Normally, I like to use my blog to focus on the business of dentistry. I have periodically ventured into ancillary topics, such as mental health, bullying and gender matters. While not business related, I do hope those subjects also generated some discussion and could be used to improve your practice.
The economic impact of the pandemic has generated interest in the dental community into the ways they can control some of their expenses. One alternative I have heard dentists and coaches ask about is dental buying groups.
This is something that I felt was worth addressing. However, in the interests of full disclosure, I am the owner of DentalPeers, which just may be the oldest, continuously operating buying group in Canada. So this may be somewhat self-promotional but I will do my best to maintain neutrality for this blog.
So what is the advantage of a buying group and why should you consider joining one?
You know DSO’s receive preferential pricing due to their size and the volume of supplies they can purchase. Well, a buying group provides its members with similar pricing to the DSO’s while allowing the dentists to retain complete ownership of their practices. There may be other reasons you might choose to sell to a DSO…but competition on the price of supplies does not have to be one of them.
The concept is quite simple and it may seem that establishing a buying group is an easy exercise. Perhaps that is why buying groups have become quite the rage. I can assure you there is more to it than you realize. Providing complete service to members is a full time endeavour and not easily achieved if your attention is divided between the buying group and other, related business interests.
It is important to recognize there are some limitations when you join any buying group. You may have a preference for products from a company the buying group does not work with. It would be nice to be able to fit an unlimited number of suppliers into a group to provide dentists with all the choices they want. Unfortunately, this simply is not possible.
Suppliers are looking for higher volumes of orders in exchange for the lower pricing. Too many suppliers will dilute your volume and compromise your purchasing power. No buying group can work with all of the competing suppliers and obtain the best pricing for you in the long run. The goal is to cover as many options as possible so most of your needs can be met inside the group and at discounted pricing.
One final thing to keep in mind is that the goal is not merely the lowest prices today! Any competing supplier can match or even beat some prices from a buying group in the short term if that is what they have to do to attract or keep your business. Price stability and predictability in the long run is just as important. And when a buying group can give you buying power that minimizes price increases on the bulk of the products you order, you may find incredible value in that group.
The pandemic has had such a huge impact on the revenues of dental offices everywhere. Unfortunately, it has also disrupted the supply chains for many of the supplies you need and added to your per unit costs when you can least afford it. It is hardly surprising that dentists would consider buying groups as an option to control costs.
Finding a buying group with a demonstrated track history of success and which fits your needs as a dentist is not as easy as choosing the first option that comes to your attention. Buying groups are out there, though they are not always easy to find. When you find one that is dedicated to providing quality service, it can be an easy way to save money without any additional effort on your part.
About the Author
Shawn possesses both a Masters in Law as well as a Masters in Business Administration, an educational combination that is unique to the field of dental consultants. This combination allows him to view the business structure behind the daily operations and make sure his clients have established their practice using the best and most efficient framework possible.