The Latest in Area Economic and Technical Trends
Exclusively to Clients and Friend of Advanced Practice Management
Our Dental Dow Jones:
Steady as She Goes
Comparing the averages of the first nine months of 2013 to 2012, we find practice production up 3.9% and collections up 2.3%. Total Patient Flow is up just under 2%. New Patients are down 3.6% (at the half way mark of the year they were down 6%).
Crown and Bridge is up 5.3% and the overall Production per Exam (a function of fees, case acceptance and range of services) is up 1.6%. Downtime in both the Doctors’ and Hygiene schedules are the same or very slightly down from last year.
So, despite all the bad news and uncertainty to do with Government, it looks like our area’s dental economy is slowly marching along.
Collections Slip Another Point, Ouch! Even as I write this, I don’t believe it. The typical practice in our area now collects about 86% of their gross production. It was 87% last year and back in 2010 it was 89%. This erosion in collections is not due to deadbeat patients; it’s due to the continued encroachment of insurance/PPO write offs. In fact, Accounts Receivable Ratios have never been tighter at under .9.
Your Depth of PPO Participation/Checkout Your Collection Percentage: The typical practice in our area participates with Regular Delta (aka Delta Premier) and perhaps one or two other PPOs (Premier PPOs, Aetna, Cigna, Health Partners).
If you’re collecting under 82% of your production, you are probably too deep into PPOs and don’t need to be. Most Doctors join a PPO with the hope of keeping or attracting patients. Very few practices can be entirely out of the PPO networks these days (fewer than 12% of practices in our area are completely “non-par”). However, there are some PPOs that just aren’t worth it (where the discounts are too deep). We’ve helped many Doctors successfully transition out of PPO Participation (carefully!) and none have regretted it. They are making $1,000s and $10,000s more.
THE AREA DENTAL ECONOMY IN GENERAL:
We are just getting our annual survey results in (over 370 practices participated) and here are some preliminary findings.
55% of Metro Area practices said their production is up compared to 48% last year. 41% said that their new patients are up (vs. 33% last year).
In Outstate practices, 57% said their production was up vs. 55% last year. 51% said their collections were up – the same as last year. New patients were up in 40% of Outstate practices (vs. 33% last year).
So these statistics are moving in a positive direction too. That is nice to see. For more complete findings, check out the survey results (have just been mailed to you if you participated) and will have them online in the not-too-distant future. (www.advancedpracticemanagement.com/2013_dental_fees).
The survey showed that about 7% of offices planned to leave a PPO in the coming year. About 5% said they dropped at least some PPO participation the previous year; however, 8% of practices said that they joined another PPO in the last year.
WE ARE SO COOL!
52% of the survey respondents have or are using management consultants. We are pleased to say that our average client satisfaction rating is 8.8 (on a scale of 1-10). We are working hard to get that to 9.8! Still, it is nice to see. Thanks.
76% of area practices now have websites. That is about the same as last year. So there are a pretty significant number of Dentists out there who are not participating in web marketing…although they are on the Internet whether they like it or not.
Many of our clients are on their second or third website. A couple of years ago, websites were full of flash, lots of standard copy, stock photos, etc. We feel the move is definitely toward simplified but very personalized websites…pictures of you and your staff and patients. No filler – content that sounds like you.
Now we stress “Conversion Factors.” We see many cases where there is plenty of traffic to a website but it isn’t pulling a lot of new patients. The website has to give people a reason to call or email you now.
ADVERTISING AND THE HOLIDAYS:
Before you start a new advertising campaign in the fourth quarter, such as direct mail or Google AdWords, make sure you have room in your schedule for new patients. We recommend being able to get new patients in within 3 days. Many practices are scrambling to accommodate patients with expiring insurance benefits before the end of the calendar year. If this is you, wait until January to start a new campaign.
End of the year advertising can still be effective. You want to avoid the Black Friday time period when people’s mailboxes will be full of shopping ads. So, don’t mail between mid and the end of November. There is still time for one last mailing the first week of December, but after that time, you will probably want to wait until the start of January.
SPREAD CHEER FOR ALL TO SEE:
Many practices decorate the front desk area of their offices for the holidays. The season is also an opportunity for eye-catching decorations on the exterior of your building or signage. There are usually no codes against holiday decorations. Hire a professional Holiday Display lights company.
