The Hidden Soft Costs of Supplies
by Kim Delle, OrthoSynetics Director of Procurement
Have you ever shopped online for a consumer product like a coffee maker or a stroller and found yourself spending way too much time weighing each option’s pros and cons? People focus mostly on the hard costs of an item’s price and may forget they’re spending valuable time sorting through the different features and reviews. When making a purchase, the soft costs are important to consider too.
Kim Delle, who is the Procurement Director at OrthoSynetics, recommends that practices take into account the soft costs too when ordering supplies and equipment for their office. While an expensive x-ray machine should merit a fair amount of research, rubber bands probably shouldn’t. Another soft-cost issue is that practices might order from 15 to 20 different suppliers, which means a lot of website visits and credit card transactions.
Pressure from group-owned practices creates a competitive issue for independent practices regarding supplies and equipment. “When a nearby orthodontic or dentist office is purchased by a large corporation, there’s the fear they can’t compete,” Delle says. “When it comes to procurement, the corporate-owned practices get group pricing because the parent company can order in large quantities. Still, independents shouldn’t fear group practices. They can get good prices without having to lose their autonomy.”
An advantage of being a member of OrthoSynetics is that practices are able to take advantage of group pricing along with an easy-to-use online ordering portal. The portal is unique as it allows offices to order from all vendors in one system.
With the procurement department at OrthoSynetics, practices can get a lot of the soft costs of research and comparison shopping taken off their plates. “We have a formula that tags certain items as a ‘Best Buy’ in the online system,” she says. “And we’re constantly shopping at the office and taking feedback. For a technical product, we’ll send them out to clients for their review, and we also have a retired dentist on staff who helps with product evaluation.”
In addition, a staff of customer service reps can answer questions about which product might be best for a particular practice. They can also follow up with the company regarding any problems with an order.
Delle’s main advice for practices, whether they choose to purchase independently or join a GPO, is that they should try to consolidate purchases as much as possible. Saving on shipping costs is just part of the reason to do so, but it also helps with managing inventory. When boxes are coming in every day, constantly unpacking them can get cumbersome. Instead, order supplies once or twice a month so they can be unpacked and sorted all at once.
She also recommends keeping an Excel spreadsheet of all supplies and setting it up with the maximum and minimum amounts of each item you want your office to always have on hand. Take inventory once a week using the spreadsheet.
In addition, as the end of the year approaches, practices might want to take advantage of the Section 179 deduction. It allows for purchases and leases of capital equipment to be deducted in full from gross income in the year of purchase. There is a 50% bonus depreciation in 2017. The bonus depreciation goes down to 40% in 2018.