However, dental practices are now in a rebounding stage. Patients are returning for preventive care; when we surveyed US adults in March 2021, 68 percent of them visited a dentist at least once in the past six months. That is a major increase from the 20 percent when we asked in June of 2020. Solutions like digital communication and enhanced safety procedures are at the forefront of the industry right now, according to Guardian’s 10th Annual Workplace Benefits Study, Inflection Point: The impact of COVID-19 on the practice of dentistry. Read on for strategies for success during this time of restoration.
“Always plan for the worst — and if it never happens, then wow, how great was that?” exclaims Dr. Eric S. Studley, President and CEO of Eric S. Studley & Associates, Inc., in a webinar presented by Guardian in partnership with the American Dental Association (ADA) . “During the initial shock of the pandemic, our profession realized, ‘Oh my gosh, I don’t have enough money saved [to cover me if] I don’t have patients or production for the next three months. How am I going to pay the office rent, the office staff, my mortgage, my car?’”
Put together a trusted advisory board made up of your accountant, attorney, and anyone else who can provide insight into your practice’s financial ecosystem, and then have those advisors communicate with one another about your financial well-being. That holistic view will help you and your practice both now and later.
Your financial advisory board may recommend pushing retirement closer than the originally planned time frame. “A number of boomers (20 percent) and even Gen Xers (22 percent) have retired early. If you’ve saved a lot of money and lost your job, you might already have your flight path,” says Zarifa Brown Reynolds, VP, Head of Small Business Segment at Guardian in a webinar called COVID-19: A Turning Point for Employee Benefits? But younger generations haven’t had the chance yet to build up their nest eggs as a time when layoffs were rampant and unemployment was extremely high.
“People would rather shovel snow than to meet with their financial planner,” says Dr. Studley. “When you get that financial house in order, it really does make you feel great. And then it takes the pressure off the changes you have to make to your office.”
This isn’t the first time that the profession has been hard hit financially. In the economic meltdown of 2008-2009, Dr. Angel Sanchez-Figueras, Dental Director of Managed Dental Care at Guardian Dental realized that his practice was based on equity. “The housing market [in Southern California] had gone through the roof, we were doing two and three full mouth rehabs a month, people were dipping into their home equities to do [procedures],” said Dr. Sanchez-Figueras. “And within a span of three months, [my] practice took an approximate 47 percent hit in revenue. It took us about two years to bounce back from that hit.”
Dr. Sanchez-Figueras’ practice went into overdrive to get through this tough time; the quick adaptations were necessities borne from desperation, but they did work, and can be applied to the challenges dentists are facing today. Here are some of his tips for rebalancing your dental office’s financial pocketbook:
- Evaluate all your costs, fixed and variable, and balance those against the revenue for each procedure.
- Expand and/or shift your office hours based on your patient needs. Maybe it’s best for people who are struggling to maintain their jobs if your office offers appointments in the evenings and on Saturdays instead of during morning.
- Emphasize prevention to your patients to avoid costly dental work down the road. It engenders trust and positions you as a dental practice with their health and financial well-being in mind.
- Institute an in-office payment plan to facilitate people who have been hard hit financially but still need emergency dental work like fillings or tooth extractions.
- Renegotiate fees with the laboratories with whom your practice works.
- Participate in volunteer events within the community in order to develop alliances not only with potential new patients, but also with other healthcare specialties like GPs and cardiologists.
- Join a dental network to simplify your business and expand your patient base
The landscape of the dental industry in 2021 is very different than it was only a few decades ago. In 2019, average dental school debt rose to $292,1691, an enormous jump from $40,000 in the early 1980s.2 This debt, the fiscal risks and responsibilities of owning a practice, and the challenges practices faced during the early days of COVID-19 are driving more dentists to join larger business units, like dental service organizations (DSOs) or dental health maintenance organizations (DHMOs).3 Eight percent of dentists (nearly 1 in 10) are currently affiliated with a DSO, but that number is projected to climb to 75 – 85 percent over the next 10 years.4
For those interested in selling their practice, it’s generally a buyers’ market. Over 12 percent of webinar attendees confirmed that their short-term plan for their dental practice is to retire and sell. Before you decide you want to sell, make sure you get a dental practice evaluation from a practice accountant or broker. You need your advisory team to educate you on the tax ramifications that will crop up after the sale. Some dentists are selling to DSOs and staying on for a fixed period in a mentorship role; that may add value because the patients will stay and make the transition along with their dentist. A dentist’s patient base is valuable to the buyer, and patient retention should be a factor in the sale.
During this recovery period, treat your patients first as a health care provider, and second as a business
Consider reactivating what Dr. Sanchez-Figueras refers to as “missing in action patients” who disappeared off of the practice’s roster. Often, those patients have dropped due to financial or health insurance changes, but still need care. Dr. Sanchez-Figueras recommends making it clear that you as a dentist are there to serve, regardless as to whether that service is optimal to the bottom line of the practice. “And make sure you tell them! ‘I understand that all you can afford is this non-precious crown and it’s ugly and its fit isn’t optimal but we’re here for you and we’re dealing with your dental issues and later on down the road, we’ll optimize it and put in a better crown.” The times are unprecedented, so the practice has to make unprecedented changes.