Dental Offices Need Effective Supply Chain Management…NOW!
By: Brian Heyndrickx, Founder & CEO, IndepenDENT Dental Solutions
Before I stepped into the dental market, I worked in the medical field for over 20 years where supply chain management was a way of life. Medical offices, surgery centers and hospitals, all relied on effective supply chain management to survive and thrive in the market. Since supply chain management plays a vital role in business, allowing organizations to manage costs and run an efficient operation, I thought other industries like dental adopted these same principles. But…I was wrong.
When I first entered the dental field and co-founded Independent Dental Solutions (IDS), a Group Purchasing Organization (GPO), I was completely shocked to learn that very few dental offices focused on supply chain management. I knew the GPO concept was new to dental, which is why we started IDS, but I was sure dental offices were managing this very important part of their business in some manner. However, I was shocked to learn that I was wrong…again!
When I learned that many dentists thought “price shopping online” or buying from an “e-commence site” was “good supply chain management,” I knew I needed to write this article to help the dental community, especially independent practices. Every dollar saved and every best practice implemented impacts an office’s bottom line and its ability to survive.
In comparison, the dental industry is 30-40 years behind the medical industry regarding the adoption and advancement of GPO’s and supply chain best practices. We need to empower and educate our independent dental communities about simple supply chain best practices. For that reason, I assembled the “Supply Chain 101 Check List” for your reference. These are topics your office should be discussing to ensure your practice is running efficiently, ultimately allowing you to survive and thrive!
Supply Chain 101 Check List
- Join a Group Purchasing Organization (GPO): As a contrast to medical, over 50 billion dollars are saved annually by GPO’s in the medical space, and 98% of hospitals use a GPO. A GPO leverages the buying power of a group they represent.
- Unauthorized Dealers: Ensure your online purchases are authorized by the manufacture. I’ve worked with many dentists who thought they got a great online deal, but when they had issues or needed to return the product, they found out it was not warrantied and they were stuck with it.
- Utilization of Products: Evaluate how your office utilizes product. For example, the use of sterile versus non-sterile products. There is a major cost difference between the two and you should not be paying for something you don’t really need or use.
- Grey Market: Ensure you are not buying products from the grey market. Simply ask your supplier or distributor to provide you with documentation that guarantees the product you are purchasing is not from the grey market.
- Product Integrity: Understand how the product you are purchasing is shipped, stocked, and stored by the supplier and distributor. All of these procedures can ultimately affect patient care.
- Random Price Changes: Unfortunately, price increases happen all the time without you even knowing it. Suppliers don’t disclose these price changes since a contract is not in place. Set up a process with your supplier to inform you when there are price changes. Joining a GPO eliminates this hidden issue altogether.
- Read the Capital Equipment Contracts You Sign: I’ve heard too many horror stories of companies suing dentists and having dentists pay for the company’s legal fees if there is a discrepancy or dissatisfaction of product and/or equipment. Search the internet for this…it really happens!
- Set up a Product Evaluation Committee: Review, test and trial products and services to stay on top of cutting-edge research and development of products and services that improve the patient experience.
- Develop Key Performance Metrics (KPIs): KPIs are not just for clinical use. Create KPIs for your supply chain, suppliers and service providers to track performance and ensure expectations are being met.
- Implement Quarterly Business Reviews (QBRs) with your Suppliers: Discuss your practice needs, future strategies and establish initiatives together that can help your practice meet your strategic goals.
- Take Supply Chain Continuing Education Credits: Staff with purchasing responsibility have a major impact on your bottom line based on how they manage the supply chain and procurement processes. Every dollar saved goes right to your bottom line! Invest in your staff by training and educating them on supply chain best practices.
- Automate Payments: Look to automate payments to your suppliers. This is a much more efficient way to manage your practice as it reduces human error. Some suppliers even offer a discount if you automate payments as it reduces everyone’s administrative time and effort.
- Educate Yourself on the Market: Research the companies you partner with and buy from to determine if their mission, vision, and values align with your beliefs as a business owner. Understand the market you operate in and all of your available resources so you partner with the right organizations. Your choices impact the future of your market and industry.
- Know the Sunshine Act: I was amazed how few dentists knew this law. As a dentist you need to familiarize yourself with this law to protect yourself! This was designed to increase transparency around the financial relationships between dentists, physicians and manufacturers of drugs medical devices, supplies and biologicals. The Centers for Medicare & Medicaid Services (CMS) fulfills the law’s mandate via the Open Payments Program.
This list could go on and on, but hopefully you start to think about supply chain differently and make it part of your dental office strategy. If you do, it will have significant impact on your bottom line!
In closing, these are several of the reasons and motivators why Independent Dental Solutions (IDS) was created – to address the wild-wild west of dentistry, to educate and empower dentists to be better business owners, and to ultimately preserve the industry our team loves…. organized dentistry.
If you wish to discuss this article or have questions around supply chain in your dental practice, please contact me at [email protected]