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High-tech Equipment — Worth it? Douglas Carlsen, DDS

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by Douglas Carlsen, DDS

Two major fears middle-aged dentists face today are first, not being able to save enough to protect their lifestyle in retirement and second, practicing in an office with antiquated equipment. How can one reconcile spending a bundle on state-of-the-art equipment with the need to save that same bundle on retirement savings?

Must Haves
There is high-tech equipment that you must have in today's world in order to be relevant, regardless of price.

• Digital Radiography
Examples: Dexis Platinum, Schick CDR Elite; $20,000 to $30,000 for use in four to five operatories.
It's become the standard of care and more and more patients demand it.

• Intra-oral Cameras
Examples: Acucam Concept IV FWT, Digital DOC Iris; $13,000 to $20,000 for individual cameras in four operatories.

This tool has been the best diagnostic and treatment planning dental tool for 20 years. Make sure you have easy access to a camera in every hygiene room and at least one doctor operatory.

• Isolite
Price for two is around $3,500. The high-tech answer to rubber dam. Makes your life easier and faster. Just using this might pay for the rest of the equipment on the "must-have" list.

• SLR Digital Camera
A Canon EOS T2I with macro, ring flash and other goodies costs between $2,000 and $2,500. If you do any cosmetic dentistry, and we all do, an SLR camera is a must.

I don't care if you rob your children's college funds (don't touch that IRA!) or stand on a street corner on weekends spinning signs. You need the above equipment now!

To take out a $50,000 10-year loan at eight percent comes to $600 per month. Keep your cars an extra two years and you're even after 10 years. And don't scrimp; get quality products.

The Big Kahuna's Equipment
And now, the most often cited items on a dentist's fantasy wish list:

• CAD/CAM impression and restoration production
Examples: Sirona CEREC, Henry Schein E4D; $120,000+

• CBCT(cone beam computed tomography)
Example: Gendex GXCB-500HD, Sirona Galileos; $150,000+

• LANAP Protocol (laser-assisted new attachment procedure) – Nd:YAG Laser
Example: PerioLase MVP-7; $40,000+

There are additional items, such as dental microscopes, caries detectors, loupes and many soft- and hard-tissue lasers that one might find on the cocktail party "hot topic" list.

Can a dentist afford any of the above? Let's analyze the situation from three viewpoints: the doctor's debt structure, return on investment and the thrill.

Debt Structure
Brian Hufford, of Hufford Financial, recommends the following percentages of a dentist's net income for large purchases and debt structure.¹

Loans: 25 percent for all personal and practice loans.

Large purchases: Five percent of personal income. This includes personal and practice purchases of anything more than $3,000.

Debt Structure: If all practice and personal monthly loan payments are more than 0.8 percent of your total practice and personal debt, you are sacrificing your ability to save by paying debt too quickly.

For a dental family with a net income of $250,000, large cash purchases must be no more than $12,500! Therefore, a cash payment makes no sense.

Of course, a dentist would normally take out a lease or loan for large purchases. As indicated above, one still needs all practice and personal loans to total only 25 percent of net income. For a typical dentist with a net income of $250,000, this means all loans, from home mortgage, cars and practice must be $5,200 per month or less. Also, savings for retirement needs be in the 15 percent range, or $3,000+ per month. With CAM/CAM and CBCT leasing at $2,500 to $3,500 per month, the burden of new equipment seems impractical. Unless…

Return on Investment
If the equipment provides a quick positive return on investment, I've always been in favor of purchase. In this case, one can bypass the above debt paragraph and go for it!

I would caution most dentists to take on an additional large payment, even if you're certain you'll cover that payment. Only after practice and student loans are paid off or an emergency fund of $100,000 is available should this be an option. An additional $2,500 to $3,000 per month payment becomes a nightmare if the dentist is out of the office for an extended period due to illness or accident.

Let's look at actual Dentaltown threads to shed light on CBCT, LANAP and CAD/CAM.

CBCT:
Posted by Dr. Jay Reznick 6/24/2011 My monthly payment is about $3,500 per month. I do about 30 to 40 CBCT exams per month (on a 3.5 day work week). I charge $195 for most scans. That is $5,850 to $7,800 per month income…

…My case acceptance rate is higher, because I do not need to send the patient out for a scan, and then reschedule them to review it. Patients love the convenience, and I love the higher patient follow-through rate. My surgical time is cut in half, allowing me to schedule more surgeries each day. This is where the profit from having the CBCT happens. All in all, investing in CBCT technology is one of the best things that I have done in my practice.

Bottom line from reading many threads: CBCT is a wise investment for those committed to a practice stressing placement and restoration of implants or for those who do extensive orthodontics.

LANAP:
Posted by Dr. Charles Payet 3/4/2011
Let's use my PerioLase payment as an example:
• $1,500 per month payment

• Average case fee $4,000

• Average three hours of time for LANAP (one should also figure the time "lost" in follow-up appointments.

• Let's assume $400/hour overhead (mine's actually lower than this, but for easy numbers) not including the laser = $1,200

• Roughly that's $1,300 profit, or $433 profit/hour on the first case each month

• On all subsequent cases per month, since the laser cost is already covered, that's $2,800 profit, or $933 profit/hour.

