For more on this topic, go to www.dentaleconomics.com and search using the following key words: Dr. Roger Levin, annual practice survey, practice production, collections, overhead, wages, benefits, doctor satisfaction.
Editor's Note: This is Part I of a two–part series discussing the results of the most recent practice survey, conducted by Dental Economics® and the Levin Group. Part II of the series will appear in the December issue of DE.
As 2008 winds down, this year's survey provides an opportunity to step back and reassess performance in what is without a doubt one of the worst economies we've had in a generation. What do you need to overcome the current downturn? How does your practice measure up in key categories? What are the challenges practices face today? What trends are occurring in the industry and how will they affect your practice? The data in the Dental Economics®/Levin Group 2008 Annual Practice Survey will help you to determine how your office stacks up against other practices and how to best position your practice for future growth.
Dental practices across the country are beginning to feel the effects of this sluggish economy. This year's surveys shows:
- Little or no growth in active patients
- A slightly slower growth rate in overall practice production
- High stress for more than 20% of responding dentists
"These trends should be taken as the early warning signs of a more challenging economy ahead," says Dr. Roger P. Levin, chairman and CEO of Levin Group, Inc. "Traditionally, it takes six to 12 months for economic trends to affect dental practices. The full impact of the downturn may be yet to come. The time to redesign practice systems, tighten collections, and improve case presentation skills is now."
In a year when Wall Street hit the wall, gas reached $4 a gallon, home energy and food prices skyrocketed, and millions of Americans faced foreclosure, it shouldn't come as a surprise that dentistry was affected by the economic slowdown, too.
Caught in a vicious cycle of stagnant wages and higher prices, consumers have watched their spending power shrink dramatically during the last 12 to 18 months. What does this mean to dentistry now and in the near future?
- Increase in overdue accounts receivable
- Lower case acceptance rates
- Higher incidence of cancelled appointments
- More patients "shopping around" for dentists
Historically, even in a down economy, dentistry has been a resilient industry. While this year's survey shows the percentage of practice production growth dropping slightly from last year, the fact is that practices are still growing. Many other industries are actually experiencing significant downturns. It's a testament to the care provided by dentists (and the value placed on it by patients) that even in today's weak economy, dentistry continues to grow.
This year's DE/Levin Group Annual Practice Survey has been expanded to provide even more information about the state of dentistry in today's economy. The goal of the survey is threefold:
- To provide the most up–to–date information available about dental practices
- To enlighten readers about the trends occurring in dental practices and the dental industry on the whole
- To inspire and empower dentists to make positive changes that result in short– and long–term success
It is our hope that you find these results not only interesting but also invaluable as you evaluate the health of your practice and look for ways to improve production and profitability during this period of economic uncertainty. Drawing on its 24 years as a leader in dental practice management, Levin Group designed this survey, compiled the responses, and analyzed the data to provide dentists with accurate, comprehensive information about the state of dentistry at this moment in time.
The economy is in flux, and so are many dental practices. Look over the responses. Benchmark your situation and performance against the results. Use the survey data as a springboard to update practice systems, adjust priorities, and create a better practice now and in the future.
This year's survey asked general dentists to analyze practice performance in four critical areas:
- Practice production
- Collections and billings
- Doctor satisfaction
- Overhead, wages, and benefits
In this issue, we will take an in–depth look at practice production and collections (Nos. 1 and 2), along with the level of doctors' satisfaction (No. 3) regarding their practices and dentistry in general. In the December issue, we will examine the complex issues of overhead, wages, and benefits (No. 4).
Before delving into this year's data, take into consideration that the number of responses varies from year to year and different doctors respond each time. The survey represents a diverse cross–section of U.S. general dentists, ranging from solo practitioners to large group practices, from dentists in rural areas and small towns to those in growing suburbs and large cities. Take some time to explore the next few pages to learn more about the state of dentistry in 2008. Thanks to all the dentists who took the time and effort to respond to this year's survey.
If you are interested in reviewing the responses to each survey question, visit www.dentaleconomics.com/resources and click "Resource Center" in the left column and then "Download Center."
The bottom line
We hope you will use this information to reflect on the past year, reevaluate what went well and what could have gone better, and rethink strategies for the upcoming year. This ability to look back and then plan ahead is even more critical during an economic downturn such as the one going on now. "The right data can help dentists make the best decisions for their practices now and in the future," says Dr. Levin.
Doctor production is the engine that drives practice growth. In this sluggish economy, median doctor production increased $40,000 from $560,000 in 2007 to $600,000 this year. But this figure is somewhat deceptive because a closer examination reveals that median doctor production actually decreased in two practice types — Major Metro and Medium–sized Town. A third type, Large City, grew only by 3%.
