Now in its 14th year, the team at Levin Group is pleased to work with the editors of Dental Economics to bring you some important insights into our profession. Let’s look at what our colleagues had to tell us about their experiences during the most turbulent period in memory.
This year's data was collected from general dentists during four weeks in January and early February of 2021. We asked the respondents to consider 2020 practice trends when responding to questions about practice performance, but to consider their current attitudes (as of the date they took the survey) when answering questions about the direction and trends of practice performance.
Introduction
To say that the survey for this year’s 2020/2021 Dental Economics-Levin Group annual practice survey was different would be a huge understatement. Perhaps the most used word of the year was “unprecedented.” You heard it used in relation to almost every aspect of life when the pandemic began to take hold. Dentistry has certainly been no different.
Given this unprecedented era, we considered what information might be of most interest to Dental Economics readers. Rather than a numerical/statistical analysis of practice financial performance in a year where comparisons to previous performance would be full of footnotes and explanations caused by the shutdown and other factors of major impact, we decided to look at the trends that are in progress in practices across the United States. So, what did we learn and how did these practices fare in 2020?
Eighty-five percent of the respondents were either owners or partners in some type of private practice. Our findings and trends identified in the survey reflect the conditions being experienced by many practice owners in some type of private setting. While our objective was to collect data to gain a better understanding of some of the key practice trends that could be identified in the private practice category, these trends are equally reflective of the profession at-large.
Collections, profit, and overhead
Responding practices indicated that 89% were shut down at some point in 2020 due to COVID-19. (According to the American Dental Association Health Policy Institute, as of February 15, more than 98% of practices have now reopened.) However, 74% or three-quarters of all practices reported lower collections in the full year of 2020 compared to the full year of 2019, even though many practices experienced excellent collections in January, February, and even March 2020 before the shutdown.
- 50% of survey respondents noted that their decrease was more than 10%.
- 25% of survey respondents noted that their decrease was more than 20%.
- 68%, or more than two-thirds, of all responding practices saw a profit decline in the full year 2020 compared to 2019. For more than half of the total respondents, the decrease in profit was greater than 10%, and for more than a quarter of them it was greater than 20%.
- 59% of practices reported higher overhead in 2020 compared to 2019.
As we unpack this information, it clearly indicates that the pandemic has had a negative effect on most dental practices. If 74% of practices had lower collections and 68% experienced a profit decrease, then the trend is clear that despite the pent-up demand that took place during the reopening phase of June through September 2020, practices began to level off and decline in collections and profits by the end of the year. We believe practices have now stabilized and that some of the lower collection and profit is due to the decrease in the number of patients (volume) that can be seen daily (due to new infection control procedures) compared to pre-COVID-19. It appears that practices are currently operating at approximately 80% of pre-COVID patient volume, and that has been stable for many months. This would indicate that practices need to focus on higher levels of efficiency and strategies that allow patients to be treated faster and more efficiently.
Overhead in most practices increased. This trend was not a surprise given the increased cost of personal protective equipment (PPE) that most practices are now experiencing. If collections and profit decline and costs go up significantly in any area of the practice, then the overhead percentage will, by definition, be higher. We do not foresee a decrease in the cost of PPE unless new technologies and/or a significantly increased supply and availability of PPE emerge. We are optimistic that the supply of PPE will grow, which will reduce costs slightly, but it seems clear that the new PPE protocols will remain in place indefinitely.
Are dentists optimistic about the future?
We wanted to understand how dentists view the future—optimistically or pessimistically? When asked about their expectations regarding revenue in 2021 versus 2020, less than 9% indicated that they are predicting an additional decrease. That means that 9 out of 10 dentists are expecting to have the same revenue or higher in 2021 and more than half of the total respondents expected revenue to be at least 10% or higher in 2021.
We concur with this optimism. Still, 2021 will not be a complete rebound from 2020, as the pandemic is still with us. The word we use to describe 2021 is “bumpy.” While it will be a bumpy year, we believe that the overall trend line indicates that practices will improve in performance for several reasons, including the likelihood of avoiding another dental practice shutdown, more vaccinated patients gradually returning to practices, and practices streamlining scheduling to create a more efficient flow of patients.
We also remain optimistic that production, collections, and profit will increase in most practices in 2021. One key reason for optimism is the current strength of the US economy despite the pandemic. Although we didn’t include this question in the survey, we have also found in many anecdotal conversations with dentists that patients are currently accepting past and present treatment plans more readily because they are spending less money on other activities in their lives such as entertainment and travel.
Dental insurance
We are very interested in the trends of practice insurance participation and dental plan enrollment. Our findings are that approximately 68% of patients in dental practices have dental insurance. Since dental insurance is such an integral and large part of dental practice revenue and collections, we asked respondents how dental insurers responded to the pandemic from the standpoint of reimbursements. Forty-one percent indicated that they had one or more plans that lowered reimbursements in 2020, which may have contributed to the lower collections and profits described above.
It was also interesting to note that less than 7% of practices enrolled in a new dental insurance plan in 2020, and of those that did most added only one plan. Historically, during difficult economic conditions, dental practices increase the number of insurance plans in which they participate. One possible explanation for this relatively low number during COVID is that dental practices, having experienced a decline in collections and profit, did not prioritize participating in additional plans, further lowering patient reimbursements.