Bottom Line: The positive return on investment threads out-number the negative about 20:1. This one looks like an easy positive ROI.

CAD/CAM:
There are many threads analyzing the number of units necessary to manufacture per month to break even, comparing the monthly CAD/CAM lease with blocks and other supplies to a typical lab fee. Consensus is that the break-even point appears to be somewhere between 15 and 30 units, depending on the price of your typical lab fee.

For additional thoughts on financial issues related to CAD/CAM and CBDT, Dr. Sameer Puri, director of CAD/CAM Dentistry at the Scottsdale Center and co-founder of www.cerecdoctors.com, offers comments.

Carlsen: For someone wishing to provide CAD/CAM restorations and have a positive return on investment quickly, how should that dentist stage purchases, education and promotion?
Puri: Purchasing CAD/CAM or any high-tech equipment without proper training is a recipe for disaster. It would be like owning a Ferrari and never really driving the car out of your driveway. Having said that, the newer generations of CAD/CAM machines have made the process much easier than before. Now, most doctors can do basic stuff right out of the gate and the training is there to fine-tune and simplify the procedures.

With regards to staging, through my own experience as an advanced trainer who has trained thousands of doctors through our CEREC Training Web site, my recommendation is to get basic training within one week of purchasing the machine. Then I would recommend supplemental (intermediate/advanced) training within 90 days.

We have a whole series of courses that teach quadrants, anteriors, bridges and more. When a dentist can now do one's own bridges, implant abutments and smile makeover cases in house, I would argue that the training is definitely worth the investment.

Carlsen: Please discuss the financial value of also incorporating CBCT with CAD/CAM.
Puri: The integration of CEREC and Galileos allows you to virtually plan your case on the CEREC, take the restoration that you designed and put it on the patient's 3D X-ray data. This shows you where your planned final restoration would be in relation to the patients bone, tissue and other vital structures. The data is then used to manufacture a surgical guide that will allow the placement of the implant exactly under your planned restoration.

The fact that this can be done in just a few minutes in front of the patient is a great educational tool and a great case presentation aid.

Increased financial return to the doctor is gauged in several ways:
1. increased case acceptance
2. ability to diagnose and treat more comprehensively
3. wow factor and marketing
4. decreased cost for surgical guide and diagnostic wax-up

The Thrill
A huge reason to consider the above equipment is the dentist's wants. Dentists have literally transformed their practices overnight with CAD/CAM, CBCT and LANAP. Dentists have also gone broke after purchases like these.

What's the difference? In talking to many dentists of all ages, the answer is commitment to the technology. Ongoing excitement and engagement are essential.

In 1992, I made a total commitment to a technology that showed little chance for a positive return on investment and wasn't new or sexy. It was a commitment to precise gold castings. How in the world did I sell that? Easily, by letting patients know and feel that I provided the best. And I retired early in 2004 due to that commitment.

Plan your purchases, docs. For intra-oral cameras, for example, provide a half-day of training for you and your staff, either with a manufacturing rep or equipment tech. Learn how to take photos, how to print and how to present your findings to the patient. Make sure all clinical staff can use it efficiently. Have a review meeting a week or two afterward.

Other equipment, such as CAD/CAM often involves a total change of practice direction and vision. This has changed doctor's lives! Continuing education and product updates are essential, yet the doctor and staff often display the "We're the best" attitude. Patients feel the excitement and tell others.

In the end, the thrill often overshadows any debt structure and return on investment calculations. Yes, this from the finance and math geek!

Buying Don'ts
Don't buy just because you think you should use a new technology.

Don't buy because you can fully deduct using Schedule 179. Remember, you will always receive the full deduction spread over several years. Those who profit from this deduction have very special financial cases and need CPA analysis. Those who purchase because of tax problems without tax advice normally end up with even larger cash flow problems.

Don't (blindly) buy used. There are definite bargains out there. I question, though, the sagacity of paying a large amount of cash for an item that might be antiquated. You might be handicapped in not having a product that is easily upgradable. I'm also not sure that purchasing used shows the level of commitment that buying new does. And yes, this is from the guy that rarely buys a new car!

Final Thoughts
In the end, the doctors who thrive are the ones who totally commit to their technologies with a fun attitude. Take course updates, follow Dentaltown threads, use Facebook and Twitter for quick comments. Engage your passion! Have all staff attend promotional and educational meetings. Be proud and show off your technology!

References
1. Brian C. Hufford, CPA, CFP, "An Economic Survival Guide -- Move Toward Your Fears -- Not Away," AGD Impact, January 2009.

Author’s Bio
Douglas Carlsen, DDS, owner of Golich Carlsen, retired at age 53 from private practice and clinical lecturing at UCLA School of Dentistry. He writes and lectures nationally on financial topics from the point of view of one that was able to retire early on his own terms. Carlsen consults with dentists, CPAs and planners on business systems, personal finance and retirement scenarios. Visit his Web site: www.golichcarlsen.com; call 760-535-1621 or e-mail at drcarlsen@gmail.com.
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