Inventory Management
Procurement
Method Pay
Analytics & Reporting
DSOs that control or reduce supply spend by just 1% can increase EBITDA by 4-6%.
Easier said than done however as the human element makes it complicated.
Your best providers have built patient relationships, mastered their workflows, and earned the autonomy you've given them. Heavy-handed restrictions designed to fix a few problem locations often punish your stars and erode the trust that took years to build.
This tension between growth and provider satisfaction isn't just a nice-to-have consideration. It's the difference between building a sustainable organization and creating a revolving door of frustrated clinicians.
The healthiest dental practices achieve net incomes of 45% of office production, and getting there requires smart procurement strategies that enhance rather than restrict provider capabilities.
Here's how three proven strategies can help you reach those financial targets while actually strengthening the trust your providers place in your leadership.
When most DSOs discover procurement problems, their first instinct is to implement universal controls. Location A is overspending on composite materials. Location B keeps ordering expired inventory. The solution seems obvious: lock down purchasing across all sites.
But here's what happens next. Your star performers - the ones hitting 5% supply spend and maintaining 45% net margins - suddenly find themselves trapped in the same restrictive system designed to fix someone else's problems. Research confirms what you probably already know: when universal restrictions are applied, high-performing locations feel unfairly penalized for others' missteps. The result is frustrated providers who start questioning whether your organization truly values their contributions.
Traditional procurement systems create this exact scenario because they treat every location identically. Practices below 45% net income often have expense leaks that these blanket policies could prevent, but applying those same restrictions to efficient operations creates new problems while solving old ones.
Imagine a different approach. Your technology platform operates on a three-dimensional control matrix: suppliers × products × locations. This means you can treat Location A's composite ordering completely differently from Location B's inventory management, while giving your high performers the freedom they've earned.
Modern procurement technology enables compliance and performance management as DSOs scale from a handful to dozens of locations. The key insight is that providers maintain autonomy within intelligent guardrails rather than universal restrictions. Think of it as personalized medicine for your procurement challenges.
Let's walk through a concrete scenario. Location A is spending 8% of revenue on supplies, consistently overordering and letting materials expire. Your platform identifies these patterns and automatically requires approval for orders above certain thresholds, suggests reorder points based on actual usage data, and flags when items are approaching expiration.
Meanwhile, Location B maintains 5% supply spend with excellent inventory turnover. The same platform recognizes this performance and provides expanded ordering autonomy, streamlined approval processes, and advanced analytics to help them optimize even further.
The result: Location A gets the support structure they need without feeling micromanaged, while Location B experiences your technology as an empowerment tool rather than a restriction.
This approach transforms procurement software from a barrier into an enabler. Practices leveraging procurement data analytics identify opportunities to reduce spend by 15-25%, largely by curtailing over-ordering and highlighting cost-saving opportunities. Your providers see real-time decision-making tools that prevent problems rather than requiring after-the-fact coaching and correction.
As DSOs scale complexity, technology becomes essential for managing compliance and performance across multiple locations. But when that technology respects provider expertise and adapts to individual site performance, it builds trust rather than eroding it.
Clinical autonomy is paramount for provider satisfaction and patient outcomes. This isn't just a feel-good principle - it's a practical reality that determines whether your providers see formulary management as professional support or administrative interference.
Custom formularies with stakeholder involvement reduce supply discrepancies and build operational discipline, but only when they're implemented with clear respect for clinical judgment. A balanced formulary ensures all patients receive high-quality care while finding the intersection of cost and quality - not defaulting to either extreme of cheapest products or premium everything.
Here's where smart DSOs differentiate themselves. They implement parallel strategies for clinical and non-clinical products, recognizing that these categories require completely different approaches.
Present clinically equivalent options to your providers, secure clinical team approval for any changes, and focus on value rather than simply finding the cheapest option. When you involve providers in evaluating alternatives - say, comparing composite materials from different manufacturers - you're respecting their expertise while creating opportunities for cost optimization.
