Dear Christine: I acquired a practice three years ago and have been putting off some much-needed upgrades to equipment and technology. I have my eye on a 3D cone beam imaging system for starters, plus a new sterilization area closer to my treatment rooms. Part of it is the cost: How do I justify $75,000 or more for these upgrades? – Expensive Proposition

Dear Expensive Proposition: Acquiring new dental equipment is exciting, but before making a big purchase, it’s important to determine if the ROI will be worth the expense and provide benefits to patient care.

Before you decide to invest in practice upgrades, ask some important questions:
•    Could you get by with the equipment you currently have and, if so, for how long?
•    What is the projected return on investment of the equipment you’re considering? Will it increase production, and thereby cash flow?
•    Will the upgrades improve your team’s job satisfaction and efficiency?
•    Finally, and most importantly, what kinds of equipment financing are available to you?

If you buy the right piece of equipment with the wrong financing option, it may have the unintended consequence of hurting your bottom line. There are advantages to both leasing and buying. For example, leasing may allow you to conserve cash. Plus, an equipment leasing company may allow you to trade in a piece of equipment for a new model before the lease ends.

BMO Harris Bank logoIf you’re interested in owning equipment outright, a bank may offer a better interest rate than an equipment company. Banks may also offer payment options not available with leases, such as interest-only payments at the onset of the loan.

To help determine which option is right for you, conduct a lease-versus-buy analysis. You can run the numbers using our interactive tool at bmoharris.com/dentists.

Once you have assembled key pieces of information, you can rest assured that your investment in new equipment and technology is the right choice.

A commercial banker since 2006, Ms. Olmstead Lopez advises mid- to large-size practices, leveraging her background in commercial credit underwriting and structuring, and providing industry-specific expertise and local market insight to add value, foster long-lasting relationships and — above all — helping dentists realize their vision for growth.

Editor’s note: This article is provided by BMO Harris Bank, the ADA Member Advantage-endorsed provider for practice financing. Call 1-833-276-6017 or visit bmoharris.com/dentists for more information.