Dan’s Word on Hardware

by Larry Emmott on February 10, 2020

in Hardware

I just finished a very informative conversation with Dan Edwards one of my chief go to guys on dental office hardware. Dan is the founder and CEO of Pact One. https://www.pact-one.com/

Dan told me that for the majority of his single site dental clients the most efficient IT system is still a local workstation – server network, with the server installed in the dental office. That is the same basic configuration we have been using for years.

The good news is that computers are still evolving at a remarkable rate and new machines are much faster and more powerful than the machines available just a few years ago. The bad news is that means we still need to continually upgrade and replace the actual computers in the network. That hasn’t changed, what has changed is how we pay for it.

There are basically three ways we can pay for our IT systems. (NOTE I am not an accountant or a lawyer. Do not take any of the following as financial advice. (blah, blah, blah) Ask your CPA for tax and financial advice.)

Buy it. This is the traditional system we were forced to use when computers first invaded dental offices. The dentist buys the machines, writes off the capital expense as depreciation and replaces them every three to four years. The old machines have virtually no residual value and need to be scrapped. The dentist will also need to contract with an IT service provider for service and support.

Lease it. Rather than purchase the dentist leases the equipment.  There is no capital expense so there is no depreciation however the lease payments are operating expenses. Again the machine will have no residual value and need to be replaced after the lease term of three or four years and the dentist will need IT support services. The decision to buy or lease is essentially a tax and financial decision.

Rent it. You do not rent the equipment you rent the system. The IT provider is responsible for all the components and may upgrade or replace them as needed. The renter (the dentist) is not leasing anything tangible, like a server, the renter is renting the functionality of a complete IT system. This is generally called HaaS, Hardware as a Service. As with a lease there is no capital expense or depreciation, the dentist deducts the monthly rent as an operating expense.

HaaS is the newest and most innovative way to pay for your IT infrastructure. It has many advantages, most notably that is transfers most of the responsibility of choosing and maintaining an up to date IT system from the dentist to the IT provider. The downside is the expertise and reliability of the IT provider. Some dentists have been left high and dry when their IT provider went out of business or worse yet, the IT company was hacked and the dentist is left with nothing but a HIPAA nightmare. Choose wisely.

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