How Motor City Dental Partners Keeps Supply Spend at 3.5% Across 50 Locations

Audrey Stern has been focused on improving supply ordering and procurement at Motor City Dental Partners since 2015.

At that time, the company had five practices, and there was no platform or system to work with. So she built a formulary-type system by hand. This meant that she found the best pricing on products herself and set up an approval process through vendor portals, so orders didn't just flow in unchecked. For a five-practice group with tight ownership, it worked, especially when a majority of their inventory came through one supplier.

Then, Motor City started growing.

Acquisitions brought new offices, staff, and surfaced ingrained habits that needed to change. Offices that joined Motor City Dental Partners had existing vendor relationships, reps they'd worked with for years, and their own ways of ordering. Some of the orders went through approved vendors, and some of them didn’t. This made it hard for Audrey to maintain visibility and control over what was ordered and spent on supplies. 

When a charge showed up on the credit card from an approved or unapproved vendor, it was categorized under a catch-all label and processed. There wasn’t a process to vet and approve it, or an easy way to know whether the invoice matched what was ordered or what was actually received. Not because anyone was being careless, processes were in place, but because the tools to track it across a growing portfolio of practices weren’t available to them.

“If the charge appeared to be from Patterson on the credit card, it was categorized as ‘Drugs and Supplies’ and then worked to track down the invoice,” Michael Towle said. 

When Michael joined in December 2021 to build out the corporate side of the DSO, one of the first things he noticed was a question nobody could fully answer: What are we actually spending on supplies?

In 2021, Motor City Dental Partners went through a full financial audit. Every invoice needed to be accounted for, and every charge needed a paper trail. That exposed a procurement gap: Motor City couldn’t track, control, and have visibility on every supply order submitted and what supplies were actually received. 

Motor City Dental Partners started with Method in 2022. They already had a procurement process that worked, though applying it consistently was a major struggle. Audrey relied on Method to give her visibility of where her methodology and processes were being applied and where they weren’t. From a single place, she could see, manage, and change supply orders based on the formularies that were already created and approved. 

Now the process is the same each month. Every location within the organization submits orders through Method by the 15th of the month. Audrey can then review each order before it’s placed. That includes checking pricing, catching items selected from the wrong vendor, flagging back-ordered products, and otherwise adjusting vendor allocation to eliminate unnecessary shipping fees. She’s able to make changes before the orders are processed, helping the practices get what they need, when they need it, at the price the DSO negotiated it for. 

On the vendor side, Motor City is able to add multiple suppliers all in one place, making it easier to compare negotiated prices. This helps enable practices to order the cheapest option. Which in turn, helps Motor City Dental Partners keep their practices within the established supply budgets. Before Method, they had to log into each supplier they had negotiated rates with, compare prices, and build out the formulary by hand. Now, that’s not necessary. Audrey uses Method to find products at the lowest possible rate faster. 

For instance, she's caught a local vendor charging $200 for an item available on Method for $80. She's caught double invoicing, contract pricing discrepancies, and shipping charges that had no business being on an invoice. She uncovers some sort of discrepancy almost every time she sits down to approve orders.

Audrey can choose the lowest-priced supplies from the approved vendors, and when a rep comes in asking for business, the conversation is simple.

She tells suppliers, "Be competitive. I'm happy to share what we're spending. If you can beat it, you're in.”

Michael used the visibility Method provided to build a formal budget structure around it. Rather than applying a standard spend percentage to every location, he sets individual budgets by office, based on what each location actually spent and produced the prior quarter. This budget is reviewed and updated every 90 days.

The effect is straightforward. When offices can see they're close to their limit, they order what they need. The practices will only spend what they have available to spend. If there isn’t a budget, this typically leads to overspending, because a limit isn’t set and established.

"The tighter we get on those budgets, the tighter they are," Michael said. "And they're not having shortages. They're just paying attention to what they're spending."

Offices that were ordering six months of gloves at a time are now ordering for the month. The over-ordering that came from having uncapped budgets just goes away.

In addition, three-way invoice matching changed the audit conversation entirely as well. When Motor City Dental Partners auditors ask how they know what was ordered matches what was received and what was billed, Michael walks them through the system."They're like, ‘okay, that checks the box. That's exactly what we want to know.’"

When Motor City Dental Partners acquires a practice, getting them onto Method is part of a 90-day integration window. Offices come in with their own habits, vendor relationships, and their own ways of doing things. Asking them to change all of that at once is an unrealistic expectation.

That's why ease of use was a must for Motor City Dental Partners when they were considering procurement software. A tool that's hard to learn creates resistance to change and can slow everything down. A tool that's easy to use helps make the procurement process work. If practices didn’t use it, then they’d have the same struggles as they had before. 

Method met those high bars. Audrey can walk a new team through ordering on a Teams call. From there, they run it themselves.

"Most of the time they come back like, 'this is way easier than the way we were doing it.'"

‍Last year, Motor City Dental Partners' revenue grew 14%. In the same period, supply spend dropped 16%.

DSO-wide, supply cost as a percentage of production sits at 3.5%. Most vendor reps come in pitching 5% as a benchmark worth hitting. Motor City Dental Partners has been well below that for years, and continues to move in the right direction.

"We have not found [another] solution doing what Method is doing," Michael said. "Method is probably one of my favorite software programs we use."