The Shell Game
Increasing your chances of landing orders during a sluggish economy.
By Laura Thill
The dollar is tight, and Wall Street is downright grizzly. But, there is a difference between unnecessary spending and wise investing. If you haven’t already done so, it’s time to show your dental customers the value of investing in their business.
Tight times or not, dentists have their eye on high-tech, sexy equipment, according to experts. Cone beam, laser and digital X-ray are just a few of the products on your customers’ wish lists, says Rick Cacciatore, president, Iowa Dental Supply (Grimes, Iowa). The challenge is to show them the value of investing in big-ticket items in spite of increasing patient cancellations, which are becoming more common today. "I don’t care which distributor you talk to, we’re all feeling the effect of a soft economy," he says. At the same time, this could be just the time for dentists to make a large purchase, he adds. Take the Section 179 deduction, which permits businesses to deduct the full purchase price of qualifying equipment (up to $250,000) purchased or financed during the tax year. If a dentist buys (or leases) a piece of qualifying equipment, he or she can deduct the full purchase price from his or her gross income. The federal Government created this incentive to encourage businesses to buy equipment and invest in themselves.
"Eight years ago, the [maximum tax write-off] was $25,000," Cacciatore points out. "Today it’s $250,000. This means, a dentist can purchase a $300,000 piece of equipment and write off all but $50,000. Of course, this whole program may vanish after the upcoming election, he cautions.
"Really, this could be the greatest opportunity for dentists to take advantage of," he continues. "But, I’ve found that most dentists have been too conservative to follow through with it.
"Distributor reps must know how to explain the difference between cost (e.g., return on investment) and price," he continues. "Otherwise, dentists are [more likely] to look for the lowest prices [rather than the best value]."
Bill Melius, account manager for Burkhart Dental Supply (Tacoma, Wash.), agrees that reps must help their customers balance cost and price. In some cases, avoiding a purchase can cost a dentist more than adding new technology and upgrading his or her practice. "I think there is a cost associated with staying where you’re at," he says. For instance, some dentists may hesitate to convert their practice from films to digital radiography. But, there is a cost associated with storing films and purchasing chemicals and related supplies. "I take this cost and subtract it from the price of a new digital system," he explains. "The dentist can see that in three to five years, a digital sensor will pay for itself."
Furthermore, it’s difficult for dentists who lack more advanced technology to compete with practices that offer patients value-added services, Melius continues. Today, it’s common for referring dentists to send panoramic images, which are much clearer and easier to store than traditional X-ray images. Without the appropriate technology, a practice may lose this referral. And while cone beam and digital imaging may have been "slow to hit the market, their value is now understood," more and more by general practitioners, he says. "As the economy wanes, we can expect to see more general practitioners looking to keep endodontic and other typically referred procedures in-house."
Indeed, an automated practice is necessary to remain competitive in today’s industry, notes Cacciatore. "Age is not a factor," he points out. "Simply, some dentists have not embraced new ways of thinking. If they aren’t technologically savvy at home, often they aren’t savvy at the office either."
Distributor reps can gauge what types of products their customers may be interested in by the degree of automation at their practice, he adds. About 80 percent of his customers have front-office programs for scheduling, billing, claims processing and more. Twenty or 25 percent have computers in the treatment rooms and use intraoral cameras and/or digital radiography.
"Most of the practices I deal with have CPUs in their front offices and operatories," says Melius. "It’s a natural step from there to add intraoral cameras, digital X-ray and other digital components that can facilitate treatment planning and patient education.
"Even senior doctors who expect to retire within 10 years enjoy this new technology," he continues. "They like to be able to [point things out to] their patients on the screen. Also, doctors who have newer technologies will be the ones who have an easier time selling their practices when they retire. This is what newer dentists out of school are looking for."
Balancing act
So, money is tight, yet dentists still need to invest in their practice in order to move forward. But, is this all that’s keeping them up at night? "Dentists’ biggest problem is maintaining balance in their lives [in general]," says Cacciatore. "Recruiting and developing staff, and then providing value-added care to their patients keeps them so busy, they become victims of their own success. This can lead to burnout."
"As in any small business, dentists [must deal with] staff and employee issues," says Melius. And, busy as dental practices are, dentists have begun to see more patient cancellations, perhaps an effect of the dragging economy. "It can be a tragedy to lose a couple of patients when you are paying your hygienist," he points out. "Some dentists do a [better job than others] finding new and prospective patients."
Indeed, Melius is concerned that some dentists may start to panic about losing business in the next six to 12 months, and cut spending in the wrong places. "Dentists should be focusing on products that can help them streamline their business," he explains. "[Operatory] supplies comprise about 6 percent of a dentist’s business, but this often is the first place they cut." In comparison, staff makes up about 22 to 30 percent of a practice’s spending. "If dentists work more efficiently and streamline their practice, rather than try to save money on cotton balls, I think they’ll have an easier time [surviving a sluggish economy]."
