Seven ways the new economy has changed dentistry
Dentistry is going through exponential changes. Perhaps no single event in the last 100 years of dentistry has had a greater impact than the recent recession.
Roger P. Levin, DDS
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Dentistry is going through exponential changes. Perhaps no single event in the last 100 years of dentistry has had a greater impact than the recent recession. There have been slow periods in the past, but nothing like what many economists have termed "The Great Recession."
While excellent clinical quality will always be an essential priority for dentists, the recession has forced practices to streamline and become more efficient, well-run businesses. Practices that have accomplished this are achieving significant growth in the new economy. Those dentists who are crossing their fingers and waiting for the economy to improve and expect everything to go back to the way it was are in for a very rude awakening!
Effects of the recession on practices nationwide
1. Fewer new patients presenting to dental practices. Patients who had been waiting to find a dental office or who had become inactive (not visiting a dentist within 18 months) opted out of the dental system. There are many people who used to be regular dental patients who no longer visit dental practices.
These individuals are being written off by many practices as unreachable. I think this is the wrong approach. Practices can use proven internal marketing strategies to attract new patients and entice former patients back to the practice. We know this can be done because Levin Group clients have been able to reactivate 85% of former patients back to their practices.
2. Many dental patients are rejecting elective treatment. According to the Levin Group Data Center™, 81% of all dental appointments are single-tooth treatment. Factor in that fewer patients are presenting for treatment and the result is declining production for the practice. The reason is simple — practices are suffering from a lack of new patients, as well as a lower average production rate per patient among existing patients. Plateauing or declining revenue is the inevitable result.
However, this situation is easily reversible. Case presentation skills will have to be sharpened and teams will need better training to increase case acceptance. Building value for cosmetic services is obviously critical. After all, people will always want more beautiful smiles.
3. Some insurance carriers have created lower reimbursement plans. Many dental patients have been transferred to these new plans, and most dentists have had no option but to accept the new, lower reimbursement plan. This population of patients will create lower production for practices, something that will not easily be reversed in an improving economy. Practices will need to increase the average production per patient. They will also have to increase elective, noninsurance-covered services as a percentage of total revenue to grow in the future.
4. Dentists are marketing more than ever before. A fortune is being spent on all types of external marketing methods from advertising to direct mail. The majority of these programs do not produce a positive return on investment. For most practices, this is simply a waste of time and money. Fortunately, there's a far better option — internal marketing.
Internal marketing is still the most effective, least expensive form of marketing on the planet. Properly implemented, it allows the practice to identify and attract the right patients through internal strategies and referrals from existing patients.
In addition, by using what Levin Group calls "The Science of Internal Marketing™," practices can identify more treatment opportunities and increase case acceptance rates for active patients. The targets — 40% to 60% of active patients who refer at least one other patient each year.
5. Young dentists are graduating from dental school with significantly more debt. This has led to a new phenomenon. An increasing number of national dental practice-management companies own practices, and the dentists are employees of that company. This has become a viable option for many young doctors. With the proposed opening of numerous new dental schools, the available labor force of potential employee dentists will grow.
Many of these dentists will remain employees, allowing these companies to expand the number of practices they own regionally and nationally. While I firmly believe there is a strong future for doctor-owned private practices, I also feel that they will coexist with practices owned by regional and national dental companies.
As the labor force expands for "employee dentists," it will not only be a viable option, but a desirable option for dentists who choose certain lifestyles. The regional and national dental companies that own practices often accept all insurances and offer expanded hours and expanded days of operation. This will put pressure on the traditional private practice in terms of patient convenience.
An increasing number of patients are not willing to give up work time to go to the dentist out of fear they will lose income or even their jobs. These individuals could very possibly gravitate toward practices with more patient-friendly office hours. To compete, doctor-owned private practices will have to provide the highest possible level of customer service.
6. Americans will have less money to spend on retail and service sector businesses, including dentistry. Many Americans are making less and saving more — about 7% more than before the recession. The money they do have to spend is being allotted differently, which usually means less money earmarked for things such as visits to the dentist.
As a result, dentists are going to have to be able to work more closely with patients concerning flexible financial options (such as outside financing) that make it possible for patients to afford treatment. The more affordable the treatment, the more likely patients will say "yes."
7. Dentists will be retiring later than ever before. Current data, including the Dental Economics/Levin Group Annual Practice Survey, indicates that lower practice profitability is having an impact on the ability of dentists to retire at the desired age. The hard truth is that many dentists will be working eight to 10 years longer than previously planned to be able to afford a comfortable retirement. This is the result of:
- Lower production
- Lower profit
- Lower income
- Increasing costs of operating a practice
- Higher taxes
- Cost of health care
- Escalating college tuitions
However, it is not a given that dentists must work longer. Far from it. This scenario can be averted if the practice is managed the way highly successful businesses are — by maximizing production and profitability while continuing to provide a high quality product or service (patient care).
Adapting to change
These seven reasons are all aspects of the changes occurring in dentistry. The future will have little semblance to the past. At no point in the future will dentistry ever look the way it did as recently as four years ago.
As with all other professions, dentistry is now an evolving and changing entity, and practices have little choice but to adapt. The key to success during change is creating excellent business systems to operate the practice. Effective systems will help achieve the following goals:
- Increasing production
- Increasing profitability
- Reducing stress
- Reaching financial independence
I have no doubt that many practices in the future will perform very well. Future dentists will be capable of providing the best that dentistry has to offer — excellent care, helping patients improve their oral health — and they will enjoy the benefits of financial success. Remember, though, success is not automatic. Dentistry has entered an entirely new era in the last four years, and it will continue to evolve Top business leaders understand that innovation and reinvention are always key factors in success, especially in the new economy. Dental practices must do the same.
To learn how to run a more profitable, efficient, and satisfying practice, visit the Levin Group Resource Center at www.levingroup.com, a free online resource with tips, videos, and other valuable information. You can also connect with Levin Group on Facebook and Twitter (Levin_Group) to learn how to share strategies and ideas.
Dr. Roger Levin is a third-generation general dentist and the chairman and CEO of Levin Group, Inc., the largest dental practice management and marketing firm in the United States. As a leading authority on dental practice management and marketing, he has developed the scientific systems-based consulting method that will increase practice production and profitability, while lowering stress. Levin Group can be reached at (888) 973-0000, or www.levingroupgp.com.
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