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3 Things You Need To Do Right Now!

Everybody wants the short answer to: What should I do right now? Is there a simple way to correct an entire career of not being engaged in your practice? Well this may not be so simple, but it is step one in taking back control and re-engaging in your career.

In laying out this strategy, I recognized there were three “broad stroke, got to get it done”, strategies that would open up choices for you and your practice.

1. Recognizing where the threats in Dentistry are coming from.
2. Understanding the Business of Dentistry.
3. Embracing change through Consumerism.

Recognizing where the threats in Dentistry are coming from is the first thing that anyone should do. The ability to recognize you are in jeopardy is only superseded in importance by your ability to accept the information and act on it. We often hear the term “denial” as a mindset tossed about to describe one’s attitude or outlook on matters of preparedness, or for their willingness to accept bad things may happen in our lives. This catchall term is generally used to separate those who plan for life’s un-pleasantries versus the “sheeple” who graze away their lives in blissful ignorance, or in belief someone will be along to take care of them. It’s almost commonplace for me to hear that most dentists think that the “Great Recession” is why their practices struggle. They somehow think that it’s just a ripple effect from stupid bankers, crooked stockbrokers, and left over recovery from the real estate corrections. Recessions happen about every 8-10 years and this last one was huge, but this last recession was the culmination of an economy gone off course. America uses 80% of the world’s natural recourses but barely has 20% of its population. Our economy has been on borrowed time for the last twenty years. It just followed the natural progression caused by over spending, greed, and unsustainable financial habits via credit borrowing. We are seeing businesses fail because in any normal society, they would never have been able to survive anyway. All of this to say that I have not included the recession as one of the threats in Dentistry. Yes it has affected how we live, but you are not struggling because of it. If you are not solvent in any economy, it is the result of you having poor business practices in the first place. In other words, you probably would have struggled and failed in business regardless.

1. Recognizing where the threats in Dentistry are coming from.

a. The Student Factor. We have gone from 3200 graduates each year to just under 5000 and we still have three more dental schools coming on line. Five years ago we had 6000 dentists retiring every year and now that has dropped to almost zero. Doctors are realizing that after a lifetime of work, they cannot retire. Even the ones that retired over the last few years are coming back into dentistry because their money is all gone. This means that the new graduate dentist who is coming out of school with a $250,000-$400,000 debt is finding there are few jobs available. Former retiree doctors are coming back into the workplace, current associates are being let go because of a lack of work, and every new graduate wants to work in the city where the dentist to population ratios are unsustainable. There is even a new wrinkle: Students are falling in love with and marrying another student with equal or greater debt meaning that we now have two doctors in the same location looking for a job with little or no backup plan for their careers. With this amount of debt and competition we are seeing most graduates with only one option: Work for the Corporations. This will be a vicious circle and perpetuate the takeover of Dentistry as we know it by investment groups in the form of the corporate practice.

b. Insurance Companies. Last year insurance coverage for anything dental dropped by 2%. That means more of your patients are going to have to pay out of pocket expenses with their hard earned cash. That’s why dental spending dropped 1% last year. People are living on a budget and dentistry has dropped well below cars and Internet access for spending priorities. Of the insurance plans remaining, PPO’s increased by 9% in 2011. That means the old indemnity insurance plans are fast becoming a thing of the past. Sure there are those of us who are still clinging to a total “fee for service” practice, but that too will go by the wayside. Fortune Magazine did a survey of 1000 people in which they found that 87% of those surveyed would change Physicians for a $5 (five dollar) change in co-pay. Get ready, insurance coverage and those that accept it will be the way of the future. I agree, it sucks, it’s terrible, but it is not going away. Figure out now how to compete or wake up someday soon and find you have no future in dentistry. Fifty-seven percent (57%) of the population in the US is covered by some form of dental insurance, and every last one of them wants to use it. When you consider that the average reimbursement for a PPO is about 35%-45% below the 85th percentile for fees, you have a crisis on your hand. Few offices actually thrived when there was no adjusted insurance fee. What is that same practice going to do when their clients all abandon ship to go to someone that accepts their insurance? Face the facts: Most of us have some difficult decisions to make. The “Trojan Horse” that insurance companies are rolling out is a plan that is only about 15% below your normal fee for service charges. Sounds good until you consider that once you get used to it they never raise the reimbursement amount (Insurance Companies average a 1-2% increase every 5 or more years). You get in, but you can’t get out. It almost sounds like an addiction to alcohol or drugs: You’re just going to try it and boom you’re hooked. The latest greatest strategy for insurance companies is a unilateral decision to change reimbursements to providers. In the state of Washington, delta dental plans (no caps for a reason), lowered their reimbursement by 15% take it or leave it. The last thing I see hitting our clients is the arbitrary drop clause where insurance companies use a coding protocol and create an “audit focus”. An example could be a great practice and really good doctor who utilizes the crown fee more often than other doctors in the PPO. You come to work on Monday and you open your mail to find that without warning you have been dropped from Delta, MetLife, etc. No reason, but now the realization is that you just lost 67% of your practice income in one swift stroke of a keyboard. It happens and it happened to two of our clients. Now what do you do? Insurance companies are now going around the employer and selling their plans directly to the consumer. Forget being insulated from managed care because you are in some back- water town with no industry. They will invade the television and Internet and take their products directly to the consumer.

