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What's BEST for Dentistry?

This was an email I received a couple of days ago and my response. I hope you find this to be motivation to stand up and act. Be sure to read to the very end. MA

Mike
Was not going to send this Mike, but really wanted to know how you would deal with an Internet request like this? I know you recommend taking the Pts plans, but I cannot see how I can accept 40% of my fees, esp from Delta. For what they pay for hygiene procedures, it’s less than my overhead for my hygienist, supplies, room overhead, etc. Then all the pts who came to me even though they had Delta, stayed and paid our fees. Now that we are accepting Delta they see what we are accepting and what we now have to write off. They must be thinking, “Dr. now accepts these low fees, why was I paying the regular fees if he will accept the low fees.

To try to stimulate business we developed an in office: Oral Health Savings Plan

1st person in family pays $279 a year. This fee covers 2 regular cleanings, 2 exams, fluoride, and any needed and X-rays. They also get a 10 % discount on all our fees except specialist fees. 2nd person, 3rd, etc., pay $169 for the above. Kids 13 and under pay $69 for the above.

We are basically giving away the preventive care in hopes to attract new patients. We are happy to take 10% off our “regular” fees. Since Delta and other PPO’s take 30-60% off our fees, the 10 % is not too bad. But if adults and kids have no restorative, I am basically losing money every time they come in. The hygienist still gets paid as well as everyone else except me and my family.

Is this a failed idea? Are we giving away too much? Should I quietly take this off our website and stop offering it? I will honor those Pts until the year contract runs out. We are tracking thousands each month in lost production since we started this plan almost 2 years ago.

Below is an Internet question sent via our web site. I did not respond. What do you do with a request like this? This patient is saying: “I want to do as much dentistry as possible in 1 appointment but I can’t pay you!”

Question:
I have over 20 issues with my teeth I’ve had many quotes on getting it all done and after a few appointments my bill quickly racks up over a $1000 I have over $10000 worth of work that needs to be done and I have 4 kids and am running a flooring installation business. I don’t have the money up front to afford all that needs done and am tired of the way my teeth are I don’t have time for multiple appts and need someone who can work out a manageable budget plan and most important need to get as much work completed in 1 visit as possible if you can help please let me know thank you

MY ANSWER:

It sounds like outside financing would be the only strategy that makes sense. It would allow them to do everything in one appointment and this would work if they were credit worthy. Otherwise the entire risk shifts to you and you know that you will never be paid. There will always be patients that cannot afford dentistry. 95% of what we do is elective, with extractions being the only service that is not. We all have fat patients without teeth.

As far as the insurance industry: It is increasing 9% a year. The average write off for normal fees is 20-30% (not 60%). Delta is the worst and is the largest. In every practice that we work with that has huge production numbers, they take every insurance plan and still keep their overheads below 60%. You cannot practice dentistry the way it was done 20 years ago and expect to survive. In my original practice we were completely fee for service for many years due to the area demographics. But it changed and we took just about everything and still maintained a 53% overhead.

You can’t expect to continue to pay a hygienist an hourly fee that you used to pay when the net collections from their effort has dropped 30%. Paying them on commission or an hourly wage that reflects their profitability or monetary contribution to the practice’s overhead is a moving target that has to be adhered to. Today and into the future hygienists will make less if they provide less in the form of profit dollars. Welcome to capitalism where profitable strategies and businesses grow and prosper and the marginal ones go under. 90% of all small businesses fail in the first 5 years. It may become that way in healthcare soon. This sounds horrible but it does force us to consider evolving into one of the survivors rather than struggling just long enough to become one of the failures in the business of dentistry.

Let there be no mistake: Dentistry is a business. Corporate practices have no problem doing this, but solo practices that have not made the changes they have to make are dying. You have to embrace what corporations do well and then improve on that. Look around and see what successful practices do well and copy them and improve on the model. We must have a better product and model to survive, or within the next 10 years there will not be any solo practices to speak of.

