THE SUPER “GENERAL” DENTAL PRACTICE
Nothing stays the same. There are always game changers and evolving situations. This is true even in Dentistry. The problem is that most of us are not seeing it: We can’t see the forest for the trees, or we are just too close to the problem to properly assess the solutions. Somehow we have become an industry in denial with a lack of concern and no perception of the reality of our plight. No longer can you take on the strategy of just hanging out a sign on any corner in town and expect to survive, much less thrive.
Let’s take a look at Dentistry today. The facts, trends, and strategies that are shaping our future in dentistry will catch most of you unaware until it is too late. It’s like the parable of cooking a frog. It is impossible to cook a frog by throwing him into boiling water, because he will just jump out. The frog gets “cooked” when he is placed into cold water that is slowly heated to boiling. It is so gradual that by the time the frog realizes his plight, it is too late. He is dead. This is Dentistry today. The water is so hot that if you sit there any longer you will be cooked. We have taken on strategies that are folly and that will not support sustainable growth driven by consumer desires. Nothing happens unless and until the consumer says YES. Are you listening to what they are saying? Will you react and give them more of what they want and less of what they don’t?
In the early nineties we were introduced to “Cosmetic” dentistry along with more and more products and technology to “sell” to the consumer. We went from being the third most respected profession to the next to the last one: Just above a used car salesman. We made the mistake of wanting the dentistry more than the consumer did. We crossed the line and now we are losing our audience in the market place. When was the last time that every dummy on every corner did not claim to be a cosmetic, aesthetic, implant, sedation, TMJ, sleep, pain, comprehensive, smile stylist, dental spa specialist? The brand is so diluted that every Tom, Dick, and Harry from every “institute”, study club, and “academy” with its bogus pseudo specialist diploma is claiming some heaven sent, never before seen technique or service that will set the patient free.
Don’t get me wrong, I love cosmetic dentistry, sedation, implants, and orthodontics. They will be around forever. The problem is that practices that limit themselves to just one of these niches, or showcase the boutique style practice will find it more and more difficult to find patients that want just that. By only offering certain services at the exclusion of what most general practices offer, you limit the range of patients you can inspire. No patient wants to be diagnosed by a general dentist, referred to an endodontist, oral surgeon or pediatric specialist if their trusted dentist (you) would do the work. The stand alone “boutique practice” is dying and will be limited to large cities with an over abundance of dentists all seeking the same 3% of the population. That small percentage of the population that needs, wants, and can afford this level of dentistry is rapidly shrinking and is not being replaced by generations of neglect or ignorance. Cosmetic dentistry in general is a product of an affluent society obsessed with the external. Even from a clinical perspective you will find that the best dentistry is no dentistry at all. Healthy teeth and soft tissue is as good as it gets. Procedures that irreversibly alter a tooth relegate the patient to having to repeat the procedure every 12-15 years, and that’s if it is done to the highest standard of clinical excellence. Decayed, missing, and filled teeth are becoming nonexistent in middle class America. Demographics show us trends that prove these assumptions. Stop and take a look at what is happening around you and your practice. What are the trends? What is changing? How will you adapt? Why are corporate practices growing at such an alarming rate?
I know what’s going through your minds right now. I don’t want to hear this crap. He’s off on another tangent that doesn’t affect me. I hear this every day: A myth that you are the exception rather than the rule. I hate to burst your bubble, but if you’ve been practicing in the same location more than 15 years, the odds are you are in the wrong place. While you have not changed, the demographics, people, income level, race, median household income, education level, disposable income and age of the neighborhoods around you have changed dramatically. You are not in the same place. Today is nothing like it was 15 years ago. Is it any surprise that you are struggling to get your share of new patients, lower your overhead, save money, and raise your production doing the same thing over and over again and expecting a different result? That result will never come. You are no longer inspiring your patients. Every system in your office is geared to give you the results you are getting. It is hopeless until you decide to do something different. If you are not operating at or below a 60% overhead, producing $20,000/employee/month, producing $25,000/operatory/month, growing at least 15% a year with 50 – 75 new patients per doctor per month, while saving your age in $1,000 bills each year, then count on never retiring, or subsisting on Social Security the rest of your lives (until that fund is bankrupt).
Even the recent graduate will struggle. They are educated for a minimal level of competence by professors who have no real world experience in the successful business model of a modern dental practice. They fly out of dental school ill prepared to meet the demands of business and clinical dentistry. They used to be just barely not dangerous, now some fall short of that. Their expectations so far exceed reality in pay and responsibility as to be ludicrous. Currently we have just under 5000 dental students a year graduating from schools around the nation. We have more and more retired dentists coming back into dentistry because they have too much time and too little money saved. We have older doctors re-evaluating or postponing retirement altogether. Add to this the lack of overall busyness creating situations where current associates are being let go and you have the perfect storm. Dental students are coming out of dental school with $220,000 – $300,000 of school debt, few skills, no job, and a challenging future. A lot of them are even marrying a fellow classmate so now its $600,000 of school debt. The icing on the cake is that every last one of them wants to practice in the city. In Dallas, Austin, LA, Atlanta, Orlando, Seattle: The very places that guarantee failure due to decreasing demographics and unsustainable competition. I call this “competition kill off”. It’s like an over stocked lack where there is not enough food to go around so they begin to eat each other. I practiced in McKinney, Texas, for over 30 years. The next closest town is Frisco, Texas. The city limits meet at a North/South street called Custer Road. These two cities are the fastest growing towns of their size in the US, but the ratio of dentist to patient on Custer Road is 1 dentist to 275 people. You need at least 1:2000. You cannot make a living in this area. Everything changes. You can’t survive in “demographic denial”. Where you practice, how you practice, what you practice, and when you practice are the points that will create success or failure.
