by Jeffrey R. Lavers
The dental-care system will evolve more in the next 20 years than in the previous 50 years. Failure to change with it will likely spell stagnation for your practice.
Those are the words of American sociologist and futurist John Schaar. As far as I know, he had no professional involvement in the dental industry. However, based upon a report submitted by the American Dental Trade Association (ADTA), his words might just as well have been those of dentists throughout the United States.
Nearly two years ago, we in the ADTA undertook a rigorous study to better understand the market trends for the domestic dental industry. Having now digested nearly every aspect of the study, those of us who are on the product development and manufacturing side have found this report to be objective, illuminating, and wide-ranging. Furthermore, for those of us who are comfortable with the concept of change, the results of the study range from enthralling and energizing to provocative and challenging.
We thought it would be helpful to share the highlights of the ADTA study with those on the industry's front lines. These highlights point to a considerable degree of change — changes in technology, changes in the marketplace, and changes in the economic trends of dental care.
A convergence of factors
The comedic Professor Irwin Corey once said, "If we don't change direction soon, we'll end up where we're going."
While it's hard to disagree with the professor's logic, it's also difficult for those of us in the dental industry to know exactly where it is that we are going. What is clear is that three primary factors — economics, demand, and supply — will converge to shape the industry's future.
From an economic context, the American dental-service economy generates roughly $60 billion per year in patient fees and practice activity — a figure that has been growing due demographics and patient behavior as well as technology and dental-care access. While changes in these factors traditionally have been slow and predictable, the ADTA report suggests future changes will move at a considerably different pace.
Clearly, the mix of consumer logic, choice, and rationale for seeking dental-care services is changing. Today, more than half of the economic value of dental care comes from procedures and treatments that were not available 20 years ago. With shifting interests on the part of patients, evolving technology, and new delivery factors continuing to emerge, it seems reasonable to expect a future marked by additional — if not revolutionary — change. Future trends promise to reflect the momentum of the past in combination with the less clear forces of the future, such as consumer behavior and technology. Estimates for the year 2008 project a dental economy in the range of $90 billion. However, the best may be yet to come.
More teeth, more need
For years we've known that three primary factors have combined to shape the demand curve for dental care:
- The number of patients seeking care
- The number of procedures for each patient
- The number of service alternatives
One of the most relevant shifts in the dental-care demand equation during the past 30 years is the significant change in the incidence of hard-tissue disease. The "dentate status" of the population in general has changed the mix and focus of care.
Generally speaking, the rates of dental visits continue to edge upward. Roughly 60 to 70 percent of the adult American population seeks routine dental care — a rate that is believed to be holding stable. That said, actual visits remain age- and need-related.
Clearly, patient demographics play an important role in future dental care. Based upon census data, the number of people ages 60 to 79 is projected to grow from 36.4 million in 2000 to more than 68 million in 2025, an increase of 87 percent. Such marked growth in this segment of the population suggests a demand for more conventional dental needs.
While trends and implications for older segments of the population seem reasonable, conventional wisdom would suggest that children are growing up free from hard-tissue disease. Unfortunately, that is not the case. More than half of the population of 12-to-17 -year-olds has some DMFT (decayed, missing, and filled teeth). Clearly, socioeconomic status, ethnicity, and education contribute significantly to this state. Problems associated with access and preventive care are real and will require solutions.
Demand? Yes. But how about supply?
It was once said, "The future is here; it's just not widely distributed yet."
The ADTA Market Trend study sheds some light not only on where our industry is headed from a supply-side perspective, but also on the factors that will likely play leading roles in determining our future.
In dental care, the supply side usually is expressed in terms of manpower. However, in this age of technical and economic change, the broader view of supply can be better expressed as the "distribution capabilities" of the dental-care delivery system. Factors such as provider functions, administrative functions, and technical resources will combine to shape the true level of supply.
Clearly, much attention has been given to the future supply of dentists. However, the population and productivity of the dentist component, along with that of the dental auxiliary staff, promise to play a major role in the dental-care supply equation.
In 2000, estimates indicated that there are some 115,000 dental practices and 130,000 full-time equivalent practicing doctors — a level that has remained fairly steady. While there is some concern about determining the "right level" of dentists and auxiliary personnel, there are no clear incentives or drivers for change other than the emergence of more independent-support opportunities and a growing proportion of female dentists.