Understanding PPE
Ninety-four percent of respondents reported that they are currently able to acquire the necessary PPE. However, nearly all of them (98%) reported increasing costs, with 4 out of 10 practices reporting an increased cost greater than 30%. We believe that along with lower collections and profitability, this is the second major contributory factor toward increased overhead as described above.
Patient traffic
More than 60% of practices reported a decrease in total patient traffic in 2020 compared to pre-COVID levels. When the pent-up demand hit after practices reopened, it may have seemed that patient traffic was extremely high (and it was during that concentrated period), but only 19% of practices reported a net increase in total patient traffic for the whole year. Regarding new patients, the exact same amount (36%) reported an increase in new patients as reported a decrease in new patients, with the remaining balance reporting no change in the rate of new-patient acquisition.
Impact of COVID-19
Almost every practice was affected in some way by COVID-19. Many followed a similar path from shutdown to reopening and pent-up demand to extreme busyness to plateauing or declining later in the year. But there were other factors to consider.
Only 54% of practices reported that all of their team members returned to their jobs immediately after the shutdown. In most cases, this was a decision on the part of a team member, but in some cases it was a decision on the part of the practice owners as they revamped their systems to operate in the new COVID-19 era. Of the 46% of practices that lost team members after the shutdown:
- 22% lost one team member.
- 14% lost two team members.
- 10% lost three or more.
At the six-month point after reopening, 72% of practices reported having the same size or larger team they had pre-COVID, with the remaining group (28%) reporting a smaller team.
A very high percentage, more than 80% of the respondents, believe there is a shortage of dental staff available for hire. There were additional temporary shortages as 43% of practices reported having at least one team member contract COVID-19. In some instances, cases of COVID-19 among the dental team led to the shutdown of a practice for the quarantine period.
It is obvious that staffing will be a critical factor for the foreseeable future. Dentistry has lost many trained people who will not be returning to the profession. A recent study by the American Dental Association and the American Dental Hygienists’ Association reported in the Journal of Dental Hygiene in February that 8% of hygienists have left the profession since the start of the pandemic. Training, education, and mentoring will become essential to help new team members master their positions.
Miscellaneous facts
Other trends to consider are that 17% of practices reported seeing an increase in the amount of patient financing accepted and used by patients in 2020. This makes sense as there are patients concerned about their personal economic situations, the overall economy, and other financial-related factors. Patient financing, we believe, will now be used at a higher rate and remain there for the foreseeable future.
Thirty-six percent of practices reported patients enrolled in in-house dental membership plans. Use of this relatively new concept has accelerated during the pandemic to retain and attract patients. We expect the presence of dental membership plans enrolling patients to continue to grow.
Twenty percent of patients reported that they currently use some form of teledentistry. We believe that the trend will be for teledentistry to grow, but not equally in all areas of dentistry. For example, orthodontic practices are adopting virtual visits more rapidly than other areas. The uses and adaptability of teledentistry during the pandemic will gradually be modified to become a normal part of patient care and advanced technologies will be emerging.
Summary
The major trends identified by the 2020/21 Dental Economics-Levin Group annual survey are clear. Most practices saw a decline in collections and profit and a rise in overhead. PPE was a major contributor to the rise. Despite this, dentists are optimistic that 2021 will be a better year, and we concur.
A noticeable number of dental team members did not return to, or have not remained in, practices, but the majority of vacated positions have now been refilled. This level of staff turnover will mean that training and education for all team members (new and existing) will be more important than ever before. Staffing will continue to be a challenge in terms of finding skilled individuals who can immediately accept key positions on the team and have a full level of experience.
In general, dental practices have survived the pandemic better than expected. We attribute this to a relatively strong economy, coupled with the generally rapid return to regular dental care by patients. It is likely that even more patients will gradually come back to practices as they become vaccinated and more comfortable from a safety standpoint.
While 2021 will be a bumpy year for many practices, it should be better than 2020. Looking ahead, assuming a continually improving economy, 2022 could be an outstanding year. One of the key factors will be the ability of practices to implement systems and strategies that enhance efficiency for patient flow. As practice production increases, overhead percentages will decrease despite the higher ongoing expense of PPE.
Thank you to everyone who participated in the survey this year. Your valuable input will benefit our profession by providing important insights into the key measurements of dental practice in the US.
References
1. COVID-19: Economic impact on public health dental programs: Week of February 15, 2021. Surveys American Dental Association. https://surveys.ada.org/reports/RC/public/YWRhc3VydmV5cy02MDJjMjg3ZmRkMDg4YTAwMTE2ZmVlYjItVVJfM3BaeGhzWm12TnNMdjB4
2. Gurenlian JR, Morrissey R, Estrich CG, et al. Critical issues facing the dental hygiene profession. American Dental Hygienists Association. https://www.adha.org/pri_docs/Feb-2021_JDH_EmployPatterns_DH_COVID.pdf
ROGER P. LEVIN, DDS, is CEO and founder of Levin Group, a leading practice management consulting firm that has worked with over 30,000 practices to increase production. A recognized expert on dental practice management and marketing, he has written 67 books and more than 4,000 articles, and regularly presents seminars in the US and around the world. To contact Dr. Levin or to join the 40,000 dental professionals who receive his Practice Production Tip of the Day, visit levingroup.com or email [email protected].