In-house insurance plans are becoming more common, but you still have to contend with the 70% of the patients out there that want to use their existing insurance benefits. I have said this before, but the only way to win at managed care is to provide a larger range of services to a larger range of patients at least 30% faster with even better results, and/or sell services that their insurance doesn’t cover (therefore charge what you want for those). The other side of the coin is how would you survive as a pure fee for service practice? According to the ADA just 7% of dental practices are currently “fee for service” only. I think this is possible, but very unlikely, to be a sustainable strategy in the future (I am one of the guys who wish it was possible because that is exactly where I would want to be, but then I wake up). Insurance companies are not the bad guy. It is the employer that goes to the insurance company with little or no money and wants an insurance plan for their employees. The employer could pay for any level of coverage they want and they opt to pay the lowest common denominator of coverage to control their overhead. All of these employers are trying to make a profit. It just seems that dentists don’t really understand how to create a business model that reflects the reality of the times and their situation. For a few of us, this will spell the end of our careers in dentistry. For others it will be a slow evolution of change or diminishing returns creating a mediocre practice and results. But for the few that wake up and see dentistry as a business with below average work hours and above average profit margins, there is still unlimited opportunity for the quick and wise who embrace and act on the changes that need to happen.

So what to do? Some would be smart to throw in the towel and go work for the corporations and learn a business model that can survive (but a lot of corporations will not make it either). Others will move from their present location with limited upside and strike out to greener pastures (there are still places where the competition ratio is 1 dentist to 4,000-5,000 patients, less insurance to contend with, and the cost of living is more in line with their abilities to pay off debt and accumulate wealth). A few select dentists that understand the new Dental Economy and the “climate change” that student debt, corporations, insurance companies, and Obamacare have created will remain where they are, be open consumer hours, do better marketing, lower their overhead and debt, improve the use staff delegation and technology as a “multiplier” (it will not help without the right strategy and systems), and offer better services while learning how to better incorporate the needs of their patients and their insurance coverage.

Bottom line: This is not going to change, and will in all likely hood continue to morph into a more challenging environment for dentistry in the years ahead. With that being said, I think the future of dentistry, for those willing to adjust their strategy, is bright and will continue to grow. Statistics and economists tell us that the dental industry will continue to grow by about 20% over the next 15 years. This is great news for the astute and persistent doctor. It still spells trouble for those of us who keep one foot in the past, continue to lament our plight, and refuse to do what it takes to change our model of practice and adapt quickly to each new change on the horizon.

The days of Monday to Thursday dentistry are gone, with working Fridays and Saturdays taking its place. The idea of not doing endodontics or oral surgery and not seeing kids died a decade ago. You will see patients flocking to practices that offer a wider range of services (kids, implants, sedation, hygiene, ortho, etc.) while taking their insurance and being open consumer friendly hours.

Sorry this has gotten so long, and I don’t want you to think I am picking on anyone, but I get this question every day, seven days a week. I am hoping that this is a good sign, because I believe that in business we need to ask the right questions. That starts the process of change and signals a new engagement as to where we are, and where we want to go.

One of the things that we, as concerned dental owners need to do, is create an alliance of independent dental practices and doctors that want to save Dentistry and move in a new direction. I’m proposing a group that will be called “BEST for Dentistry”. BEST stands for Building Everyone’s Success Together. We should have a website (www.bestfordentistry.com) up within the next couple of months. While it should help the individual practice get on the same footing as large national corporate practices for purchasing power with vendors, it will be much more. It will bring together the tools, strategies, and systems each of us needs in order to re-create the type of culture in dentistry that will mold our successful future. I want this to be an outlet for a David and Goliath” fight for our lives and livelihood.

I remember the days when doctors, authors, lecturers, and the dental community as a whole freely gave information out that would help our profession. Somehow, that turned into speakers charging $10,000 a day to speak while spending 70% of their time trying to sell us something if we were lucky enough to be one of the first 100 doctors to appear at their booth after their talk so you could become one of their platinum members in order to receive their add-on gifts and benefit packages before they stepped on their new private jet to fly off to another speaking engagement. This, in contrast, will be a platform to bring together dentists who realize that without some coalition of like-minded doctors who in turn can attract the right professionals and vendors to help us in our goal to take back our futures, we will not succeed.

In a few weeks I will hit 65, and while I understand that I am getting closer to my use before date, I want to spend my last years in Dentistry doing something truly “significant”. My goal is to inspire you to come alongside me and all the other dentists that see the future as I do. I look forward to hearing any concerns or suggestions you have in making this happen. In the next month and a half, I will need to hear from you when I ask you to make a commitment of your time to make this happen for all of us.

Michael Abernathy, DDS
972-523-4660 cell
abernathy2004@yahoo.com