What’s the next move for your dental practice?

The impact of the COVID-19 pandemic on dental practices cannot be denied: Since March 2020, 90% of dentists report higher operating costs, while 2 in 3 practices say volume is down.¹ Half of dental practices report a loss of patients, which corresponds to a significant loss in revenue and inevitable staff reductions.

However, dental practices are now in a rebounding stage. Patients are returning for preventive care: When we surveyed US adults in March 2021, 68% of them visited a dentist at least once in the past six months. That is a major increase from 20% when we asked in June of 2020. Solutions like digital communication and enhanced safety procedures are at the forefront of the industry right now, according to Guardian’s 10^th Annual Workplace Benefits Study, Inflection Point: The impact of COVID-19 on the practice of dentistry. Read on for strategies to help your practice continue to adapt to the changes and trends within the dental landscape.

Getting your practice’s finances in order

“Always plan for the worst — and if it never happens, then wow, how great was that?” exclaims Dr. Eric S. Studley, President and CEO of Eric S. Studley & Associates, Inc., in a webinar presented by Guardian in partnership with the American Dental Association (ADA). “During the initial shock of the pandemic, our profession realized, ‘Oh my gosh, I don’t have enough money saved [to cover me if] I don’t have patients or production for the next three months. How am I going to pay the office rent, the office staff, my mortgage, my car?’”

Put together a trusted advisory board made up of your accountant, attorney, and anyone else who can provide insight into your practice’s financial ecosystem, and then have those advisors communicate with one another about your financial well-being. That holistic view will help you and your practice both now and later.

Your financial advisory board may recommend pushing retirement closer than the originally planned time frame. “A number of boomers (20%) and even Gen Xers (22%) have retired early. If you’ve saved a lot of money and lost your job, you might already have your flight path,” said Zarifa Brown Reynolds, VP, Head of Small Business Segment at Guardian, in a webinar called COVID-19: A Turning Point for Employee Benefits?. But younger generations haven’t yet had the chance to build up their nest eggs, and are looking to do so in a time when jobs that pay young workers well are more elusive.²

“People would rather shovel snow than to meet with their financial planner,” said Dr. Studley. “When you get that financial house in order, it really does make you feel great. And then it takes the pressure off the changes you have to make to your office.”

Corporate dentistry and DSOs continue to provide an option for dentists

The landscape of the dental industry today is very different than it was only a few decades ago. As of 2022, the average dental school grad carried $293,900 in loans.³ A surge in younger dentists joining the field and the challenges practices faced during the early days of COVID-19 are driving more dentists to join larger business units, such as dental service organizations (DSOs) or dental health maintenance organizations (DHMOs), instead of owning their own practice.^4,5 Eight percent of dentists (nearly 1 in 10) are currently affiliated with a DSO, but that number is projected to climb to 75% to 85% over the next 10 years.⁶

For those interested in selling their practice, it’s generally a buyer’s market. Before you decide you want to sell, make sure you get a dental practice evaluation from a practice accountant or broker. Consider engaging with an advisory team to educate you on the tax ramifications that may likely crop up after the sale. Some dentists are selling to DSOs and staying on for a fixed period in a mentorship role; that may add value because the patients will stay and make the transition along with their dentist. A dentist’s patient base is valuable to the buyer, and patient retention should be a factor in the sale.

Treat your patients first as a health care provider, and second as a business

Consider re-engaging and reactivating patients who have disappeared from the practice’s roster. Often, those patients have dropped due to financial or health insurance changes, but still need care. Remind them that as a dentist, you are there to serve, regardless of whether that service is optimal for the practice’s bottom line.

Changes in the dental world will continue to happen, and so the practice must change with them.