Are you neck-deep in your end-of-year reporting, working weekends pulling together data for next year’s budgeting process and questioning whether the data you can get is complete, or even accurate?
If you are responsible for leading the financial planning activities for your organization, this time of year can be grueling, frustrating, and just a little stressful. What makes this whole process even more difficult is when you don’t have access to the information needed to make informed decisions. When that data sits in many different and siloed locations and is hard to get your hands on, this process can take days or even weeks.
What if you had the ability to see where every penny spent on supplies had gone? What if this included who spent it, where, when, and on what? What if you could view spend information by practice or location or role? How sharp would your forecast be if you could analyze data. By product category, supplier or time period? What if you could see what was purchased on formulary or off?
What if all of this information was centralized in a single location, being pulled in from across your entire enterprise in real-time? Would this make it easier and faster to make decisions?
This is exactly how Method enables financials leader to do more. We give you all the tools you need to make the best decisions and drive financial gains, instead of spinning tire trying to get to the data.
Let’s make 2024 a year of action. Let Method give you a tool that enables you and your leadership team to make decisions that could save your business tens or even hundreds of thousands of dollars, next year, and every year after.
In the world of financial planning for dental service organizations, the adage "knowledge is power" couldn’t ring truer. As the industry matures, strategically savvy DSOs are evolving from driving growth purely through acquisition to putting more emphasis on same-store growth.
To successfully make this shift, it is critical to be able to parse out performance metrics with a great deal of precision and flexibility. Access to comprehensive, precise data on buying behavior, forms the bedrock of informed decision-making, directly impacting the efficacy and success of financial strategies. The quality of decisions made about future spending strategies is only as good as the data on past spending behavior used to inform them.
This article explores how access to accurate data makes it easier to maximize savings from rebate programs and guide your private-label buying strategy. We also look at the role of standard operating procedures (SOPs), and the importance of establishing benchmarks to guide future financial decisions. Finally, we will examine how e-procurement solutions can directly impact the ability to accomplish specific goals associated with same-store growth.
With management consultant Greg Mahoney from our industry partner Skytale Group, let’s look closely at how e-procurement can enhance your access to critical information, enabling you to make data-driven decisions and fortify your financial planning in 2024.
The key factor that distinguishes successful financial planning from arbitrary decisions is the ability to leverage comprehensive and accurate data. By analyzing past spending behavior, dental service organizations can predict future trends, identify cost-saving opportunities, and streamline financial operations. This data-driven approach empowers organizations to make precise forecasts and allocate resources more efficiently and Method is the special sauce that delivers the data to you on a silver platter.
A pivotal aspect of financial planning for dental service organizations involves procurement and purchasing decisions. When dental service organizations have easy access to complete and accurate data, they gain a nuanced understanding of their spending behavior. This insight enables the optimization of spending strategies, ensuring resources are allocated to the most impactful areas. Let’s look at a few examples:
One of the key benefits of having access to complete and accurate data is the ability to maximize rebates from different suppliers. By thoroughly analyzing past spending behavior, Dental Service Organizations can identify opportunities to negotiate better terms, such as volume discounts or extended credit periods, as well as leveraging bulk buying strategies. A comprehensive understanding of historical purchasing patterns equips organizations to strike deals that yield better discounts and increased rebates, positively impacting the bottom line.
Visibility into buying behavior provides DSOs with a distinct advantage in optimizing spending on private-label supplies, particularly in non-clinical, disposable, and consumable categories. With comprehensive data at their disposal, organizations can make informed decisions about when and how to best allocate resources to these supplies. This insight allows for strategic planning, ensuring that funds are effectively channeled towards high-quality private-label supplies without compromising on costs.
Easy access to a platform aggregating financial data across multiple practices and locations saves invaluable time and resources. Rather than manually collecting data from various sources, a centralized platform eases the burden of financial information collection. Greg Mahoney from Skytale Group commented, "This time-saving aspect enables the financial team to focus on analysis and strategy development, fostering more efficient and effective decision-making."
The ability to sort financial data by category significantly streamlines analysis. This feature is especially beneficial for individuals without a clinical background who might not be familiar with the intricacies of dental products. Categorization simplifies the process, enabling quick and informed decision-making, thus enhancing overall financial planning efficacy.