And while dental practices equipped with cutting edge technology may be ahead of the game as far as attracting patients and keeping them satisfied, efficiently run practices may find a better return on investment for this equipment. For instance, "is a dentist’s staff educated to use [his or her] new intraoral camera and digital radiography system?" says Melius. "Can the hygienist sit down with patients and help educate them? Some dentists purchase digital and video equipment, and it just sits there. But, all auxiliary staff can be trained and on board, whether it’s by highlighting troubled gum areas [on a screen] or by taking X-rays and prepping patients before the dentist comes in."
The do’s and don’ts
There are sales reps and there are consultant reps, and dentists are looking for the latter, note the experts. Honesty and reliability are key traits dentists value in their rep. "Reps should take notes and pay attention to the details, because their follow-up is paramount to their success," says Cacciatore. The dental industry is an ethical one, he notes. As such, "reps should never speak negatively of their competitors to their customers."
They should also understand the difference between the dentist and the office manager who places orders, he adds. Dentists are less accessible than the front office staff, "but they own the business and write the checks," he says. "So when the rep gets an appointment with the dentist, [he or she must decide] what to talk about: 3D cone beam or impression material."
"Staff members often decide where to purchase products from," he continues. "They [are more likely to] make time for reps, because they need things fixed or more supplies." A solid relationship with both people is essential. "If a staff person leaves or decides to no longer do business with the rep, the rep must be prepared to [approach] the dentist and find out what happened."
"The value of a long-term customer is huge in this industry," says Melius, particularly since distributor reps depend on customer referrals for business. "Many dentists are extremely smart and good clinically, but that doesn’t make them great communicators," he adds. "Until I get to know my dental customers very well, I watch their body language and ask a lot of probing questions. My strategy has always been, win some, but lose none."
Sidebar:
Speaking From the Chair
By Laura Thill
One dentist reflects on investing during a sluggish economy, and how her dental rep can help.
Vicky LeClair, D.D.S., P.S., owner of a family dental practice in Poulsbo, Wash., decided 2008 was the year to grow her practice, which sees up to 90 restorative and hygiene patients each week, plus additional patients one Saturday of each month. For now, it’s just LeClair and a couple of hygienists. But, she looks forward to adding an associate and hygienists within the next year and a half.
This fall, with the help of her distributor rep, LeClair designed and built a new office. "I did have some computers prior to our move, as well as intraoral cameras," she says. "But, I went completely digital in my new operatory. This includes digital panoramic and X-ray." And, it’s been great, she adds. "Having digital x-ray is wonderful. I can view images instantaneously and blow them up."
Nevertheless, she is "extremely anxious about what’s going on in the economy. We are seeing more patient cancellations than normal, and it’s becoming increasingly difficult to fill such short-notice cancellations," says LeClair. "This may or may not be directly related to the economy, but we definitely see [this trend], and it makes me nervous about purchasing a big-ticket item right now." In fact, if she had known just how scary the economy would get when she was planning her new office, LeClair admits she might have held off adding a digital X-ray system. Nevertheless, she trusts her distributor rep and values his consult, and understands the benefits and potential return on investment this new system can bring to her practice.
"I have an eight- or nine-year relationship with my rep," says LeClair. "He has gotten to know my practice and style, and I depend on him to keep me informed on new products and help me stay within my budget constraints.
"The products dentists use are extremely important, but we can easily overspend and then not use them," she continues. "My rep is well-versed and educated about products, and he is honest as far as whether a product would be a good value to my practice." A great rep saves his or her customer time, she adds. "Dentists can spend so much time reviewing products, and if our rep isn’t tuned into them, we might miss out on something important. If my rep brings a product to my attention because he thinks I would be interested in it, I can research it and save a lot of time." So, for instance, she has her eye on an oral cancer-screening device as her next major purchase.
LeClair advises new dentists to look for three qualities in their distributor reps:
- Honesty. "I want to know my rep is selling me a product because I need it, not because he or she wants to make a sale," she says.
- Longevity. "I want a long-term relationship with my rep [in order that] he knows the needs and style of my practice," she says.
- Reliability. "My rep has come out on a Saturday to repair my autoclave," she points out. "He also offers me a lot of advice."
"Newer dentists should form a relationship with a rep," says LeClair. "They should go to lunch with their rep and discuss their short-term and long-term goals. They should discuss where they would like to be in five years. Even if they aren’t sure [about this], it’s still important to ask their rep a lot of questions. I’ve found I get so much more from my rep than simply dental products."
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