Dentistry is a huge industry that is affected by many different internal and external forces. Like in many industries, change is occurring, and it’s happening faster than ever. Understanding the most significant factors that are reshaping the business of dentistry and what they mean for your practice is essential to achieving and maintaining success. All dentists can achieve success. However, doing so depends in part on their ability to see the big picture and make decisions that are in the best interest of their practices and their patients. The following six factors are some of the most significant ones that are currently reshaping the business of dentistry.

Economic Uncertainty

For the last 15 years, dentistry has had an excellent run overall, even considering the impact of the COVID-19 pandemic. Many practicing dentists have not yet experienced any type of severe, lasting economic decline or recession. During the last US recession, which was from 2008 to 2009, Levin Group data showed that the average general dental practice decreased in production by approximately 10%. However, within 2 to 3 years of that recession, the economy was back to performing well, and the issue was in the rearview mirror.

Today, we face a different type of economic uncertainty. For example, at the time of the writing of this article, we do not know what effect the new federal trade tariffs will have on the industry or on the overall economy. Even if the tariffs are absorbed without significant disruption, at some point, as a result of natural business cycles or other regulation, it is likely that the economy will slow down. Some of the first indications of a slowing economy are an increase in the number of no-shows and last-minute cancellations and a decrease in the rate of case acceptance. Dentists should monitor these “leading indicators” carefully and react quickly if they occur.

To protect themselves, dental practices should build a fortress around their patient bases and referrals by adopting effective practice management strategies, including the following:

• Keeping patients scheduled at all times

• Providing an excellent new patient experience

• Encouraging patients to refer their family members and friends

• Maintaining highly efficient systems

By definition, uncertainty is hard to predict, but practices that implement excellent systems, train their teams at the highest level, and maximize patient flow will be well-positioned in the event of a downturn and even better off if the economy remains strong and improves.

The Decline of Solo Practice

The percentage of solo practicing dentists has been steadily declining for the last 30 years or so. Through the early 2000s, it was stable at approximately 65%, but it now hovers around 38% and is continuing to decline.¹ As this trend away from practicing alone continues, it will be necessary for dentists to master the art of partnership and group dynamics. Successful partnerships require excellent communication and transparency. Partners must also learn to compromise and respect the goals and desires of others. When partners do not agree, progress slows down and stress increases. The key to an excellent partnership lies in maintaining full communication and a spirit of compromise.

Low Dental Insurance Reimbursements

In the 1970s and 1980s, reimbursements from dental insurers covered a larger percentage of fees than they do today. In recent years, dental insurers have kept reimbursement levels static, and in many cases, they have lowered them. According to a Levin Group survey, 89% of dental practices participate in one or more insurance plans, so this issue affects almost the entire profession. If reimbursement rates do not increase, then the profit per procedure decreases with inflation, which has been happening steadily for many years. Negotiating with insurance companies is often fruitless, and exiting plans can be difficult to accomplish without causing a significant decline in production.

Although dentists often complain about insurance companies, the fact is that they have one of the most powerful lobbies in the United States, and dentists are unlikely to win many battles, much less a war, with regard to reimbursement levels. As dental insurance reimbursements lag behind basic inflation, the profits of dental practices will continue to erode unless steps are taken to offset this issue. The best way to deal with flat or lower insurance reimbursements is to create a highly efficient practice with an excellent set of systems designed to manage higher patient volume.

The National Dental Staffing Crisis

There are very few places in the United States where dental staff members are readily available. Although there was a slight shortage of staff prior to the pandemic, it has skyrocketed since. Unfortunately, the pandemic caused a number of hygienists, assistants, and front desk team members to leave the profession. Many of them now desire jobs where they can work mostly remotely, and dentistry has suffered. The economic impact of this crisis is simple. It is costing practices more money and creating higher overhead. According to Levin Group data, staffing costs have increased by approximately 12% in the last 5 years. This is the single largest increase in any one overhead category during that time, and it isn’t going to decrease. Now, it is imperative for practices to train staff to produce sufficient revenue to offset this increase in overhead. This is made more difficult when dentists are forced to hire staff members with less skills than the ones that they hired in the past. When there are staff members who are not fully capable of carrying out their primary jobs, it can create chaos, and that can contribute to additional challenges in increasing practice production and profitability.