Specialists are not immune either. They, more than anybody else, are feeling the pressure of change. When the going gets rough, general practices actually start studying and adding specialty services. 99% of all endodontics is done by the general practice. 30% plus of orthodontics is being done by the general practice. We are doing sedation, implants, perio, you name it, we are doing it all. The patients want to stay with the general dentist they know and trust. Technology has caused this to accelerate: Think automated endo with ultrasonic’s and rotary instruments. Technology in bracket and wire design has made orthodontics a no brainer for 90% of the ortho cases. Add in Clear Choice and Invisiline and there is no wonder that Orthodontists are down 47% in the last 3 years. You name it and specialists are feeling it. Why should the general practice send out every wisdom tooth, periodontal implant, child, or orthodontic case? There is no reason and there are plenty of reasons to keep it in house. This is a trend that is not only accelerating but becoming nationwide.
The next nail in the coffin of the boiled frog is managed care insurance. I call this “Insurance Glut”, and they are here to market you out of the game. Every insurance company is pushing their enrollees to seek an in-network provider. Every time an out-of-network patient has a crown done, they receive a letter from the insurance company on how much they would have saved by seeking an in-network provider. They are trying to make the public believe that a crown is a crown is a crown: Simply a commodity item. If they succeed, there will be no reason to select a dentist other than by fee. You just pick the lowest priced provider. Guess what? They are succeeding in many states. These people have lots of money and know how to play the game. You and I have to be aware that they are not going away. The latest and greatest tactic by Big Brother is to systematically use technology to limit fees and eliminate good doctors who do high-end dentistry. We had a client who was dropped from Met Life due to an arbitrarily high number of crowns done by his office: Crowns that the insurance company had approved on their EOB. The doctors that are being eliminated are the ones that continue to be at the front of dental research and study: The LVI, Pac Live, Seattle Study group, Pankey, Dawson, Rosenthal, and American Academy of Cosmetic Dentistry types. Through no fault of their own, they are being excluded from managed care because of their excellence in clinical dentistry. It is not “good versus evil”. It is just another business competing for the consumer dollar trying to remain profitable and we have to be competitive to make this work. Insurance companies with ever-updated strategies are not going away.
The final nail is the corporate dental practice. Companies like Pacific, Aspen, Monarch, and Heartland are making huge inroads to dentistry in the US. This strategy has started and stalled off and on for over 20 years, and now it is working. We have uninformed, clumsy business models that are ripe for picking and the Corporate nationwide companies have hit their stride. These people are not going away either. These companies are looking at a business that can generate 25-50% profit margins when operated correctly. Give me a break. Grocery stores operate on a 3% spread. Dentistry is ripe for the harvest, and the solo practitioner is clueless. This happened some 30 years ago with Pharmacists. Most if not all pharmacies were individually owned private businesses. Then came the big bad wolf. Corporate America saw an opportunity to capitalize on this mom and pop operation and turn it into big business. Enter Wal-Mart, CVS, and Eckerd’s. So successful were they, that there is not one privately owned pharmacy in all of San Francisco today. This is our future if we do not act. If you wait to react it will be too late.
So what do we do? How can we compete? What is “the” business model for the future of dentistry? It’s not the 23 operatory, high stress, high staff turnover, corporate model. It’s not a spa/boutique practice with limited services for the high end customer. It is not a specialty practice that depends on referrals from the general dentist who no longer refers to specialists. It’s the phenomena of the “Super General Practice”. Let me list just a few of the characteristics of this new model that is popping up around the country and thriving in any market:
- It is located in an area of growth with a demographic of at least 50% of the population below the age of 39.
- It will have a race demographic of 80% white or higher. If Hispanic, black, or Asian race demographics exceed 5% they will reflect this in their hiring practices and marketing to become more inclusive of all the factors from age, income, race, and educational level.
- The median household income will be $50,000 or higher.
- Educational statistics will indicate a 90% or higher high school graduate and at least 40% with a bachelor’s degree.
- People living in the same home 5 or more years will be below 30%.
- They will see and market to kids.
- They will take most insurance and try to eliminate as many hurdles or barriers as possible to treatment while still maintaining a 60% or lower overhead.
- They will have multiple financial options along with perhaps the ability to carry the financing themselves while still maintaining a 98% or higher collections rate.
- Hours will include Fridays and Saturdays (open six days a week) with some early morning (before 8:00am) and some early evening (until 6:00 or 7:00pm) appointments. Sunday hours will be following close behind.
- Services will include, but not be limited to: Implants, C&B, sedation, TMJ, oral surgery, limited perio, orthodontics, and all of the normal general practice services.
- Staff cost will be at or below 25%, with benefits, and a progressive bonus system that guarantees a “staff ownership” mentality.
- 6-10 operatories that maintain a $25,000/month/Op production rate or higher.
- They will have long time caring and compassionate staff with little or no turnover. The owners will not tolerate mediocre staff. Staff will have a functional bonus that will act as an incentive for above average results. A policy manual and job descriptions will detail consequences for lack of performance also.
- They will average 2 hygienist per dentist or 2X the hygiene hours per doctor hours.
- New patients numbers should meet or exceed 40-70 new patients/month/doctor
- There will be multiple providers leading ultimately to multiple owners. Creating an attitude of ownership among the doctors.
- While it grows it will maintain an attitude that will embrace change while constantly monitoring results. The owners and staff will make sure that serving the patients is a core tenet in building a business model that will continue to grow and compete in any economy.
This “Super General Practice” is the model for today and the future. The practices that are at the fore front of profitability and sustainable growth already know this. Wake up and reevaluate your direction and vision. Waiting for the good ole days to return guarantees that you will be the victim in a profession that needs to change.
Michael Abernathy DDS