c. Who hasn’t felt the incursion of corporate practices? Consider this: Thirty years ago every Pharmacy was owned by private individuals. Hard working Pharmacists making about 20% profit and relationally meeting the needs of their clients. Now fast forward to 2012. In large cities and most other towns it is rare not to see a large corporate chain doing 90% of all Pharmacy production. Back in the seventies large corporations took a look at Pharmacies, saw a 20% profit margin and saw that they were ripe for picking. The corporations could lower the cost, bring “value added services and products” and basically run the little guy out of business. 2012 marks the time that corporations are gaining momentum on doing the exact same thing to Dentistry. The scary part is that it will be easier and it will happen faster. Think about it: A 25-50% profit margin, poor business structure, poor consumerism, and a clueless owner. This is the low hanging fruit for this type of corporate business strategy. There is no way it will not succeed. Sure there will be bumps in the road, but in the not too distant future young dentists will be graduating from dental school with a lot of debt and a minimum wage job waiting for them. Corporations with multiple practices are negotiating reimbursement fees from insurance companies that are 10%+ higher than you can get, buying supplies and lab work at a 35% discount, providing real-time training for employees and doctors, utilizing aggressive marketing, keeping office hours early and late and sometimes seven days a week, and delivering every dental service imaginable in one convenient location. Why wouldn’t they find it easy to compete with your 32 hours, 8 to 5, Monday thru Thursday schedules in some out of the way, poorly maintained office with fewer services? It’s not coming, it’s here.

d. National Healthcare. It has passed and whether it is repealed or modified, it will eventually become part of entitlement mentality for many. If this goes into effect, you can forget about ever selling your practice for any type of money. Physicians have had to just walk away at the end of their careers and they have been dealing with federal incursion into medicine for thirty years. National Healthcare will be the final nail in the coffin of Dentistry as we have known it.

Each of these four threats to dentistry is real, has gained momentum, and is an unavoidable obstacle to you running a successful dental practice. You either need to resign yourself to a slow death or actively decide you are not willing to bend to their pressures. Only the proactive doctors will thrive in the coming environment we see ourselves heading for. While this may seem self-serving, you need to take the time to read my book and attend a seminar, or at least get the DVDs for the “180 Degree Dental Journey” which will spell out step by step what it will take to prosper in the future of Dentistry.

2. Understanding the “Business” of Dentistry.  Over and over we keep trying to emphasize that the “practice” of dentistry has become the “business” of dentistry. Doing well in dentistry will come down to becoming a great leader and good business man/woman in your practice.

There are a few trends in dentistry that I need to point out before I lay out what the business of dentistry looks like.

Over the last 4 years we have seen a steady decline in the utilization of specialists. More and more specialty services are being performed by the general practitioner. With this trend we are seeing Orthodontics down 47%, 99% of Endodontics is being done by the general practitioner, and implants, perio., and cosmetic services done exclusively by the general dentist. We’ve finally figured out that a normal dentist with a little practice and training easily performs many of these services. We are also seeing the demise of the Pseudo-Specialty practices (Implantologist, TMJ specialist, Sedation dentist, Cosmetic dentist, etc.). The “stand alone” strategy of limiting your practice to one of these areas has seen its day. Patients have spoken and they don’t want to limit their selection of dentistry to one location for one service. They much prefer to have their trusted friendly family dentist do all of these procedures, including working on their children. If you think about it, implants, sedation, and cosmetic dentistry was an event specific demand brought on by poor teeth in Baby Boomers without another generation following to replace the demand. They are just not growth strategies. In fact, in a middle class demographic, decayed, missing, and filled teeth are almost non-existent. The playing field has changed and we are headed back to a “general practice” model we call the “Super General Dental Practice”: They see the kids, do cosmetics, sedation, implants, TMJ, and bread and butter general dentistry as demanded by the demographics of the people they seek to serve.