The difference between successful formulary implementation and provider rebellion often comes down to process transparency. When clinical teams understand how alternatives are evaluated, when they see data supporting cost-saving decisions, and when they're included in the review process, they become partners in optimization rather than obstacles to overcome.
This collaborative approach reduces unauthorized spend not through restriction, but through buy-in. Providers who understand the reasoning behind formulary decisions are more likely to embrace them and suggest additional improvements.
Here's a perspective that reframes procurement savings from cost-cutting to value creation. Every dollar saved in procurement equals $3-4 in production value to your practice. Consider a typical root canal generating $800 in revenue. The equivalent procurement savings of $200-267 requires significantly less patient chair time and marketing investment than generating that additional production.
This multiplier effect means that procurement optimization doesn't just improve margins - it creates capacity for growth by reducing the production burden required to achieve the same financial results.
Traditional procurement operates on instinct and routine. Providers order when they think they need supplies, often overbuying to avoid stockouts. Suppliers process these orders without questioning quantities or suggesting alternatives because their job is to fulfill requests, not optimize your business operations.
Analytics-driven procurement reveals a different reality. Practices implementing data-driven approaches identify 15-25% savings potential, primarily by controlling overbuying and waste. The transformation happens when you replace "order when worried about running out" with "order based on consumption patterns and lead times."
Every procurement decision ultimately comes down to three elements visible on your invoice: Product + Quantity + Price. Granular spend data enables competitive supplier negotiations across all three dimensions, empowering providers with better information for each decision.
This framework shifts the conversation from "are we spending too much" to "are we buying the right products, in appropriate quantities, at competitive prices." The specificity makes optimization actionable rather than overwhelming.
One of the biggest misconceptions about procurement optimization is that savings require switching to obscure or lower-quality vendors. Procurement analytics actually increase your negotiating power with existing suppliers by providing concrete usage data and competitive benchmarks.
When you can show a supplier that you're purchasing $50,000 annually of a specific product across multiple locations, and you have competitive pricing from alternative sources, you're negotiating from strength. This approach maintains the supplier relationships your providers value while optimizing the financial terms.
Real-time visibility prevents costly corrections by identifying problems before they compound. Teaching providers to interpret KPIs like inventory turnover rates, write-offs, and cost-per-procedure trends transforms them from passive participants into active optimizers.
Course correction becomes collaborative data review rather than punitive oversight. When providers can see their own performance metrics and understand how they compare to peer locations, improvement becomes self-directed rather than externally imposed.
These three strategies reinforce each other to create something powerful: a procurement culture that enhances provider capabilities rather than restricting them. Technology enables granular control that prevents blanket restrictions from frustrating high performers. Formulary processes respect clinical autonomy while capturing 7-15% non-clinical savings. Data transparency builds confidence and increases supplier negotiation power.
From the provider perspective, this approach delivers what matters most: "I have targeted support where I need it, complete freedom for clinical decisions, and data that helps me make smart choices." Each strategy removes friction rather than adding bureaucracy, creating a path from expense leaks to the 45% net income targets that define healthy practices.
The financial impact is clear. When you move locations from 7-8% supply spend to the 5-6% benchmark while maintaining provider satisfaction, you're not just optimizing costs - you're creating sustainable competitive advantage. That 1% spend reduction translates to 4-6% EBITDA improvement, providing resources for expansion, technology investment, and provider incentives that fuel continued growth.
Technology has become essential for managing DSO complexity at scale, but not all procurement platforms understand the provider trust equation. The difference lies in granular controls that adapt to individual location performance, respect for clinical autonomy in formulary management, and analytics that empower rather than restrict provider decision-making.
Ready to see how these strategies work in practice. Schedule a demo to explore how Method's platform enables surgical precision in procurement management while building rather than eroding provider trust.
Because when you get procurement right, scaling your DSO becomes an opportunity to strengthen provider relationships rather than strain them. The practices that understand this principle aren't just growing faster - they're building organizations that providers actively want to join and stay with for the long term.
