UNDERSTANDING THE TIPPING POINT IN DENTISTRY
Corporate critical mass is just around the corner. This point of no return revolves around new graduates from dental school. Less than a decade ago we had 3,000 dental graduates a year coming into a profession where 5,000 existing doctors were retiring. There were always more practices available than buyers. Now fast forward to today. Two dental schools just opened in Utah, and two more are due to open on the East coast shortly. We have jumped from 3,000 to 5,200 graduates a year and are headed for 6,000 before you know it. 2008 was the last of three recessions that left the dental community reeling. Dental students are coming out of dental school with an ever increasing student debt ($350,000-$550,000), doctors who retired prior to the recession are coming back into practice because they lost their money, and those who would have retired are putting it off for the same reasons. This started the clock and signaled the critical mass that national corporations needed: An endless supply of doctors.
The tipping point for corporations that will signal the beginning of the end for independent dental practice is now in motion unless we unite and make a huge change in our business models. In a previous post I spoke about “what we should have learned from corporations already” and this week you will understand the why and the need to act now.
Over 50% of dental graduates are female, which is great. They are perceived as being more empathetic, skilled with their hands, and certainly an equal on the intelligence front. I have a daughter who is the seventh generation of Abernathy’s that are attorneys. She is the wife of a pastor and mom to my three grand kids and she strives to be the best help mate for her husband, best mom, and best attorney she can be. Women do things men would not even consider to attempt. It is in this transition from a male dominated profession with the primary desire to own their own practice that we have we seen the first step in allowing corporations to take over Dentistry as we know it. Only 32% of women end up as owners of dental practices. Most of you can understand why and it makes perfect sense. 68% of males become owners. The tipping point in corporate takeover of our dental profession begins here.
If more graduates don’t desire and succeed in ownership, we will have crossed a strategic line that we will never be able to undo. This is exactly what happened to Pharmacies, Vision, and Medical practices. The second third and fourth steps will follow in rapid succession.
With fewer graduates owning their own practices we will see a suppression of practice values. If there are fewer buyers the “price” or “value” of a sellers practice will plummet. The lack of demand will rule the day and they will become worthless just as they have in Medicine. This will fuel the acceleration and demise of the independent dental practice.
Next will come suppression of wages for doctors and their staffs. In the corporate world when profits are realized, they will go to the shareholders, not the employees. This is exactly what happened a few years ago when Dentists began to make more, on average, than Medical doctors. This is not some fantasy or some possible outcome of our precarious present state, but a fact that has already begun.
2007, one year before the final of three recessions, was the pinnacle of income for dentists. From 2007 to today, we have seen a steady decline in dentist’s income. The trends have started and we have to wake up and make some serious changes in our operations. Add to this the fact that most dentists hear that the inflation rate for the US is only about 2% (if that) for the last decade. What most fail to realize is that while we are subject to national inflation rates, we need to add the fact that the healthcare inflation rate is much closer to 10% over the same time period. In other words, your cost of materials and services will soon outstrip your ability to pay the increase. Your profit margins and financial futures are slipping away, and without a quick, decisive action on your part, you may be relegated to working for someone else.
A few months ago we set up a web site, www.bestfordentistry.com, to act as a way for each of you to buy goods and services on the same footing with corporate dentistry. BEST has already become the largest GPO for dentists in the world. Hundreds of doctors have taken advantage of all of these opportunities to put thousands of dollars a month back in their pockets, and membership costs you absolutely nothing. I have to ask myself: “Why wouldn’t every dentist in the US take advantage of these discounts instead of being taken advantage of by the national dental suppliers that have already decided to go to the dark side by discounting the same products and services they sell you at full price at a discount of 30-50% to large national dental corporate practices?”
Take the first step and join www.bestfordentistry.com and stand up and be counted as an advocate for the independent practice of dentistry before it is too late.
This is how you Summit. Next week I will share with you the number one way to save the independent practice of dentistry.
Michael Abernathy, DDS
PS — The B-E-S-T in www.bestfordentistry.com stands for Building Everyone’s Success Together. Join TODAY!