Return On Investment
I was with a group of doctors recently here on the Spear campus for an Occlusion in Clinical Practice workshop and we were working in one of the operatories. As you may be aware, in addition to the Spear hands-on workhsops held here, cerecdoctors.com also offers courses on the use and implementation of CEREC CAD-CAM technology into the practice.
We have many CEREC machines in the lab and clinic. With so many around it’s hard not to have some conversation around them regardless of the course.
I found a recent comment particularly interesting, “I’m not going to buy that thing, they try to sell it to you by implying that you can eliminate lab costs and that’s a lie. You just pay them, and it’s more than you would pay the lab, what a rip.”
Before I talk about my reply I’d like to take a business moment, not something most of us were well trained for. Return on investment (ROI), is a foundational principle in business; failure to pay attention to this reduces the profitability of the business and robs owners and employees of income and of opportunities to re-invest in the business.
When I speak with owners of CEREC machines I have occasionally heard this statement, “I eliminated my lab cost,” as one of the reasons for acquiring the technology and investing in learning how to use it well. That statement is technically correct, you aren’t sending a check to your technician for that restoration, but it is financially incorrect—the cost has not been eliminated, it has been shifted.
Checks written to the technician are a variable expense. The amount varies depending on the number of units completed, it’s a per unit cost. Complete one unit and your lab cost is “X,” complete 100 and it’s “100X.” When you invest in a CEREC machine parts of that variable expense remain: the cost of the blocks, the diamond burs and the machine maintenance.
For our discussion, let’s say the block is $30, burs $10, powder and distilled water $2, for a total of $42 per unit. (I’ve left out the costs of increased chair time and the potential for increased doctor time depending on how you complete design and fabrication as well as the savings on impression materials so we can do an easy example.)
The cost of using the machine to the business is a variable expense. It will increase (vary) as the use of the machine increases. The cost of having the CEREC machine and the subscription plan is a fixed expense. It will remain the same as the use of the machine increases. When you do more dentistry, your fixed expenses are reduced as a percentage of the whole while your variable expenses rise as a percentage of that whole.
If your CEREC machine payment is $2,000 per month and you do one unit with it, the cost of that unit of dentistry is equal to 100 percent of the variable expense ($42 in our example), and 100 percent of the fixed expense, for a total “Lab Fee” of $2,042 ($42+$2,000) for that unit.
The second unit you do that month changes the cost for each unit to $42+$1,000 (50 percent of the fixed expense) for a unit total of $1,042. Do 20 units and it’s $42+$100 (5 percent of the fixed expense) for $142. Do 40 units and well, you can do the arithmetic. Pay off the machine and the only fixed expense to add to your variable expense is the subscription plan divided over the total number of units. When you upgrade, like most of us did to the BlueCam, we start the process over again.
It’s this calculation that determines whether or not a CAD-CAM system makes sense for your office. If you are not going to do enough with it to bring the unit fee equal to or less than the lab fee for your technician, it may not make sense—and I have seen some people come to that conclusion. This very simple example does not consider the benefits of single appointment dentistry or the impression of being state-of-the-art that comes with CAD-CAM dentistry in the office. It is meant to help you see that ROI, return on investment, can only be calculated when you understand and apply some general accounting principals to your consideration.
The CEREC machine does NOT eliminate “lab fees!” What it does is create a situation in which you have the tools in place to reduce the lab fee per unit as you make use of the machine by shifting part of the lab fee to a fixed expense that is reduced over time as the debt is retired and the machine depreciated. I LOVE having and using it!
Great post Gary. As your office mate as well as one of the instructors for CEREC, your analysis is a great one. The only thing I would add is that in the financial calculations, you have to figure in the savings that are accomplished when you factor in the things that you eliminate with a CEREC appointment. Impression material can cost $25+ for an impression when you figure in the tray, impression material, mixing tip etc. A provisional can cost $15+ when you figure in the preop impression, the bisacryl, time to fabricate the provisional. You also can factor in the cost of no second appointment which can run $50+ just to seat the patient when you figure in overhead, supplies, time of office staff, insurance etc.
Bottom line is that there are many ways to figure out if the financial commitment of CAD CAM is worth it, but the most important item is will you enjoy the procedures that you do more? Time savings for you and your patients and the opportunity to provide a great service can be important factor in deciding whether or not to invest in CAD CAM.
Great post and glad you are enjoying using the CEREC systems we have at the Center.
Nice post Gary, I’m not sure if you would consider this a ROI but I think using the CEREC pushes you to become a better dentist. And that in turn, can pay big dividends when you consider remakes, chair time, etc. And what I mean by this is that it doesn’t allow you to cheat. You see your preparations on the large flat screen in great detail. You see exactly how much clearance you have and if or where your restoration will be compromised. It really humbled me when I first began using it because I thought I was cutting nice preps. However, when you see your first couple on the CEREC, you soon realize you have some work to do on refining your preparations. At least it was that way for me initially. The cary over from using this machine has greatly influenced the way I prepare teeth in regard to both design and clearance, even when I’m sending the crowns to the lab.
Lastly, I think when you fully embrace this technology, it gets you excited and sparks your interest to learn and grow in dentistry beyond CEREC. And, although the ROI can’t be calculated in numbers for that, I’m sure it is huge in the grand scheme of things as you push yourself beyond your comfort zone…..
EXCELLENT points Sam and John ……. Thanks! More reasons for thinking about how it fits into your practice now rather than later. As I just said to a Restorative Design workshop, “If you are planning to practice another 10 years you WILL have CAD-CAM in your office – the force behind that statement is my daughter Katie. She’s a third year dental student, and CAD-CAM dentistry is there. Heck, in the preclinical lab, she scanned the first preps she attempted – to judge reduction and margins. In the clinic they have access to machines and are expected to plan several cases for them. (They don’t have one for every student – yet.) For her, it will be a normal part of what she does, of what dentists do. As always – some of us are arriving later than others, but we’ll all arrive.
I just had my blue cam delivered Tuesday, and I’m pretty excited! I had always thought that the Cerec prep was different than the non-Cerec prep. After learning what the recommended reductions guidelines really are (think Restorative Design) I realized I was wrong. Now, a month later, I’m working on my first CAD/CAM cases—I’ve been converted.
Have fun and take pictures!