Understanding industry benchmarks for performance metrics is essential for gauging organizational performance against industry standards. Developing internal benchmarks enables the comparison of future results against current performance, aiding in goal-setting and performance evaluation within the organization
This provides context and helps in identifying areas for improvement as your organization evolves and establishes higher standards and new KPIs. In order to drive continuous improvement, it’s important to have a solution in place that allows you to customize what metrics you monitor and aggregates that performance data for you. This enables you to easily compare against historical performance and monitor progress toward future goals
Establishing, monitoring, and reinforcing clear guidelines for future spending behavior forms the bedrock for the financial health of companies, particularly those in growth mode. These SOPs act as the backbone for financial governance, ensuring consistency, adherence to financial regulations, and optimizing spending behavior, aligning actions with organizational goals.
The Skytale Group team emphasizes the importance of procurement SOP implementation to involve clearly defined approval processes for expenditure, standardized guidelines, and policy frameworks for negotiating contracts. For instance, a comprehensive SOP might dictate the process for evaluating and selecting vendors, thereby ensuring transparency and compliance in supplier negotiations.
Once you have identified the buying behavior that will drive financial performance, the next challenge is ensuring that behavior becomes the norm across your enterprise. The implementation of standardized procedures serves as a key factor in driving financial discipline and fiscal responsibility within organizations, especially during expansion phases. Consistent and clear guidelines are instrumental in shaping spending behavior, ensuring transparency, and fostering a culture of financial prudence and accountability. This is where e-Procurement really becomes the execution arm for any procurement department. Utilizing Method becomes the structural tool that reinforces SOPs unilaterally across all locations.
The success of financial planning for Dental Service Organizations hinges on being able to maintain visibility into and control over buying behaviors. The ability to enforce these behaviors as SOPs is crucial, as they are, in reality, the execution of your strategy. A powerful e-procurement platform gives you both the needed visibility to set your strategy and the control to ensure it is executed properly.
Interest rates remained high throughout 2023 and there is no indication that they will be dropping in 2024. This means there is less capital available to DSOs for acquiring new practices. Skytale Group’s Greg Mahoney shared that many DSOs, and their investors, will be focusing more of their attention on increasing revenue from their existing locations. Same-store growth figures allow you to see what percentage of a practice’s sales revenue is coming from growth in existing locations versus revenues from the acquisition or opening of new locations. Accurately tracking same-store growth will become a requirement as DSOs mature and the pace of acquisitions slows.
To accurately measure same-store growth (SSG), you first need to be able to calculate the revenue that each of your existing locations generates over a specific period of time. Using a robust e-procurement solution to track your spend across all locations, month-to-month, quarterly or YoY, will make this task much easier.
Here are a few tips on how to maximize SSG:
With access to the right data, it’s easy to identify where there is room to adjust pricing structures and secure more favorable terms. By having visibility into purchasing across all of your locations, you’ll be able to see where you have the greatest leverage and how you need to adjust your purchasing patterns to increase it.
Integrating your various tech platforms to bring all your data together is a powerful enabler for making good decisions, faster. It also simplifies the process of testing new procurement strategies and easily analyzing the results, leading to greater profitability.
Did you know that every dollar you save is equivalent to approximately three dollars in production? Because of the expenses associated with chair work (staff, equipment, supplies), only one of three dollars in production contributes to your EBITDA but every dollar save through better pricing goes directly to your bottom line.
In the fast-evolving landscape of dental service organizations, the importance of leveraging comprehensive and accurate data cannot be overstated. The ability wield this data requires the assimilation of e-procurement software into the financial planning framework. Such tools provide clarity on past spending behaviors to sort and analyze massive amounts of information.
Best practice dictates a need for real-time access to spending snapshots, drill-down capabilities into focus areas, and the utilization of benchmarks, both industry-based and internal, to enhance the financial planning landscape. These tools and benchmarks empower DSOs to navigate complexities, make informed decisions, and foster continued growth in the competitive dental industry.
If you would like to learn more about creating efficiencies in your DSO, contact our partners at Skytale Group to help build a roadmap to continued growth and scaling of your business. Reach out at firstname.lastname@example.org or visit their website www.SkytaleGroup.com.
Method Procurement Technologies gives independent dental practices and DSOs the inventory management and procurement capabilities they need to succeed. With our full, end-to-end solution, ordering dental supplies is straightforward and hassle-free.
Learn how Method Procurement's spend management solutions can improve your bottom line. Get in touch with our team today or request a demo to see it for yourself.