy but to research. So that when they are about to make a purchase they are a little but more informed about that purchase.”

Mattson added, “Talk to colleagues that have the technology. This is good ‘in the trench’ information. Listen and evaluate information in conjunction with the doctor’s personality. Also, go to continuing education courses related to that technology and listen, get ideas and determine if that will enhance your practice without changing your basic philosophy.”

And when you’re ready to make that purchase, be sure to have a plan to get the most out of the new technology or products and make sure you and your staff know how best to use the additions.

Seventy-two percent of the survey respondents said they have a plan in place to achieve a strong return on investment when making a major purchase, while 92% add that the implementation plan for purchasing new technologies includes additional training. Other components of this implementation that received plenty of responses include meetings with staff to make sure they’re on board and understand the new technology (79%), devising a marketing plan around the investment (37%) and working with a consultant (31%).