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Trends in Dentistry
Forces impacting the dental industry’s course in 2014 and beyond
Economic Outlook: Déjà Vu for 2014
Dentists continue to struggle to offset major forces impacting patients and the industry
Roger Levin, DDS
Dentistry has entered into a new economic reality that is reshaping the profession. The resulting structure will require dental professionals to acquire and apply real world business principles and methodologies to remain fiscally healthy says Roger Levin, DDS, founder of the Levin Group, a dental consulting firm based in Owing Mills, Maryland. The dental economy, once tied to the general US economy, has become disengaged. No longer does a recovery of the general economy signal a parallel bounce-back for dentistry. The profound and unique industry-specific factors that are impacting the business of dentistry are irreversible and will remain unchanged until proven business systems are applied in the practice. Until that occurs, dentistry will continue to be beset by supply and demand issues, changing consumer buying habits, competition from national corporate dental chains, and lower insurance reimbursement rates.
After four straight years of declined production reported by the 75% of dental offices in the US that responded to questionnaires from the Levin Group Data Center, the production outlook for 2014 appears to show signs the decline is slowing down or may at least plateau at that level. It is still unclear, Levin says, how quickly, or if, production levels will improve in 2014. Collections are still down by 3.3%, as is payment at time of service, meaning dentists are waiting longer to get paid. At the same time, practice overhead increased by 1% in the last year. The reaction to this cumulative effect has resulted in reduced practice income levels. In reaction, 16% of dentists are now practicing five days a week instead of four, which is up 3% from last year, and most are working longer hours. On average, male dentists are practicing 34 hours per week and female dentists 27 hours. Declining production rates and income levels, as well as an erratic investment market, have dentists postponing retirement—according to American Dental Association statistics, the average retirement age has now pushed to 68.3 years. Levin believes that if dentistry stays on its current course, retirement age could extend out into the early 70s. With no clear path to reverse these trends, dentists’ confidence level in an economic turnaround is extremely low and nearly one-third of surveyed dentists report high or extremely high stress levels. For a growing number the answer has been to access business education to implement new systems and strategies in their practices.
Underlying all these downward pressures is the change in consumer, or patient, buying habits. Today’s consumer has moved from impulse shopper to a much slower decision maker says Levin. Consumers want more value than ever before for their expenditures. Value-seekers become fickle shoppers as they seek the most value for their money. Patients, he says, are much more careful about what they accept and agree to in terms of a treatment plan; even the most affluent have become careful spenders.
In addition, corporate run dental practices have become a new source of competition to the solo practice. Estimated to employ approximately 10% of dentists in 2013, Levin’s research predicts that percentage will increase to 16% in the next five years. For the individual practitioner, the rise of the corporate business model will be one of the game-changers that will reshape the industry and make it more difficult for practices that don’t implement real business solutions. “It is just one more reason why dentists must move from a profession practiced by habit to one that runs the practice by proven business systems,” urges Levin.
The increased supply of dentists in the US and the reduced demand for dental services are also producing a new competitive environment. The opening of 15 new dental schools that promise to graduate thousands of new dentists in the coming years coupled with a sluggish economic environment where a more frugal patient base is driving down demand for dental services will play a big competitive factor in the profession as will the continued lowering of treatment reimbursement levels by the insurance companies.
Dentistry is like any other business Levin says. The goal is to provide excellent quality clinical results, but in today’s environment dentists also need to run an excellent business. Customer service must be better than ever before to maintain patients in the practice and keep them engaged to prevent them from looking elsewhere.
“Both the dental practice and the dental laboratory have always functioned by the principle of supply and demand,” says Levin. “That must change. We now have to move both businesses to a relationship-based model.”
For dental laboratories it presents a new business opportunity. “Laboratories are often so focused on how to make a better product, thinking that is why the client is buying from them,” councils Levin. “Of course, technically you want to give your clients the best product you can, but that is often not why that dentist is your client.” If laboratories can help dentists get production back on track and become a valuable asset to their clients’ businesses then it is more likely they won’t lose those customers to a less expensive competitor and both will profit. Levin suggests holding business meetings or arrange a SWOT (Strength, Weaknesses, Opportunities, and Threats) analysis such as the In-Office Practice Analysis that the Levin Group conducts for 1,600 practices each year.
“When things change, you have to change how you approach operating your day-to-day business,” says Levin. “The good news is that for dentists who are adopting real world business systems business growth potential is up 30% to 50%.”