Take photos of your office and holiday parties and post them to your social media sites, such as Google+ and Facebook, and to your website.
MAKE HAY DURING THE WINTER:
As you all know, I am very big on the “Seasonality of Dentistry.” That is, paying attention to the calendar and how it can affect your dental office. I wrote an article on this for Dental Economics years ago and I think it is still relevant (www.advancedpracticemanagement.com/articles).
August is the #1 month for patient checkups and new patients (the back to school rush for most practices). May and September are usually the slowest months of the year…so you’re not crazy if you felt that your schedule was light in September.
We are coming up on the biggest crown and bridge months of the year (December, January and February). Talk to your staff about it. Light up those cameras! “Recalibrate” with your team and clarify your treatment protocols.
Talk to your team about what you really feel is best for your patients based on your experience and the science. As you clarify your thoughts, your language will be clearer. If your language is clearer, your patients will understand your recommendations better. If they understand better, they make better choices and you get better outcomes for them! Your practice flourishes.
And don’t forget “Dental Health Month” is coming in February. Dental Health Month should be to Dentistry what Christmas is to Macy’s. More about that later.
A BUYER’S PERSPECTIVE:
Sean Epp is the Transition Leader (e.g. head buyer) for Midwest Dental. Midwest Dental has transitioned (acquired) many practices over the last several years and currently supports more than 120.
Sean says, “DSO’s* (or group practices) – those that are professionally managed like Midwest Dental – still represent only about 5% of the total marketplace. Over 80% of Dentists continue to work in and manage their own practices.”
2012 was a very busy year for Midwest Dental and others. They transitioned over 26 stand-alone practices in addition to several mergers. Mr. Epp said that things have slowed down a bit in 2013. They’re on schedule to purchase 12 or maybe a little more this year. Their goal is to continue working with interested Doctors in all existing and adjacent geographies.
Mr. Epp said that apparently sellers have hunkered down a bit this year. Perhaps uncertainty about the economy, the government and the Affordable Care Act are causing Dentists to delay retirement a little bit longer. The good news for buyers and those involved in the transition industry is that, as time passes, potential sellers are building up and this will create a wave of future sales. In other words, the inventory is building up and potentially quite large.
However, for the near term (the next 2 years or so), Mr. Epp feels that it will continue to be a seller’s market, especially for those practices in metro areas, due to the scarcity of opportunities.
* Dental Service Organization
HOW DO YOU FEEL ABOUT CORPORATE DENTISTRY?
If you ask how I feel about Corporate Dentistry, I wish it didn’t exist. I’d like it to go away.
However, how I feel isn’t important. What matters is; What is happening? Our clients rely on us for realistic advice and so we are doing our best to keep you apprised of what is REAL.
Right now, Corporate Dentistry’s pursuit of practices is helping keep practice values strong. For my retiring clients this is a good thing. Some of my clients have sold to corporate groups and I’ve heard mixed reviews from them since then. Some have liked working for them and some haven’t.
Corporate dentistry is here and growing rapidly. Midwest Dental is the most active in our area. However, Heartland Dental runs over 400 practices and has offices in Iowa and Wisconsin and will probably be in Minnesota soon. There is a lot of money behind those organizations. They have some sharp people. They have buying power with suppliers. However, I don’t feel they have all of the advantages. Being an owner of a private dental practice has a huge advantage in that you are owner operated. No one is ever going to care as much about your practice as you do. You do not have a corporate bureaucracy to deal with. In fact, you get to create, maintain and amplify your own culture.
Dentists who are working for the corporate practices tell me that there is often a lot of PPO participation. Therefore, a lot of their production is deeply discounted which affects their income. Although you might sometimes feel that you are forced to deal with PPOs, you don’t really have to. The decision on any given plan is still yours.
In fact, everything is still yours! There just is no substitute for the interest, accountability and power of owning and running your own practice.
Our job is to help the Doctors who want to stay out of the corporate world be able to stay out and control their own destiny. You have a strong ally in Advanced Practice Management. We help manage over 250 dental offices, but unlike the corporate guys, we aren’t the bosses. Youget the final say. I’ll put my small but very good management team up against any corporate staff. And, my team is your team.