Analyzing the Investment in Dental Software

Posted by Four Quadrants Advisory on Thu, Dec 19, 2013

icebergThis guest blog post was written by Andy Jensen, an expert in dental software who's been in the field two decades.

“How much does it cost?” That’s the first question most dentists ask when investigating a new or replacement software system to manage their practice. If only the price tag told the whole story! Unfortunately, most of the cost is below the water line. When the great ship Titanic made its maiden voyage, the “unsinkable” boat found out very quickly that what is beneath the water may be substantially more dangerous than what is visible above the water. The consequences were tragic.

What We Can Learn from Icebergs

Icebergs are large frozen masses of water. When they freeze, the volume increases and they are slightly less dense than the surrounding water. From Wikipedia, “Any object, wholly or partly immersed in a fluid, is buoyed up by a force equal to the weight of the fluid displaced by the object.” That’s why they float. It also means that, given the density of water vs. ice, most of the mass of the iceberg is found below the water, out of site, but just as real. Dental offices that don’t consider the costs found “below the water line” can also face unforeseen and undesirable outcomes. A holistic perspective and analysis is required to ensure positive ROI on any technology implementation.

What Lies Beyond the Sticker Price?

Gartner Group, a widely respected national re-search group conducted a study and found that across all industries, for most client/server installations, the software price represented just under 10% of the total cost of a system. Of course, these are not dental industry specific numbers, but anything remotely close to these numbers warrants significant consideration when you have so much on the line.

The sticker price never tells the whole story. There are always additional considerations with any purchase. This is especially true of technical purchases like dental software. Software license fees usually don’t include most of the cost items associated with implementation, use and maintenance of the system. For example, there are typically additional charges for things like:

  • Implementation fees.
  • Data conversions.
  • Initial system training and upgrade training.
  • New staff training and re-training costs.
  • New hardware.
  • Hardware upgrades required to run the software.
  • Hardware upgrades required to support an upgrade (like new video cards, additional memory or faster processors).
  • IT staff expenses for installation, configuration, and upgrading.
  • IT services costs for system maintenance, database repair, and overall database health.
  • Data backup equipment/software/tapes, and staff time to manage it as well as IT support time to setup and maintain appropriate scripts and processes, then update those processes with each software upgrade.

With a little time and thought, the list can become quite long. These undocumented fees can easily in-crease the cost of a typical dental software system by double or more. One IT Professional that specializes in client/server dental installations indicated that his clients will spend between $500 and $700 per month on his services (that is in addition to the cost of equipment and vendor fees). You can find out what you spend quite easily. Just ask your accountant what the average IT spend is over the last year. My guess is that you will be quite surprised. It all adds up really quickly.

How to Spot Lost Production

Even given the long list presented above, there is one cost item that is intentionally passed over by many vendors—because they don’t like to talk about it. It’s a very easy item for software reps to just ignore and forget about. For some offices it can become the most expensive cost item on the list. It’s the cost of office downtime and lost production required by most vendors for things like computer installation, configuration, upgrade installation, staff training, etc.

Any time the office has to be shut down when it would ordinarily be open, there is massive cost to the practice (and the practice owner).

Most firms suggest “on-site” training. Sure, it’s more convenient for a trainer to come to your office and spend 3 to 5 days in a row, but how much does that cost? They will quote something like $1000 or $1500 for the training but that’s just the check you write. What about the check that isn’t being written by your patients during that week of training? That’s where the real cost is. And think about how productive your staff is being when you have an IT guy running from workstation to workstation installing the latest bug fix. It isn’t hard to see that much of the cost for a traditional dental software system is really hidden beneath the water line and is not taken into account in the typical client/server software sticker price.

Analyzing Web-based Solutions

Web-based solutions inherently include more of the costs in their published price. Most of the items that require office downtime are not required. For example, in a Web-based solution, the installation is done on the web-hosted server located in a hardened network operating center. Nothing is installed in the dental office. There are no CD’s to plug in, no server to configure, nothing to load on workstations, etc. With a web-based solution, once the system is provisioned, the dental office receives a URL, a username and a password. All that is needed is a web browser. The result is no hidden costs for installation, configuration etc. Same thing goes for updates. Nobody has to come to your office and take precious and expensive office time to do an upgrade. You just log in the next morning and the upgrade is installed.

Training is much the same way. When using a web-based system the training is most effectively done on-line. It will be presented in short, one-hour sessions that can be handled during normal office breaks and down time. They don’t require you to close the office for several days. The result is no lost production time for training and implementation.

Finally, there is the general maintenance cost for a client/server system that requires hundreds of dollars a month for an IT guy’s time. We’re not saying that you won’t need the IT guy anymore, but you will only need him about half as much. So, whatever you paid last year for IT services, you can pretty much cut it in half for a web-based solution. When you buy a car, you know that some models require more maintenance and use more gas. Some are really reliable and just sip fuel. Obviously, the sticker price is just part of the equation.

