In order to justify expensive equipment purchases, it is sensible to formulate a business plan – Sakina Syed details her recommendations on how to write dental business plans.
I used this exact approach with my practice manager when I wanted to introduce guided biofilm therapy (GBT). I explained what GBT was, how much it would cost and return on investment (ROI), a common metric used to define how good an investment has or can be.
Three years on, we have grown as a GBT provider, increased our GBT productivity, availability and awareness amongst patients, and invested in our second unit.
Being an ex-bank manager may have helped me to understand the business logistics. But I want to share my journey with you and my recommendations on how you can approach it.
Situations that require business plans
I will focus on GBT here. However, there are other situations which may warrant business plans from a dental hygienist and/or dental therapist’s perspective.
New equipment
- Airflow such as EMS Master Unit
- New sets of instruments
- Calculus/biofilm removal systems for professional mechanical plaque removal (PMPR) such as cavitron or satalyic scalers.
Introducing new treatments
- Introducing Guided Biofilm Therapy
- Introduction of whitening systems
- Digital scanning.
Improving daily operations
- Implementing standard nursing support for dental hygienists and dental therapists if not already in place
- Consider Increasing operational hours
- Consider Changing appointment times/uplift of fees.
Discussing an uplift of hourly rate or percentage
- Reflective upon experience
- Percentage of white space in diary (gaps in diary).
What should business plans include?
Business plans should include market research, financial projections and a marketing strategy. Ideally, display information on an excel spreadsheet. Chiefly, this helps to show timelines and can be easily adjusted to reflect changes. Covering these points will support the justification of the cost of the new treatment and/or equipment. This can help you to plan and build for the future.
Dental practices are no different to other businesses. They need to make money to financially stay afloat and have a number of variable and fixed costs which must be taken into account whilst, at the same time maintaining a high level of patient care.
A solid business plan with a targeted goal will determine the financial feasibility of the purchase and how it fits into your current revenue streams, ie the existing treatments on offer.
In most practices, if you are self employed, new equipment could be the responsibility of the treating clinician, the practice or the corporate to purchase. But to expedite that request weighing up cost and return on investment, on a business plan will certainly help.
Weighing up costs
Understand that there are some costs which will be fixed and some will need to be accounted for if they are associated with an appointment. For example, the initial cost of the equipment and its ongoing costs is fixed. However, the cost of the airflow powder, annual servicing cost and loan unit charge changes with the number of appointments.
For both situations, you need to determine how efficiently you work. Productivity is up when patients are in the chair undertaking treatment. Some dental computing software can be useful to extract this information allowing systems reports to be generated.
My experience affirms that this information can be retrieved from the practice software data by a simple process of running reports. This should be able to be done at a practice level. It will take into account your average treatment time per patient, average cost charged per treatment category and can also breakdown how efficiently the chair is being used on a daily and weekly basis.
Each equipment purchase is an asset of the company or person who purchased, so an investment is made upon each purchase.
EMS has recently introduced a GBT calculator. When relevant information such as appointment cost, number of appointments available per week is inputted, it can help you to work out potential revenue that can be generated. This information can be added to your business plan and is a great asset to increase your negotiating potential.
Do your research
If it’s a new treatment, do other practices offer it? If so, for how much and how long do they allocate for the treatment?
I always refer to allocation of time for the appointment as it’s how long the clinician needs to complete the treatment, not how long the patient needs to stay in the chair.
Business plan breakdown
My recommendations may not require you to include all this information, but the more information you provide, backed with evidence, the greater chance you have to open dialogue with the practice manager or principle.
- Aims and objectives of the business plan – what do you want and how will you achieve it?
- Current treatments/equipment available – do you offer airflow/ air polishing or whitening at present? If so, what are the costs and how popular is it with patients? If not, have patients been asking for it?
- Generate awareness from referring dentist and colleagues – this formed the basis of my marketing strategy, which was all in house recommendation
- Why will the new treatments or equipment benefit the practice? For this, use FAB
- Feature – the EMS master unit provides warm water when using both the airflow and Piezon.
- Advantage – More comfortable for the patient as less likely to have any sensitivity
- Benefit– More comfortable for patients and clinicians therefore uptake of treatment will be greater, and stronger patient recall rate.
- Research about local competitors – how much are they charging and what do they offer?
- Financials including costs and ROI – how much is the initial unit and what are the ongoing costs or servicing costs?
- Chair analytics and efficiency – ask your practice manager for this information as it can be run off most dental software.
Chair analytics
This is a report that can be run on most dental practice softwares providing information on how efficiently the dental chair is being utilised. In simple terms, if the chair is being used, is it generating revenue from the treatment?
The information it provides can be broken down into treatment types, time spent on average for each appointment category, and revenue generated.
Appointment analysis
This breaks down actual appointments and can give information on gross earnings per hour. This is particularly important if you are trying to negotiate your hourly or percentage uplift.
How to work out return on investment (ROI)
In simple terms, this is how long it will take to generate the money for the initial cost of the new equipment. It is not when you make profit – that is after you break even.
ROI will depend on factors such as the cost of the equipment or treatment, the potential increase in revenue or patient satisfaction, and the timeline for recouping the investment.
In conclusion, this may seem like a daunting project to undertake but this guide should help you better understand business purchases. This will aid the development of further purchases and additional services, growing both the practice and you as a clinician.
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