Competition in general has thwarted most of our efforts at growth. You need about 2000 potential clients per dentist (1:2000) to grow a practice. The trouble is that in most cities it is more like 1:400. This creates an unsustainable business model. We have younger demographics and older dentists. The younger dentists complicate the competition by only wanting to practice in an already overpopulated city. The frightening thing is that most of you would agree and know that this is true, you just are not reacting to these changes.

Business is based on getting finite results that are measurable and reproducible. In Dentistry it seems that we often forget that we are in the middle of a consumer driven business that requires and demands us to be intentional and consistent in the way we treat patients, offer services, and measure our progress. If you’ve heard me speak or read just about anything I have written in the last year, you will recall that I see the future of independently owned practices as a “Super General” dental practice. A business model with very real and sustainable results that allow us to maintain the relationships we have as an individual practice while adding most of the benefits of corporate practices with an eye toward consumerism. Allow me to give you a target as such, so that you have a clear goal to shoot for. These benchmarks are for a really well run general dental practice with an overhead between 50%-55%. Low stress environments in which our patients are inspired by a well-trained, long-term staff who know the “why” of working for you. This practice will have these benchmarks as a result of doing everything right.

a. 50-75 new patients per doctor per month with 70% being directly referred.
b. You will be practicing in an area where the doctor to patient ratio is about 1:2000
c. You will be sensitive to the fact that consumers shop and that we must keep our comparable fees comparable.
d. Producing $20,000-$25,000 per staff member per month.
e. Producing $25,000-$30,000 per operatory per month.
f. A strong hygiene department that produces around 33% of the total practice production each month. They will be producing at least 3 times what they are paid, with 2 hygienists per dentist (twice as many hygiene hours as doctor hours).
g. A 98%+ collection rate as a minimum result.
h. Recall effectiveness of 80%.
i. Overhead will be around 50-55%
1. Staff compensation at 24-25%
2. Facility cost at 7-9%
3. Lab at 8-10%
4. Marketing at 3%
5. Office supplies at 2%
6. Dental supplies at 6%

Probably the easiest way to define consumerism is to “give patients what they want, when they want it, at a price they can afford.” Too often we try to give patients what they don’t want, and you will never get better at that. If you have plateaued and find yourself grasping for new patients and profitability, you can be sure that your potential patients are screaming at the top of their voices that they don’t like something about your practice. Having to drive by 30 other dentists to get to you just makes it even worse.

Before you can embrace consumerism by inspiring your patients, you have to know who your potential patient might be. Go to and put in your zip code and study the education level, median household income, race, and age of those around you and make sure that your current patients match the percentage of consumers who have yet to choose you as their dentist. Always keep in mind that these demographics define your audience. Get in step and embrace the change it takes to speak to that audience; they are the future of your practice. Without them you are finished as a viable business. If your practice strategy does not at least consider the demographics, you are probably tying to appeal to a very narrow group of people further diminishing your chances at a successful business strategy.

If there were one number you should look at when considering your score as a consummate consumerist, it would be the number of “direct referrals” you get each month. If you are not getting a bare minimum of 50% (should be more like 70%) of your patients from your existing patients through a direct referral, something is wrong. Consider the “threshold test”: What barrier(s) do you require your patients to climb over to get into your office? Do you take their insurance? Are you open on Fridays and Saturdays? Do you clean teeth on the first appointment, see kids, and provide the services that your population demographics dictate? Each and every barrier you set up for a patient to get through pushes you further and further down their preference list when they start looking for a dentist. Why does the average dentist insist on making it almost impossible for a consumer to select them as their dentist?

Patients have always been and will continue to be concerned about time, money, fear, and most of all trust. Dentistry has always been about getting to know your patients and giving them what they want rather than what you want.

I hope this challenges you to get off your recliner and start doing even the minimum of what it takes to turn your practice into a profitable, productive, less stressful business: The Super General Dental Practice.


Mike Abernathy, DDS
[email protected]