Getting finances in order for success

Salvatore Cantale

We talk to Professor Salvatore Cantale, who lectures on the online ITI/IMD online Dental Practice Management course, about the role played by finance in running a successful practice.

Tell us a little about yourself

My name is Salvatore Cantale and I have been a professor at IMD for 10 years. Before that I worked in consulting with a focus on finance and also in a bank. I have a Master’s and PhD in finance from INSEAD and I teach business finance and strategic finance at IMD.

Regarding my knowledge of dentistry, I’ve been involved in a dentistry-oriented start-up, which is no longer a start-up but quite big now. And I teach business models and finance for the Master of Digital Dentistry at the University of Geneva.

Why should dental practice owners understand the basics of finance for their business?

Every entrepreneur should understand not just finance but business as a whole. Finance is one of the 4 big pillars along with strategy, marketing and operations. Dental care is a business, therefore it needs to be addressed as a business.

Being able to understand what the drivers of value are, being able to understand when, for instance, your investment is going to provide not only the revenues you want, but also impact the bottom line and the cash flow is very important.

IMD very often uses large companies as an example. How can small business practice owners relate to financial reports from large corporations like ABB?

Whether companies are small or large, the value drivers are very similar. Maybe the way they are calculated differs a little but the kind of key value drivers are the same: how much money we make, how much capital we put in.  

As you likely know, 95% of companies go bankrupt because of cash-flow problems more than anything else. I am on the boards of several large companies as well as start-ups and this idea of cash flow is not always there. If a dental practice truly understand the importance of cash flow, it will have an advantage for the future of the practice, especially because nowadays they have to invest in more and more sophisticated, digital devices, and this costs a lot of money.

So, it is not just about making a profit. The idea of cash flow is more valuable to a dental practice than profit. Profit is a great-to-have, but, you know, companies like Amazon did not make a profit for 20 years but their cash flow was positive.

Given the geographical diversity of the students in the ITI/IMD online Dental Practice Management course, can you apply the same financial principles across the world?

Yes, we talk about P&L efficiency, capital efficiency and cash flow everywhere. And these drivers are valid for a small company, for large companies, in Japan or anywhere else.

And what about the impact of the different reimbursement mechanisms in the different geographies on the financial figures of a practice?

The details differ for each country, but this can really affect maybe not the profitability but certainly the cash flow. Let’s say if a government gives you money back after seven months compared to a client or a private insurance that pays you quickly, this will affect the business model and the cash flow, because of the delays or the differing maturity in terms of payment.

How can your students apply the finance lessons in the context of a dental practice?

They should have a P&L overview, they should be able to understand if they are making money or not, they should have a sense of the cash-flow position, and where it comes from, because this will really help them with bank payments, especially if they are making investments and asking banks for money.

They should know at every moment whether they actually have the money or a small cash shortage in order to be able to change payment structures with their clients or maybe work more to anticipate some events. This becomes obvious as the practice grows bigger. Knowing the cash position is going to be very, very important.

They should also be able to understand their profitability in terms of clients, types of activity and products. Maybe something is very profitable but takes a lot of time to perform, so maybe it’s not really that profitable anymore. Or maybe the capital needed to invest in a machine is so big that they tell themselves they don’t want to take the chance.

They have to understand the activities they are undertaking, their margins, the capital and the time required. So I feel, they should really think about their activities as a portfolio or different products.

Now, of course, they are doctors, and doctors do what needs to be done – that is fundamental, it’s the patient first. That said, given that they are able to take care of that aspect, they should be able to consider their practice as a portfolio of products that demand different time and energy investments. Maybe a treatment should be done at a particular time of day, or cannot be repeated five times a day because it’s too complex. So it’s about the time and energy they have to spend and the margins and the kind of resources that they need.

The idea of a portfolio becomes even more important when you have more than one doctor, but also assistants, hygienists etc. Being able to understand who does what, what the margins are, the timings, the capital invested for each of the different activities becomes very important. At this point, it becomes even more important to have a clear dashboard that provides this information.

Having a dashboard will help if something is not going the way they think it should be going. They then have a clear early warning saying “hey, we’re putting too much money here, or these are not the same margins as before.”

But initially, business owners need simply to understand the logic. And then, once they have a good feel for how it works, they can meet up with an accountant once a month or so.

In 2020, the ITI teamed up with IMD Institute for Management Development – a globally top-ranked provider of executive education – to offer dental practitioners a customized, online dental practice management course that will help them to maximize their business impact. The course comprises the three fundamental components of every successful practice: Business Insights, Leadership Insights & Marketing & Customer/Patient Centricity.
On September 30, 2022, the third course cycle starts – ideal for practice owners and anyone looking to open a practice to pick up valuable know-how.

More information is available on the course website.


Salvatore Cantale
Salvatore Cantale
Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Practice development

Expert tips to assure dental patient satisfaction

The goal of any dental treatment is to achieve maximum patient satisfaction. However, dental phobia can get on the way to having a pleasant experience at the dentist for many people. Following some of the measures and tips in this article, we can improve the overall experience of patients.

Read More »
Clinical insights

Implant surface decontamination in peri-implantitis therapy by means of photodynamic laser therapy

Abstract Various implant topographies are susceptible to peri-implantitis pathogen adherence and growth, resulting in biofilm formation. In combination with systemic, local, and implant-based risk factors, these pathogens can trigger an excessive inflammatory response in the peri-implant tissue, causing peri-implantitis onset along with hazardous bone resorption. Implant surface decontamination is an

Read More »

Catastrophic earthquake in Turkey

In the worst disaster of the region’s history, the series of earthquakes that have devastated Turkey and northern Syria continue to take a high toll of victims and have inflicted unimaginable chaos and suffering on the region with the destruction of vital infrastructure. The lives of many of our ITI

Read More »