23 Jul Everything Dental Blog July 2018
These topics represent change or movements in our once cottage industry. All of them are having a profound impact on our industry norms. The consolidation is creating massive change and disruption. However, with greater transparancy, multi-specialty and multi-discipline doctor collaboration and digital medical records, we will undoubtably improve healthcare outcomes.
We are immersed in a race to catch up, keep up or gain a competitive advantage which can be physically and emotionally taxing for owners and workers. With each technological advancement the new becomes old and the old becomes obsolete or incompatable. Today, we dispose of technology that just a few years ago, amazed us.
Consolidation is evident throughout the entire dental landscape and is a natural business phenomenon. When an industry maintains decent margins in a robust economy, mergers and acquisitions happen. It is a fundamental economic principle based on historical data from hundreds of industries.
Big money chases opportunity and healthcare has been delivering huge profits to private equity and venture capital investors for over two decades. We saw it with our medical counterparts and now we are in the midst of change within dentistry. Dentistry however, is rich in electives (Implants, cosmetics) and the majority of Americans do not have dental benefits. Therefore I am optimistic about our future, though it will look very different than today.
The good news is that these changes will result in a better and more sustainable business model. When businesses are efficient and customer focused the standard of care improves and the customer experience is enhanced. This leads to complimentary patient reviews that become a competitive advantage.
Group practice is not a new phenomenum but managed group practices are. Differences arise in organization, external investment and performance analytics. Non-clinical care and operational activity is conducted by a management team, not a wet handed dentist. This movement towards managed dentistry has been orchestrated and accelerated by private equity and venture capitalist investment. Dentistry remains profitable and predictable compared to other industry’s.
uses direct to consumer marketing to advance its one stop shopping solution for dental implants. Clear Choice™ markets implant surgery and the final restoration in one visit. Their advertising and marketing is effective and sophisticated. At ClearChoice Dental Implant Centers, you get more than a permanent tooth replacement solution that looks, feels and functions like natural teeth. You get your life back! That is a powerful message that will accelerate the popularity of implant dentistry in America.
Dental specialists are considering this busines model as the referral network is shrinking with the growth of the organized, multi-specialty group practice. Solo practices are encouraged to invest in direct to consumer marketing to attract new patients and target populations. I have been advocating direct to consumer and search engine marketing for years because it works!
uses direct to consumer marketing with a Tele-Dentistry component. This phenomenon is changing our dental landscape and making minor and moderate orthodontics easy and affordable. Here is how they describe their service on their website: We make a 3D image of your teeth to see exactly what’s going on and align your smile. There are two easy ways to make a 3D image: you can visit a SmileShop for a scan of your smile, or we can build it from the impression you take using our at-home impression kit. Your 3D smile is reviewed by a dentist or orthodontist licensed in your state, who will guide your new smile from beginning to end – with a treatment plan that lasts, on average, 6 months.
Tele Dentistry is creating another dimension for care givers. With the help of encrypted, medical records, (including radiographs and other digitized testing results) information can be shared amongst clinicians and specialists via telecommunication. Healthcare professionals will triage, diagnose and treatment plan a patient from anywhere in the world with a smart phone or computer. This will lead to transparency in medical/dental fees as patients shop for healthcare providers on the web.
Insurance company owned and operated dental facilities – While this movement is not new, it has drifted from the original charter to serve communities with lack of access to care. You can find these types of facilities in our suburbs and inner cities today.
EPR, digital projects or capital investment is a financial burden regardless of industry or business size. We are moving from a paper environment to a digital one and no one is exempt. Most industries will have to invest in infrastructure or capital equipment to modernize (digitize) their facililties and keep up with their competition. In some instances we will be required to communicate and colaborate using technology (hardware/software) that we currently do not own. Most modern dental facilities have digitized or are moving towards a paper-less environment now.
Web costs (SEO, SEM, reputation management & social media) are now a line item on most dental practice budgets. These critical marketing initiatives must be measured, monitored and managed. Reviews can help or hurt your practice. They provide valuable feedback about the markets perception of your clincal prowess, operational efficiency and customer care (patient experience). Consumers select their dentist for many reasons but bad reviews are not one of them.
Reduction in medical/dental benefit coverage – employee healthcare and retirement benefits will grow as a percentage of ones’ compensation over the next decade. It makes sense for employers, especially amongst their high earning employees, to bundle these desirable benefits as a way to sweeten compensation packages and attract talent. On the flip side, there will be a decline in the middle and low wage earners benefit packages. We’ve seen employers decrease benefits while raising employee participation with higher co-pay levels. They are selecting medical and dental plans with more limitations, reduced fees and bundled procedures. Ironically, this could lead to more ‘fee for service dental patients’ but the downside is a return to pain/emergency based dentistry from the economically challenged.
Technology investment can lead to cash flow challenges – A modern facility operated by well trained, highly motivated and customer oriented personnel is the secret sauce for any practice. Cost containment, procedure expenditures and hourly production costs must be determined to create practical and fiscally prudent budgets. Failure to digitize your facility and acquire revenue producing technology will affect your attractiveness to the consumer and the businesses cash flow.
Businesses that do not offer competitive salaries/benefits and education to their employees will determine their fate and the type of patients they’ll attract (Golem effect). If you have limited or outdated technology and high staff turnover, you will drift towards lower fees and benefit reimbursement.
Buying groups – the business of dentistry can be very different based on location and the community (socio economics) you serve. In rural communities, care givers are more selective regarding their insurance participation (in or out of network) because they have less competition. *This does not hold true in underserved communitiues that take state or federal funding. In urban areas, with highly dense populations, competition is so fierce that providers are compelled to be panelists in less desirable plans.
Dental suppliers have a different M.O. in these competitive urban markets as well. For decades, full service dealers have provided a full compliment of financial, operational and equipment expertise in addition to aggressive pricing on sundries. In rural and middle America, buying groups are in vogue. They have a compelling story by marketing these same services with a slightly different slant. They emphasize their buying power and operational expertise. Over the next few months you will hear about Thrive by Henry Schein Dental which will revolutionize distribution and enhance member dentists analytics, operational effectiveness and pricing.
MSO / DSO – Management and Dental Support/Service Organizations provides practice management, administrative services and financial solutions for individual and group practices. An MSO is owned and operated by dentist(s). A DSO provides critical business management and support to dental practices including non clinical operations. Both entities are supported by investors (VC and PE) who look for accelerated growth and a good yield from their investment. This is why some people call it corporate dentistry.