In my recent blog I discussed a simple formula. You can apply this to TEAM, or PRODUCT. Lets just talk about a widget.
If you use "Widget A" and you drove down the cost so it's now at 5% of your procedural costs (supply overhead is 5%). If the supply you currently use generates $300 in an hour.
$300 x 5% = $15 per hour cost.
Gross Profit $285
Labour costs remain the same regardless of procedure time (associate fees are affected, but the second example will make an associate even happier!)
If you are taught to use a more skilled product. One that costs 6% relative to the procedure but is so much better - it's FASTER and DOUBLES production. This person/product generates $600 an hour. In the case of the widget - a variable expense.
In the case of labour....a fixed expense.
$600 x 6% = $36 per hour cost
Gross profit $564
Labour costs remain the same, profit for end user is higher.
Which would you rather strive for?
If you want to use "cheap", you will find it. There is plenty in the "race to the bottom". Personally, I am an investor and UNDERSTAND the value of a trained and productive team. I understand the quality of people first, then process (supplies and equipment) and quality of product (your services).
So do the large businesses that are buying up our clinics. People are an investment, Process is an investment. Product is the outcome of these investments...
We are all in this race together, let's create an efficient health care system that benefits the patient as much as the team creating the incredible solutions.
Understand the investment.
Check out my website...35 years of consulting in the dental industry.