Technology and Dental Accounting

It’s amazing how much content is flowing through the dental industry message boards, LinkedIn, and social media channels regarding the “emergence of digital technology in the dental space”. The dental industry has always been on the cutting-edge of healthcare technology – innovative in the clinical space with the onset of CAD CAM, new material technology, CBCT, 3D printing, and other digital leaps and bounds. It’s interesting that the business systems within the dental office have remained relatively stagnant for all these years; however, as a champion for the independent dentist I must admit, I’m disappointed – but not surprised – that dental business technology advancement has lagged behind the operatory space.

When the COVID pandemic started crawling upon us in the first quarter of 2020 and the government decided to offer some financial assistance with PPP, EIDL, and the like, most dentists were clamoring to determine where they stood. The first thing you focus on in that scenario is good data. Accurate and timely practice financial data allows you to build a strategy in good and bad times. In bad times, you immediately calculate a “cash-burn analysis” to see how much life the practice has without revenue streams coming in. The second step is the PPP analysis to include payroll as related to furlough and practice operations. Third, let’s prepare for the future. So many dentists were left alone with poor financial bookkeeping, antiquated accounting systems, and sat listening to crickets rather than the ringing phone of their CPA. Without accurate and timely data, decision making is a challenge.

As the pandemic righted itself and the ADA Health Policy Institute continues to project a reasonable rebound, we all look to the future. Signs indicate growth is leveling off and profit and procedure will be burdened a bit moving forward – to what degree we can’t predict. It will be more important that it has ever been before, in the history of the dental profession, to modernize your dental practice systems and surround yourself with a serious team of industry experts. I predict the thriving; independent dentist will succeed by leveraging dental specialty advisors and technology. We see dental industry companies exploding with technology tools for the business sector now, enabling financial an accounting firms like ours to offer better, faster services. Mining data in the dental industry will continue to be a serious topic in the coming years.
When I indicated I wasn’t surprised that dental business technology advancement was mothballed some years ago, I believe it was due partly to the ease at which the dental model enabled strong income and business management through the years. The secret is out: a well-run dental practice is a model for smart business in any college classroom. As a result, there was not a demand to provide cutting edge business tools for the dentist – your regular neighborhood CPA was good enough. “Treat the dentist like any business they said” – and did just that. The emergence of corporate interest in the dental space is real and growing. Based on economies of scale, you can buy and bundle 100 dental practices and improve efficiency to the point that your profitability is increased and scalable. What about the independent dentist? They much surround themselves with the same efficiencies and technology to help them compete too.

“It will be more important that it has ever been before, in the history of the dental profession, to modernize your dental practice financial systems and surround yourself with a serious team of industry business experts.”

Technology, however, does not benefit your dental practice. It’s what you do with the by-product called “time savings” – the slag of the tech – so to speak, that makes all the difference. For example, rather than gathering paper receipts in a box and sorting and entering them in month’s end, use Receipt Bank app to photograph the receipt while artificial intelligence reads the data, transmits it to Quickbooks, and stores a digital file for your records. Duplicate this digital efficiency across ALL business process and you gain back valuable time. You also cloud your data and connect it to the front desk so your advisors receive their own, personal notification when your Profit and Loss and other reports are ready to view – every month in real time. Now, financial planners, consultants, and Office Managers can access and review reports, enabling them to pivot and improve quickly. Great digital business technology also improves the security of your data by layering two-part authentication throughout, in an environment of ever-growing fraudulent, digital attacks. Cash-flow management becomes proactive, tax strategy discussions are more common, and your CPA has time to give you solid advice. Your CPA didn’t call to help during the pandemic? Maybe it’s time to put your CPA to the test with the Dental CPA Checkup, which could make all the difference.