Diagnostic Instrumentation

Buying Instruments: New Toy or Valuable New Treatment Tool?

By Laurie Sorrenson, OD, FAAO

It’s tempting to invest in new instrumentation on display at conferences or pitched to us by visiting salespeople. There is a fine line between making a sensible investment to better serve your patients and impulse buying. The following are two formulas I’ve discovered over the years to lessen the chances of making an unwise purchase.

First, most salespeople will say that if a loan payment on a piece of equipment is $300 a month, and the reimbursement is $50, you only need to see six patients a month to break even. What this formula doesn’t consider is the cost of business associated with bringing in revenue.

There is a formula called the contribution margin which can tell you how much revenue you really need to bring in. For most optometric practices, that factor will be about 1.8 times the cost of the instrument. So, what I would do in the scenario described above is double the cost of the instrument, and if I thought I could bill 12 patients a month, then I would consider the purchase.

Another formula, which I learned from Jerry Hayes, OD, says that your loan payments should not exceed 4 percent of your monthly receipts. So, looking again at the scenario of the $300-per-month instrument, if my loan payments each month were at 4 percent already, I would wait until an existing investment was paid off before I purchased it. On the other hand, if with the new payment my total loan payments were still less than 4 percent, then I would be more likely to purchase the instrument.

We all want more “toys.” That’s why it’s best to rely on proven financial formulas—rather than your emotions—before signing any purchase agreement.

What was the last piece of instrumentation you invested in? What calculations or formulas did you use to decide if it was a sound investment?

Laurie Sorrenson, OD, FAAO, is president of Lakeline Vision Source in Austin, Texas. To contact her: sorrenson@att.net.

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