Dentists’ incomes are on the decline. In 9 out of the last 10 years, dentists have seen a drop in their earnings and the American Dental Association has forecasted that 2017 will be another down year for dentist’s incomes. Though the economy has rebounded from the Great Recession, dentists’ incomes have not bounced back. What’s behind dentists’ declining incomes? And what can dentists do about it?
Supply and Demand
The most basic principles of economics tell us that when supply is high and demand is low, prices will fall. This is what has happened in the field of dentistry.
Since the mid-2000’s, the demand for dental services has decreased. This could be, in part at least, due to the economic recession. However, even as the economy has improved, demand for dental treatment procedures has remained low. The dental industry is unique among most medical fields as the clear majority of dental work is discretionary. Patients can go years…even a lifetime without suffering complications from a missing tooth. Certainly, we all know friends or family members who have less than perfect teeth. However, the cost and fear of discomfort have been a sufficient deterrent to keeping patients from seeking cosmetic or orthodontic treatment.
Things aren’t good on the supply side, either. Despite the relatively weak demand for dental services, there is an increasing number of dentists. This trend is expected to continue in the coming years, driving down prices further.
Hopefully, the demand for dental services will pick up again eventually. With unemployment falling, more adults should begin seeking dental care. However, there are other factors unrelated to the current state of the economy that is responsible for dentists’ declining incomes.
Corporate Dental Chains
One cause of dentists’ declining incomes is the rise of large corporate dental chains. Again, basic economics come into play. Big corporate dental chains have the advantage of economies of scale. By sharing resources among many different locations, these chains lower their operating costs.
In addition, most of these large dental clinics provide specialty services as well. This allows patients to receive comprehensive dental care under one roof. The inconvenience that patients experience when a private practice dentist refers patients to a local specialist is significant. Studies have shown that as many as 30-42% of patients never follow up on specialty dental treatments when they are referred outside the dental practice. Corporate dental chains don’t have that issue and are rapidly acquiring new patients at the cost of the traditional private practice dentist.
Thanks to their lower cost of business, corporate dental chains can offer services at a discount. While they may not be able to provide the individualized care as a private dentist, they still draw in customers with their low prices. To compete, other dentists in the area are forced to drop their own prices or lose customers.
Decreasing Insurance Reimbursements
Further affecting dentists’ declining incomes is a decrease in insurance reimbursements. In the past decade, the fees that most dentists charge for procedures have gone up. However, the amount that dentists are reimbursed by insurance companies has gone down.
The root of the cause stems from businesses demanding lower premiums for their employee benefit plans. This has forced dental insurance companies like Delta Dental to reduce reimbursements to dentists for dental treatments. In addition, insurance companies have created new “lower benefit” plans which are being rapidly adopted by businesses. Dentists are forced to either accept the new plans with the lower treatment costs and fees. If dentists refuse, they run the risk of losing a significant number of patients because that dentist is now “out-of-network”.
Payments from private insurance companies make up a large chunk of a dentists’ income. When reimbursement rates fall, despite rising costs, dentists are left hurting financially.
Rising Cost of Business
In addition to the low demand for dental services, competition with big corporate dental chains, and decreasing insurance reimbursements, dentists must also deal with the rising cost of business. Staff salaries, crushing taxes and regulatory fees, equipment, and facilities are all costs that add up quickly.
New expenses are constantly emerging for dentists. Dental practices are always investing in new technologies. The switch to electronic health records has also been costly for dentists. Strict privacy and legal requirements make implementing any electronic health record system expensive.
New Sources of Income
To combat dentists’ declining income, many dentists are looking for new revenue sources such as offering expanded dental treatment services. This is a difficult task for dentists who have been in the general dentistry practice for their entire career. The prospect of moving into offering more lucrative specialty services may be tempting, but most dentists don’t have the time, training, money, or desire to make such a switch.
Instead, many dentists are partnering up with dental specialists to bring in additional income. Every year, dentists refer out billions of dollars’ worth of specialty dental services to local dental specialists such as oral surgeons, periodontists, endodontists, and orthodontists. By keeping those services in-house, dentists can add as much as 30% or more production revenue to their practice.
Hiring a full-time specialist isn’t in the budget for your average dentist. However, working with an itinerant dental specialist allows dentists to offer the services of a specialist without the high cost. Itinerant dental specialists travel to the offices of general dentists and perform services for their clients. The dentist and the specialist then agree upon a treatment sharing financial structure where procedure revenue and expenses are split.
By bringing specialists into their office, dentists can increase their income without paying large upfront costs. It should come as no surprise, then, that more and more dentists are hiring itinerant dental specialists.
Matching Dentists with Specialists
The logistics of finding an itinerant dental specialist can be tricky. Dentists have specific procedures their patients need at specific times. How can they find the right specialist at the right time for the right price?
There are many new local and regional services that help dentists find qualified specialists. MyPractice9 is one of those services. The online service is free to member dentists who can post s specialty dental treatment request such as a multi-unit implant case. Subscribed local itinerant dental specialists are instantly notified of the request and respond by providing treatment proposals. The dentists simply select the specialist they feel most closely matches their practice culture and clinical need. MyPractice9 also provides a huge number of valuable resources to member dentists (also for free) such as pre-treatment check lists, patient consent forms, and treatment service contracts which outline the procedures, warranties and payment terms. This system makes it easy for general dentists to find itinerant dental specialists who can meet the needs of their patients.
By bringing in the right itinerant dental specialists, dentists can see tremendous growth in their practice. Patients also benefit from access to the best specialists in their regular dentists’ office. This all leads to happier patients and, hopefully, greater income for dentists.