Avoiding the Apples-Oranges Comparison

One common mistake that many offices make is to assume that the product and services received from a client/server system are equivalent to the product and services received from a web-based system. This assumption will result in a gross error that can cost the dental office thousands of dollars. The monthly subscription fees paid to a web-based vendor typically include many services that are not included in most traditional software vendor quotes. Many offices find that the additional services required with a client/server based system end up costing as much or more than the total monthly subscription fee of a web-based product.

Thus, it is vital that a total and honest comparison is performed before simply accepting the sticker price as the whole price. Any return on investment (ROI) analysis must include not only the simple software fees, but also the system related fees that are not included in, but are required to run the software. Additionally, the analysis must include the costs associated with office downtime and disruption. Failure to include these hidden costs is simply ignoring the truth.

Conclusion

When a dentist is considering a new practice management system, all costs should be included in the analysis. It’s very easy to ignore some of the most expensive parts of a system. Expenses not paid to the vendor, such as server configuration, software installation, backup systems and process scripting need to be considered. Additionally, the very significant costs of lost production associated with on-site training and computer software installation must be factored in. It is widely recognized that a typical client/server software price includes just a fraction of the total cost. Web-based systems improve the ROI from several perspectives. First, they totally eliminate some of the most routine expenses; secondly, they incorporate in the price many products and services that must be added to a client/server based system; and finally, they represent a hassle free implementation eliminating the hidden costs of lost production.

Andy Jensen has been in the dental software business for nearly 20 years, directing the marketing activities for DENTRIX, Easy Dental, DentalVision, and now Curve Dental. You can reach Andy at andy.jensen@curvedental.com or by phone at 801-851-5175 x1002.

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Topics: dental advisor, dental technology, dental software, Financial Planning, dental computing

9 Ways Dentists Can Stop Fraud Today

Posted by Four Quadrants Advisory on Thu, Dec 19, 2013

hackingThis guest blog post was written by David Harris and William Hiltz of Prosperident, North America's foremost experts on dental fraud.

Fraud takes place in dental offices far more frequently than most dentists realize – published statistics suggest that the chance of a dentist being defrauded in his or her career exceeds 60%, with an average loss of over $100,000.

When fraud in your practice becomes apparent, emotions like anger, despair, guilt and, in some cases, even fear are common. All of that, and a desire to act – when a dentist suspects embezzlement, there is a strong urge to deal with the problem immediately, usually by confronting the suspect.

This urge to take action, combined with a dentist’s likely inexperience in matters relating to fraud, often results in missteps that often can worsen their position. These missteps can lead to destruction of evidence, wrongful dismissal lawsuits, denied insurance claims, and failed prosecution. Don’t make things worse. Instead:

1. Stealth is paramount. This is so for several reasons – normally at this point fraud is suspected but not confirmed.

If there is no fraud, it is far better that staff members are unaware that the dentist had a “crisis in confidence” in them. But if fraud is happening and the thief thinks that you’re onto them, their normal inclination is to take steps to destroy evidence.

If a theft is taking place, the best outcome for the dentist will be achieved by preserving evidence, conducting a quiet (stealthy) investigation and confronting the thief only when fully prepared.

2. That investigation should not be done alone. Obtain professional advice. Some dentists approach fraud investigation as a do-it-yourself project. Given that the dentist typically does not know what to look for, self-guided fraud investigation is likely to accomplish little other than tipping off the fraudster.

At this point, knowing where to turn is vital. What is needed is expertise in investigative techniques, fraud methodologies specific to dentistry, evidence preservation and knowledge of dental software. At this juncture many dentists consult their CPA, their attorney, law enforcement agencies, or their dental software vendor. All of these people can offer some help, but each typically lacks an element necessary to properly guide the dentist forward.

When engaged, an experienced fraud investigator should take charge of the process and coordinate the work of the other actors involved.

3. Preserve evidence. Your computer’s hard drive contains a cornucopia of information that will be needed to confirm the fraud, quantify losses, prepare an insurance claim, and proceed with prosecution. But this information is volatile and can be deliberately erased or overwritten by the normal activities of your dental software. It is absolutely vital that the computer-based evidence be preserved. Normally this is accomplished by performing a backup that is not “rotated” like most backup media. In certain cases, we also perform a procedure known as “ghosting” a hard drive – this makes an exact copy of an entire hard drive including working or “temporary” files that are not normally captured by a backup, but may contain important information. We also typically move a complete copy of your dental software onto one of our servers so that we can both preserve and study it.

