July 13th, 2022
DSO Technology Playbook: A Bottom-Up Approach to IT Investing
Industry Research — Other
By: Ellie Naderi – CEO, Dental Solutions
Contributor: Thomas Terronez – CEO, Medix Dental IT
The DSO model was designed to be a win-win scenario. Dentists would happily focus on patient care while business-savvy entities dealt with human resources, finance, operations, revenue cycle management, technology and more. A dental utopia would evolve where patients thrived and stakeholders harmoniously worked together amid unprecedented levels of profitability, efficiency and economies of scale. Did somebody miss the memo?
The Short-Term Approach
We’ve not quite reached the DSO utopia yet. Despite the best of intentions, DSO leadership teams, eager to close deals, promise sellers nothing will change—dentists can do what they love, share in the profits and retain partial ownership (if desired) while the DSO does everything else resulting in a better patient experience and work-life balance for the practice staff.
Although DSO leadership teams act in good faith, they’re prone to adopting a short-term view in heat of sales negotiations. The teams are quick to buy while the sellers, anxious for an exit strategy, are quick to sell. As a result, both parties unwittingly enter a relationship that sours once the honeymoon is over.
The problem is after the closing, DSO stakeholders realize some things have to change. Change management then enters the scene and cultural disaster ensues. Sellers feel they’ve been sold a bill of goods and won’t buy in; neither will their teams. Distracted and disgruntled, the staff’s focus on patient care suffers which defeats the ultimate objective of the sale.
Changing the Play
DSOs can avoid these issues by refining their approach to acquisitions. First, taking a long-term view of the target practice will reveal transitions that must occur. These could include revised human resources policies and procedures, scheduling changes, and new administrative processes.
Second, adopting a policy of presale transparency by presenting these changes during negotiations will circumvent gnarly surprises, particularly when explaining how they will benefit the seller, the staff and the patients. When the seller makes an informed decision upfront to buy in, he will get his staff to do the same. Everyone is happy and the DSO avoids getting a bad rap.
Third, planning for technology standardization in the presale play will also make for a smoother, more productive acquisition. Unfortunately, due to the expense, technology investments are an unpopular topic and thus put on the back burner despite the negative impact on the DSO, the seller and the patient.
Penalties of Nonstandard IT Systems
Like all cliches, there is some truth to the adage, “If it ain’t broke, don’t fix it.” Because a seller’s network is already up and running, technology issues may be overlooked during acquisition, including compatibility of the seller’s IT systems with the DSOs. This is understandable but unfortunate. The fact is DSOs with hundreds of practices using different software systems suffer costly inefficiencies. Consider the following:
More expensive technology deployment: Deploying new technology across multiple sites with varying platforms and systems is highly impractical and very expensive. Let’s say you want to add patient communication software across your organization. If you use a cloud-based or centrally hosted practice management system, your vendor need only deploy the new software once; all offices can then access it. On the other hand, if you have over thirty offices with various local practice management systems, the vendor has to deploy the new software individually at every office plus have the capability to support the software applications each practice has. Additionally, the DSO needs to ensure new systems slated for deployment are either hardware agnostic or compatible with the seller’s hardware.
Training complexities: Each software application within the DSO requires training manuals and trained staff. Disparate IT systems mean having and maintaining an excessive number of user manuals. Staff training time also becomes extended. Additionally, DSOs will be unable to share staff among locations since not all staff will be trained on all systems. One of the top reasons employees quit is a lack of effective training. In a climate of staff shortages, who can afford to create more retention challenges for their organization?
Inefficient operations: Operating hundreds of offices on disparate IT systems is like sprinting with leg weights; you’ll never run as fast. After a while, you’ll also tear your knees apart. Simply arranging for adequate IT staff to support disparate systems, even with a third-party IT services provider, becomes an operational inefficiency.
The Technology Playbook
Technology integration doesn’t mean all offices operating on identical systems. It means standardizing critical systems in those locations. Follow the steps of our DSO Technology Playbook below for a practical approach on how to accomplish this:
#1 – Create an IT standardization strategy.
DSOs who develop an IT standardization strategy for existing and future acquisitions will enjoy a smoother, more efficient, less disruptive transition. Let’s look at what this strategy would encompass:
Tighter security: Security is always a critical IT priority. To protect your systems from malicious intruders, including endpoint protection of all network entry points, i.e., desktops, laptops, mobile phones and tablets. Also, add firewalls to block unauthorized traffic and centralized control to regulate user access.
Serverless computing: Eliminating on-premises servers makes life easier and more cost-effective in the following ways:
- No replacement costs, fewer IT staff: On-premises servers typically require replacement every three to five years, plus IT staff to maintain them. Going serverless can save your DSO tens of thousands of dollars in hardware and IT personnel costs.
- Enhanced security: Most security breaches are introduced by users who have poor password hygiene or naively click on malicious email links. Cloud-based systems segment the practice’s data from the network to protect it from exfiltration.
- 99% or better uptime: On-premises servers do go down, halting production, cutting revenues and downgrading the patient experience. The practice will have to reschedule patients and otherwise catch up on administrative tasks. By contrast, cloud computing provides 99% to 99.99% uptime. Equipping the practice with two different internet connections virtually guarantees 100% uptime.
- Timely hot fixes: Cloud-based system providers are obligated to apply hotfixes and other software updates rapidly. Otherwise, they put their users and their own operations at risk.
- Immediate scalability: Whether you need to scale up or down the number of users on a given system, cloud computing provides immediate scalability.
- Rapid data recovery: Natural disasters, malware and hardware failures all cause data loss. With cloud-based systems, data recovery is rapid and virtually seamless with minimal disruption to operations.
As you can see, a sound IT integration strategy builds a solid infrastructure on which all DSO offices can safely and efficiently operate.
#2 – Determine what is negotiable.
This is where the rubber meets the road. The DSO leadership team must decide which of the seller’s IT systems must be replaced and which are negotiable. For negotiable items, the DSO team can provide a list of preferred applications such as cone beam imaging systems or practice management systems. If the practice is thriving on its practice management system, you can leave it in place, but if it’s not cloud-based, it may need to be replaced for overall cloud migration.
#3 – Devise an implementation plan.
Conduct an IT triage assessment of your existing and upcoming acquisitions to implement the IT strategy in workable phases with the least possible impact on production and customer service. Eliminating on-premises servers, for instance, can be done as servers age and require replacement.
#4 – Level set with sellers.
Transparency is the keynote here. Present the integration plan to the seller during negotiations. Tactfully let them know which changes are negotiable and which are not. Be sure to include how these transitions will benefit them, the team and the patients. After all, that’s why we are all in the game.
IT Standardization Advantages
With integrated technology correctly planned and implemented across all locations, DSOs can enjoy new efficiencies and cost-saving benefits, such as:
- Reduced cost of maintaining disparate systems and on-premises servers.
- More efficient IT functions with fewer vendors, products and processes.
- Faster staff onboarding, training time and materials.
- Higher staff productivity and more.
- Enhanced patient experience.
The end game for any DSO should be high-performing practices with superlative care and customer service. Staff would be friendly and competent; patients would have no waiting time, see the same doctor on each visit and enjoy an exceptional patient experience each time.
With a bottom-up approach, caring for the sellers, the staff and above all else, the patients, we can come that much closer to the dental utopia DSOs were meant to provide.
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