The increase in the number of female dentists may be one of the biggest forces in the supply side for the next 20 years, almost assuring a shift in efficiency, patient/provider culture, and practice organization. Figures show that women make up about 13 percent of DDS/DMD providers and about 38 percent of dental school enrollment. In addition, women account for roughly 35 to 40 percent of newly active DDS/DMD providers. Also contributing to the shifting make-up of dentistry is the fact that 85 percent of women providers are under the age of 45. It is conceivable that lifestyle and family choices, along with practice choices, will impact the norms in provider supply and capacity — norms that must now incorporate methods for enhanced productivity and the use of new or improved practice models. Additionally, data appears to demonstrate that a higher number of dentists will be leaving the profession each year than entering the field. Graduation rates for 2000 show that there were nearly 4,200 graduates, compared to 4,500 retirees in 1999 (the most recent years for which statistics are available from the ADA and AADS, respectively).
The past may not be a prologue
While the ADTA report does not provide an exhaustive analysis of individual practice models, it does define the range of alternative models, as well as the forces that shape them. In the end, the report concludes that an estimated 35 to 40 percent of all practices are operating well below their production capacity and economic potential. Virtually all career positions and functions in dental care are evolving and, as traditional staff roles grow more independent, the conventional practice model may encounter some significant threats.
Today, the most common practice model in dental care is the standard solo practice with three-plus operatories and a lean clinical-support staff. The smaller general-practice model generates roughly $225,000 to $300,000 in gross billings. Gross for the larger general practice ranges from $475,000 to $550,000. Mid-range operations gross between $350,000 and $425,000.
General expenses in this traditional model typically run from a low of 50 to 55 percent to a high of 65 to 70 percent. The norm is 60 to 65 percent.
The ADTA report clearly suggests that staff shifts and changes will force the design and construction of new practice/organizational models that have "insurgent" staffing concepts and dynamic cultures — if the dentist is willing to embrace the full spectrum of provider choices!
Based upon the ADTA's study, six variables seem to determine provider productivity, quality, and economics — all of which influence a practice's sustainability. These variables range from strategic to operational:
- Range of services
- Scope of capacity
- Staffing mix/format
- Capital resources
- Fee and expense mix
Providers and business advisers will remain on a continuous search for the ideal practice model. Meanwhile, it is anticipated that traditional models will produce less than 40 percent of all dental care provided by 2010. And, as the demographics of providers continues to shift in the next 20 years, more options for nonowner doctors are expected to emerge.
Overall, practice-model evolution and innovation will fuel the ongoing change and growth of the dental economy by reshaping the way patients are attracted, converted, and retained in the practice.
The times, they are a changin'
While it is clear that change is occurring — and that change will continue throughout our industry — the systemic nature of the supply and demand forces make for a complex and dynamic picture. Technology will interact with disease patterns; dental workforce issues will interact with patient behavior; practice models will interact with service choices; and demographics will interact with capacity issues. All together, whether gradual or radical, change is certain. Both providers and the industry as a whole can influence this evolution by encouraging new service choices, practice models, technologies, access points, and staffing concepts.
The ADTA report points out that failure to move on these fronts will likely spell stagnation. Any successes on these fronts, however, promise to fuel growth in market value, patient service, and trade performance.
All told, the range of scenarios available can take the dental industry from gradual erosion to extraordinary growth. With leadership at the provider and industry level, the ADTA report predicts a very optimistic future. In fact, the study concludes that the dental-care system will evolve more in the next 20 years than in the previous 50 years! Market activity in the aggregate could more than double — even triple.
For that reason, the next quarter century might best be described as "transitional." While the ADTA report supports a positive future, it also adds the qualifier that the market must be willing to embrace growth and change. Better policy moves and focused leadership at every level, in every sector, can ensure the promise of effective, innovative dental-care services for the entire American population.
That said, I leave you with the words of Mahatma Gandhi: "We must become the change we want to see."
Emerging practice models
On the horizon are several emerging dental practice models — models that the ADTA study concludes will collectively produce and deliver 60 percent or more of all dental services by 2010. The following five models present a combination of services and access to address changing needs and wants of the consumer:
Ready Access Model — High-process standardization, convenience-oriented, highly flexible operating systems, focused on a dynamic "retail" service experience
Tech Station Model — High level of technical resources, procedural leading edge, "gee-whiz" experience backed by relatively high-touch patient communication
Small Group Model — Well-integrated staff with broad range of scope, seamless teamwork of staff geared to provide service efficiency and throughput
Cosmetic Center Model — A variation on the conventional practice. with heavy emphasis on elective care in personal aesthetics and restorative services
Super Norm Model — Emphasis on high-touch, service-intensive patient experience, customer intimacy, and high-margin work with demanding patients
This is Part 1 in a three-part series on "Market Trends in Dentistry." Look for Parts 2 and 3 in November and December.