Dental software vendors make continual improvements to their software. A common recommendation of vendors, if contacted with concerns about theft, is to upgrade your software to the latest version. This is probably not a good idea in most cases. Forensic investigation often involves retracing the steps of the perpetrator, and this is made complicated if the software has changed.

4. Do not place “bait” (e.g. put an extra $20 in the cash to see if it goes missing). Employees who target their dentists often perpetrate sophisticated frauds involving tens or hundreds of thousands of dollars. If you were doing this and the dentist offered a (fairly transparent) chance to demonstrate your honesty by returning the $20, wouldn’t you give it back? Also, if the money does disappear, you won’t necessarily know who took it.

5. Do not change financial protocols. Looking to make changes without being able to explain the rationale will certainly be seen through by a thief.

6. Do not report the incident to police until you have sufficient evidence to confirm fraud. Making a police report before you have gathered all the evidence serves no purpose and may limit your options in dealing with a thief.

7. Do not confront the suspect. There will be a time when this is appropriate – our success rate in obtaining confessions from thieves is 100%, but it requires careful preparation.

8. Do not contact insurance companies. If a theft involves obtaining extra funds from insurance companies, the insurance company may have recourse against the dentist for amounts misappropriated. Some insurance companies will provide agreement not to hold the dentist vicariously liable in situations where the dentist had no involvement in the theft, but this amnesty needs to be set up correctly, with an intermediary approaching the insurance company on behalf of an unnamed client.

9. Whatever you do, don’t fire anyone until evidence has been gathered. The amount the employee may steal from you in the few weeks that it will take to complete an investigation pales in comparison to the cost of a wrongful dismissal lawsuit.

If you suspect, right now, you might be a victim of fraud in the dental office, contact us at fraud@prosperident.com.

David Harris B. Comm MBA CMA FICB CD TEP and William Hiltz MBA CET can be reached at (888) 398-2327, Skype ID prosperident, and fraud@prosperident.com.

Prosperident is North America’s only company specializing in the prevention, investigation and remediation of frauds against dentists. The authors have been involved in many fraud investigations, have acted as expert witnesses in court cases and are regularly consulted by law enforcement agencies on the topic of dental fraud. They have also spoken at regional, national and international dental conferences on the subject of fraud against dentists.

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Topics: dental accounting, Financial Planning, dental computing

The Future of Dental Accounting is in the Cloud

Posted by Four Quadrants Advisory on Thu, Dec 19, 2013

cloudHave you heard of cloud computing? Have you checked your credit card or bank account balance online? Do you have an iPhone? Do you use iTunes, Gmail, Facebook, or Netflix? Have you used Dropbox or some other file sharing company to move and store important information? Maybe you’ve read articles in the latest dental journals about cutting-edge dental software like our friends at Curve Dental. If so, you are a veteran cloud user and may not even know it.

Clouding QuickBooks is the future of dental accounting. Do you get frustrated by sending a backup copy of QuickBooks to your accountant, only to receive untimely feedback two or three months later? We call that “driving while looking in the rear-view mirror.” That archaic process doesn’t allow you to have real-time financial data on your dental practice and it prevents you from making positive changes quickly enough. Constant tweaks are essential to becoming more profitable without producing more. That is exactly why clouding QuickBooks is so important. It enables you and your accountant to work in your QuickBooks file at the same time, obtaining real-time data and making real-time changes in your dental business.

Analyzing deep swings in variable expense, like lab fees, is another good reason for clouding. With the dentist and their CPA/advisor accessing the bookkeeping in real time by logging into through the cloud, you can achieve fast and accurate reconciliation of profit/loss and balance sheets. Because you also scan all your lab invoices to the clouded server, your advisors can look at the invoice level and help determine the reason for increases and offer some analysis to consider, rather than having to settle for speculation. Technology allows for fast reconciliation which leads to more accurate and timely advisement on how to improve the business.

Another great reason for clouding is accounting security. Did you know that three out of five dentists experience some type of fraud in their practice? Removing check writing capabilities from your office server is one way to prevent unauthorized use of your practice funds. Years ago, I discovered that an office manager was maintaining two sets of QuickBooks files on the office server. One file was there to print fraudulent checks while the other was to record fake payments. This fraud risk is removed when the check writing authority is removed from the practice and put in the cloud.

Only authorized users are allowed access to the ultra-secure cloud partner, Right Networks, a Thompson Reuters product. Furthermore, we can limit their access to QuickBooks functions with the available security features. For example, you can customize it so an office manager can only enter bills when they are due. This allows you to match statements and invoices to bills entered and pay them directly from QuickBooks – very efficiently. Or you might want to manage the bills yourself. Either way, we can set appropriate security levels.

The future is cloudy, but we think cloudy is bright. Are you ready?

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Topics: dental software, dental accounting, Financial Planning, dental computing

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