Having excellent systems will help, but there is more to consider. Leadership should be open, honest, and transparent in setting goals for team members and explaining how they will be measured. Furthermore, team members should be taught that missing a goal will not result in an unpleasant conversation but rather a discussion about how the goal can be achieved. Those who continuously fail to achieve goals should be evaluated for additional training. The team is a critical element in practice success, and as I have said in many seminars, “If you take care of your team, they will take care of you.” This means providing them with the training, guidance, and incentive to perform at the highest level.

The Growth of DSOs

The rapid emergence of dental support organizations (DSOs), or corporate groups that own dental practices, has continued unabated, with more dentists working as employees than ever before. Although there will be room for both private practices and DSOs to coexist for many years to come, private practices need to acknowledge DSOs as competition and understand their different marketing approaches. Some DSOs are very well run, and others are not. Some have excellent direct-to-consumer marketing campaigns, and others have no marketing campaigns. Some have excellent strategic plans for growth, and others are simply cobbled together practice by practice. Furthermore, many of the smaller DSOs will eventually either sell to the larger DSOs or be bought out, especially if they are experiencing financial challenges.

Private practices can compete more effectively if they operate at a high level of efficiency, provide excellent staff training, and offer 5-star customer service. Practices that can take customer service to extremely high levels will attract more patients and differentiate themselves. These practices will have no problem continuing to improve performance, production, and profitability.

There are numerous customer service strategies that can and should be put in place, but to be successful, they must be followed for every patient, every day, and with almost no exceptions.  When practices implement high levels of customer service training, it can help to increase the number of new patients and referrals, improve reviews, and take case acceptance to a higher level. People tend to judge the quality of clinical dentistry more by how they are treated as individuals than by the quality of the actual clinical care they receive.

The Emergence of Digital Technology AND AI

There is no question that there is a strong trend in dentistry toward adopting advanced technologies. Implementing the right technology can increase efficiency and quality while decreasing the need for certain staff positions. That being said, we often caution dentists against adopting a first-generation technology before it has been established and proven. When evaluating potential technologies for implementation, practice owners should ask themselves the following questions:

• Will this technology improve quality of care significantly enough to warrant the investment?

• Will this technology reduce the time required for procedures?

• Will this technology make practicing more efficient, easier, effortless, and enjoyable?

• Will this technology provide a return on investment?

It is not necessary for the answers of all four of these questions to be affirmative to make the decision to purchase a technology; however, it is worth the exercise of answering all four of these questions to fully inform the decision-making process.

One technology that is rapidly being incorporated into other technologies is artificial intelligence (AI), which can provide assistance in diagnosis, treatment planning, surgery, and more. Beyond the operatory, AI can help to take some pressure off of practices because some traditional front desk activities can now be delegated to AI-powered software. In fact, AI may eventually permit a reduction in the number of team member positions, which will benefit practice overhead and enhance performance at the same time.

Practices can feel pressure to invest in technologies as they start to look like the standard of care, but this can become very expensive. We have seen practices that have invested too quickly in multiple technologies and then faced severe financial challenges shortly thereafter. Practices should develop a technology implementation plan, possibly with an excellent set of sales representatives, and then the adoption of new technologies can be prioritized based on the needs and desires of the practice and the questions listed above.

Succeeding Despite the Challenges

These six factors will have an effect on almost every dental practice. The only question is the degree to which each practice will be affected by them. Understanding these factors and how to mitigate their effects through excellent dental practice business systems creates an opportunity to succeed despite the challenges. Dental practices today need to be extremely well run through outstanding operational systems that are updated regularly, well-trained teams that are motivated and inspired, and effective communication and decision-making.