Location always plays a critical role in practice success. If you are in an economically distressed area, the impact of the slow economy is probably much more severe. But just because the economy is down doesn't mean your practice has to follow suit. This is no time to be passive. There are a number of strategies that practices should implement to offset a downturn in the economy, including:
- Reactivating inactive patients
- Instituting a robust patient referral program
- Having 98% of active patients scheduled
- Confirming appointments 48 hours in advance using cell phone numbers, e–mail, and instant messaging
The survey also shows that doctors who schedule in 10–minute intervals, as recommended by Levin Group, have higher daily production levels than those who schedule in 15–minute intervals. Ten–minute units increase efficiency and expand scheduling capacity, allowing doctors to produce more in less time. Another bright spot was median gross hygienist production, which increased from $125,000 to $150,000.
However, that increase didn't extend to the second or third hygienist in practices with multiple hygienists. Gross production for the second hygienist remained flat and decreased 6% for the third hygienist. This indicates that some patients are cancelling their recare appointments or postponing hygiene care.
Practices are reporting that each doctor in an office saw about 20 new patients per month, which was flat compared to last year. "No–shows and last–minute cancellations can be a real challenge in a slow economy," says Dr. Levin. "Practices need strong patient retention strategies to prevent active patients from falling into the inactive category."
Strong customer service must go hand–in–hand with exceptional patient care. In a tough economy, people are always looking for ways to save money or cut "unnecessary" expenses. Don't give patients a reason to rethink their commitment to your practice and look elsewhere for care.
Collections and billings
In analyzing the service mix, need–based procedures dominate the schedule for most dental practices, with these four service offerings accounting for the majority of practice production:
- Restorative nonimplant (21%)
- Preventative (15%)
- Crown and bridge (15%)
- Diagnostic (10%)
These percentages remain similar to last year, though crown and bridge dropped from 20% to 15%. In a tougher economy, many patients are holding off on more expensive restorative treatment. Periodontics and endodontics each accounted for about 5% of production, with implant placement representing 4%.
Not surprisingly, cosmetic procedures (inlays, veneers, bleaching) comprise a small percentage (9%) of overall practice production. While many patients may not be able to afford cosmetic dentistry right now, this doesn't mean doctors should stop promoting cosmetic services.
Even in a slow economy, there are patients who will go forward with cosmetic treatment, such as upper–income individuals or patients who are undergoing major life events (marriage, job interview, reunion, etc.) in the near future. Remember, if you don't present treatment, there is no way a patient can say "yes."
In terms of collections, the numbers also reflect the tougher economic conditions patients are facing. Practices are collecting 97% of monies owed, which is slightly lower than last year. Levin Group recommends collection rates of 98.5%. This year's lower collection rate is also exacerbated by the fact that almost a quarter (23%) of accounts receivable are in the over–60–days–due category. Click here to view practice survey.
Dentists want to be nice to their patients, but doctors have every right to be paid promptly for the services they provide. Many dentists can get into trouble financially by letting their patients "slide."
Levin Group recommends updating your collections policies (which must include collecting payment at the time of service), training your team on those policies, and making patients aware of those policies. Strong financial policies and protocols are critical to practice success, especially in a slow economy.
Dentistry is not only about enjoying a great career, but also about having a great life. An alarming 22.5% of responding dentists said they were experiencing high or extremely high stress. That type of stress takes an emotional and physical toll when experienced day after day.
There are many reasons doctors have unacceptable stress, but a lack of a practice vision is often a contributing factor. A practice vision sets the foundation for long–term success. Unfortunately, only about half (52%) of doctors reported having a vision statement. Without a vision to guide them on the path to success, many doctors become frustrated about where they are and their lack of progress.
As one songwriter put it, "If you don't know where you're going, any road will take you there." Too many doctors end up on that road to anywhere (or nowhere) due to a lack of vision. That kind of career detour saps energy, creates unnecessary stress, and delays financial independence. If you don't have a vision statement, it's time to create one!
Another reason so many doctors are overly stressed is the effect the slow economy is having on their ability to retire. Last year, responding doctors said they expected to retire at 62. This year, doctors expected to retire at 65, even though they would like to retire at 62. It is no surprise the significant downturn in the stock market and housing market has altered retirement plans for many doctors, which makes it even more imperative to have a well–run, profitable practice.
"With the right management systems and strong leadership, dentists can grow their practices and reach their retirement goals even in a tough economy," says Dr. Levin.
Editor's Note: Next month, find out just how you rank against other practices in the important areas of practice overhead, staff wages, and fringe benefits. The results for Part 1 of the DE/Levin Group 2008 Annual Practice Survey are available at www.dentaleconomics.com/downloads and www.levingroup.com.