Every DSO leader and practice owner knows the frustration: despite setting clear supply budgets, individual locations consistently overspend, order duplicate items, or let inventory pile up while cash flow suffers.
The problem isn't your budget numbers, however. Once your organization has scaled to a certain point, a lack of systems to enforce and optimize spend is completely necessary.
Here's how forward-thinking DSOs are making their once chaotic procurement process into a competitive advantage.
Too many DSOs set supply budgets based on ideal scenarios rather than production reality. When budgets are unrealistic, teams either ignore them entirely or constantly request exceptions.
Benchmark your budgets against actual production levels.
A healthy DSO typically runs 4-6% of collections on supplies, with top performers hitting closer to 4%.
But here's the game-changer: give your teams real-time visibility into budget performance. When office managers can see exactly where they stand against their monthly allocation before submitting orders, they make smarter decisions automatically.
As the old saying goes, “what gets measured gets managed”, but people forget the second part: you’ve got to be measuring the right things. In this case, measurement has to happen before the money is spent, not after.
Most DSOs try to build formularies by requesting order history from multiple suppliers. The results are incomplete data, missing invoices, and formulary decisions based on partial information.
Implement procurement technology that captures every transaction across all suppliers for 3-6 months before making major formulary decisions. This gives your clinical team complete visibility into actual usage patterns, not just what suppliers choose to report.
Real-time reporting also allows you to refine your formulary continuously. When you spot a location consistently ordering off-formulary items, you can quickly determine if it's a training issue or if the formulary needs updating.
Asking teams to build carts on supplier websites for approval or manage spreadsheets takes focus away from patient care and higher-value tasks.
Automated approval routing where requests flow directly to designated approvers with all context included—pricing comparisons, budget impact, formulary compliance status.
This creates essential checks and balances without administrative burden. Your teams can request what they need while you maintain spending control and prevent over-ordering before money leaves your account.
Teams manually check multiple suppliers for the same items, often missing better pricing or simply ordering from whichever site they remember.
Procurement platforms that aggregate real-time pricing and automatically build optimized carts based on your lowest available prices. With a few clicks, staff can confidently order knowing they're getting the best deals from your preferred suppliers.
This isn't just about saving money—it's about eliminating the time waste of price shopping and the frustration of discovering better pricing after orders are placed.
Excess inventory sitting on shelves ties up capital and often expires before use. But stockouts disrupt patient care and force expensive rush orders.
What you should be doing instead
Implement inventory management systems with visual scanning, reorder tagging, or check-in/check-out processes. Train teams to maintain 2-4 weeks of supply for high-turnover items and 6-8 weeks for specialty items.
The key is having systems that make inventory tracking effortless, not another admin thing to do. When checking stock levels is as simple as scanning a barcode, teams naturally order more precisely.
The bottom line is you need to control procurement processes before they control you.
What separates a successful DSO from a struggling one is how well they’re managing their supply spend and inventory.
While your competitors are still playing spreadsheet games and hoping for the best, you could be:
The practices implementing these systems then reinvest those savings into growth, technology, and better patient experiences.
