25 Oct Everything Dental Blog October 2018
Dentistry is experiencing a reinvention at every level of manufacturing, distribution and patient care. While it feels uncomfortable and even chaotic at times, we are enhancing the patient experience and clinical outcomes. We are moving toward Same Day Dentistry with a preventive and cosmetic bias. This is happening as the industry embraces the digital workflow during an industry wide consolidation of ownership. It is the best of times for some and the worst of times for others!
Manufacturers are struggling for brand recognition and market share after a decade of “me too” products. There are dozens of similar options for the clinician in restorative and infection control materials and just a few companies dominate this business. Most of the notable changes in clinical materials, other than the movement towards Nano technology, has been in auto-mix delivery systems and product packaging.
Today, manufacturers are focused on the emerging group practice business and their stature in the ever-changing dental landscape. They see group practices and progressive dentists working closely with their distributor partners to create customized sales plans and dental formularies. A formulary strategy restricts unique purchases, reduces line item acquisition costs and lowers the practices overall supply spend.
In private conversations with several key manufacturer executives I have been told that they are concerned about being abandoned by distribution and not appearing on popular price plans and practice formularies. In response, some of these companies that previously resisted private labeling their proprietary products for distribution have softened their position. Today, many premium products and their proprietary chemistry can be found in someone else’s box. Care givers can be confident that the materials in that Acclean™, Maxi-Temp™ and Natural Elegance™ branded box are of the highest quality!
Dentists and practice owners have a variety of serious challenges but where they get their information (who they listen to) will either bring clarity or more uncertainty to them. There is an unspoken parallel between the public, geo-political and business environment today. It is hard to know what is real and what is fake.
In the last eighteen months I have attended several lectures where the speaker claims that private practice is gone forever. These doomsayers operate with the premise that dentistry, will no longer resemble the cottage industry we have come to love. They point to insurance participation, lower reimbursement, rising costs, reputation management, The Millennials and Corporate Dentistry as the enemy.
In contrast I have attended lectures that ignite excitement and provide hope about the ever-expansive role of dentistry. The truth is, that much of what we loved about dentistry has morphed or has changed forever. If you operate your practice like you did in 1990 or 2010 than you are indeed in trouble. However, if you operate a progressive practice and regularly update your products, policies and systems than dentistry is still quite rewarding. Why do you think private equity and venture capitalists like our industry?
I consult and work with 140 dental offices. Eighty percent of my clients are in private practice. Something wonderful happens when my clients and I become partners in their business. We share our challenges and celebrate our successes. We look out for each other and achieve a level of honesty that impacts us personally and professionally. I use my practice management skills and purchasing expertise to help them lower their supply spend and accelerate their growth. They help me understand the business of dentistry and what keeps them up at night.
Wet handed dentists are like assembly line workers and their revenue is based on their production. If they don’t sell or perform, there is no revenue. This explains their frustration when the administration team doesn’t execute or is ineffective at appointment confirmation, insurance verification and accounts receivables. Another emotional trigger for the dentist is when the clinical team fails to treatment plan and provide comprehensive care. Why does one hygienist identify restorative dentistry and converts hygiene patients with moderate and severe periodontitis into a Perio regimen and the other doesn’t? Why does one associate produce an average $4k a day and the other associate averages $1,500?
I have clients in the same community, sometimes in the same building or on the same floor that operate with different results. I have clients that have two or three hygienists that are booked out for three weeks and I have clients that can’t fill one hygienists schedule. Many of these dentists are excellent clinicians but lack the leadership or skill to adjust.
There is a great deal of heavy lifting for practice owners but if they stay current, operate efficiently and have an inspired and well-trained team, it’s still an amazing profession. We need to avoid the dental denial trap and stay focused on providing optimum care. 60% of Americans have a chronic disease: diabetes, hypertension, heart disease, cardiovascular disease, Asthma and mental illness. It is our responsibility to educate them about the oral systemic link. We have better relationships with our patients and see them more than our medical counterparts.
Did you know that about 65% of Americans visited the dentist last year? Statistically a higher percentage of those with dental benefits went to the dentist than those without it. While it is true that millennials will not require as much restorative dentistry as their predecessors, they believe in prevention and will spend money on their [smile] appearance. Most cosmetic procedures are fee for service! Millennials are the subscription generation. They are comfortable with small regular payments for phone and computer apps, gyms and in office dental plans. They expect transparency in transactions and fees.
Lastly, let’s look at distribution. Distribution has always played a vital role in healthcare as a supplier of clinical supplies, office and janitorial products and medicaments (including prescription drugs). Behind the scenes, organized distribution [full service suppliers] has partnered with independent clinicians and healthcare providers since the beginning of time. In most cases someone from a distributor was there from idea inception to project completion. Their expertise in design and equipment combined with a fleet of trained professional equipment installers and service techs made them indispensable. Today, the role of the healthcare distributor is morphing. Some key opinion leaders believe the larger dealers will go to battle with web-based retailers, GPO’s (Group purchasing Organizations) and buying groups that offer education and managements services.
I believe there is some truth to the above assertion but that is not where the war is being fought. Many of those traditional products and services that once captured an extremely high profit margin no longer do so. In some cases, those products and services will be bundled with a host of other SaaS products to capture more of a client’s business. I concede that niche companies and these management companies will make inroads into the traditional distribution landscape, but they do not have the full offering of products and services to bid for government, hospital, DSO and the large group practice business.
Over the next decade the larger, national distributors will have created the infrastructure, complete with technical manpower to meet the challenges of the new digital dental landscape. As the business of dentistry gets more complex, the role of the full-service distributor will become more expansive. While the cotton roll and composite business will remain robust, their flagship products and services will not be sundries. The glue that keeps doctors and dealers united will be the dealer’s expertise in technology integration and practice management support services.
I suspect many KOL’s will disagree with my optimism for distribution. I appreciate everyone’s opinion, but we mustn’t discount the infrastructure, expertise and big data [transactional and behavioral] that full service distribution has. These are challenging times for the manufacturer, dentist and distributor but the opportunities are abundant.