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  05.19.05 Issue #167

   
Calculating ROI on Digital Radiography


Sally Mckenzie, CEO
The McKenzie Company
sallymck@mckenziemgmt.com

There are many reasons for dentists to convert from film to digital radiography, including improved diagnostic capability, greater patient acceptance of treatment recommendations, and increased efficiency. But one of the most important reasons, from a practice management point-of-view, lies in improved cash flow and return on investment. I’d like to compare the two technologies as far as their impact on your practice’s finances is concerned.

First, as every dentist who’s ever taken a film X-ray can tell you, there are significant out-of-pocket costs associated with film. As long as your practice remains film-based, you’re going to be paying for film, chemicals, developer equipment service and maintenance, and mounts. Those costs amount to about $.50 per X-Ray, according to the ADA. In a practice that averages 50 X-ray images per day (or 200 images per four-day week), you can see that you're paying $400.00 or more per month just for consumable supplies. And you never get a return on your expenditures for consumable supplies.

Another thing you must consider is the fact that your team members spend a lot of time in the darkroom developing film during a work week. It takes, typically, five to seven minutes to process a single film X-ray. And while that's an accurate measure of how much time you're spending to develop a single X-ray — if that's all you're doing — the time for a single radiograph is reduced significantly if you’re developing a batch of several X-rays. For example, it might take 12 to 16 minutes to process a typical full-mouth series, meaning that in this case the average time per X-ray is more like one minute.

To come up with a better measure of how much time is spent in the darkroom, it’s more accurate to use an average figure of ten minutes per trip to the darkroom to make these calculations. So if you want an accurate measure of how much time your team members spend processing film X-Rays, just count the number of trips they make to the darkroom and multiply by ten minutes. You'll soon discover that for the 12 to 15 darkroom visits required to develop and mount 50 film X-Ray images in a given day, your practice is wasting two to two-and-a-half hours. If you multiply that times $20.00 per hour, you’ll find it’s costing you as much as $50.00 a day. That means you’re paying $800.00 to $1,000.00 a month for staff time to develop film X-rays.

The typical lease cost for a digital radiography system is around $500.00 per month. If you subtract the $500 lease cost from $1,300.00 (the monthly cost of film supplies and staff time for taking 200 film X-rays a month), you’ll see that your return on investment is $800.00 per month

But it’s important also to look at this same model from a cash-flow standpoint, because you don’t have to wait until you’ve amortized all of your film costs to realize the financial benefits of going digital. You will actually begin realizing positive cash flow from your investment in digital radiography within as short a time as one week.

Remember that we’re using a cost of $500.00 per month to lease a digital radiography system, and we've determined that, if your practice takes an average of 50 X-Rays a day, it costs you about $100.00 daily — $50.00 for consumable supplies and $50.00 in wasted staff time. At that rate, you will have saved $500.00, the cost of one monthly lease payment, within five working days of installing digital radiography.

In other words, on day six you'll begin realizing your return on investment. That's one of the fastest returns you're ever likely to get for your money. And by the end of the first month, when you make your first lease payment, you'll hardly miss the money. That's because you'll already have realized at least $1,300.00 in savings. The ROI for digital radiography starts early and never goes away. It's one of the best financial moves you can make.

If you would like to know the cost saving of having digital radiography in your office email info@mckenziemgmt.com.

If you have any questions or comments, please email Sally McKenzie at sallymck@mckenziemgmt.com .

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