Patients, doctors, and laboratories feel the squeeze of insurance-based dentistry
From all indicators, dental insurance trends for 2014 will continue to mirror those of 2013 as insurance companies further squeeze procedure reimbursement rates and shift the onus of cost onto the patient, says Mark Murphy, DDS, Director Clinical Education, DTI MicroDental. Dental insurance began as a welcomed initiative by dentists and patients to advance oral health care and increase access to dental care by reducing the rising costs of dental care for the working masses in the 1950s and 1960s. Today, dental insurance reimbursement programs have trapped thousands of today’s employers, dentists, and duped millions of consumers into a reimbursement system that has failed to keep pace with the rising costs of dental care and continues to shift ever larger shares of that cost onto the patient.
When first initiated in 1954, managed care dental insurance covered most major dental procedures as well as routine care. Although it required dentists to cut their rates for dental care by about 10%, the coverage was welcomed by patients and was used by dentists to sell patients on needed dental treatments that would have previously been neglected. Today, that same dental insurance policy, which has not evolved as the complexity and costs of restorative dentistry increased, does not even cover the basic needs costs of the patient needing two crowns and routine care. The failure of dental insurers to keep up with the rising costs of dental care in part lies with employers who pressure the insurance carriers to shave the cost of the premiums they pay for their employees’ dental care coverage. This, in turn, is causing insurance companies to find ways to reduce their costs by cutting back reimbursement rates. In seven states today, the largest dental insurance carrier, Delta Dental, has trimmed reimbursement rates by an additional 10% to 15%. The cost-cutting measures for usual and customary dental care treatment is having a detrimental effect on the gross revenues of the general dental practice.
In addition, most dentists have signed on to one of the dental insurance carrier’s Preferred Provider Program (PPO) networks in hopes of attracting patients. However joining those networks requires cutting fees an additional 10%-15%. Whereas a decade ago, only a small fraction of dentists accepted PPO-insured patients, today more than 74% of all practicing dentists in the US accept at least one PPO insured patient. As a consequence, since 2005 dentists have experienced a 13% decline in their average annual income even though spending on dental care has increased each successive year. The driving force behind the loss in practice revenue can be directly tied to the downward reduction in reimbursement levels for Usual Customary Reasonable (UCR) treatment procedures and the fear that dentists harbor of losing patients should they opt out of the PPO network.
So in order to recoup lost revenues, dentists first and easiest reaction is to impose cost management efforts, which means slashing overhead and practice costs. This approach is having a trickle down effect on dental laboratories as dentists push their technicians for lower costs on restorative services.
Because of the increase in patients joining PPO insurance networks and rejection of the HMO concept, many pundits, including the ADA, are prosthelytizing that this is the new norm—we are entering a new era where dentists will make less money and patients will get less dentistry done, cloaking a pall over the future of the entire industry. However, if the dental insurance companies continue the trend of eroding reimbursement rates at their current pace, there will be a segment of general dentists that will separate from insurance-based dentistry in frustration and revert to full-fare-fee dentistry, where they are free to charge patients their full standard rate for dental procedures. To do that, dentists will need to build a value proposition for patients, spending more time with them, creating a better provisional, putting anatomy in a composite restoration, taking photographs, and doing diagnostic waxups for all their cases.
On the laboratory side, if laboratories identify those clients who are willing to shed the shroud of insurance-based dentistry and then support those clients and help them move to the right side of this equation, then their clients would be more successful; they would make better choices for their patients and themselves; they would make more money; and they would care less about their laboratory bill. But in order to do that, laboratories must first be clear about the vision they have for their businesses and the caliber of dentist they want to work with. If that vision is working for dentists who want to do their best work and need a like-minded partner, then they need to get the education that puts them on that level.
However, for the short term and for 2014 the reality is that we will see growth of the managed care model from Dental Service Organizations (DSOs); there will be growth in patients opting into PPOs; and we will see a further decline in UCR insurance coverage. As we move forward we are nearing a point where boutique laboratories and dentists will serve society’s “haves” and the “have-nots” will be served by mass-production dentistry. The middle segment of dentistry will eventually disappear.
The rising female demographic will change the face of dentistry
By all indications, the face of dentistry is poised to transform from its male dominated past to a new predominantly female future by the year 2020, according to Connie Drisko, DDS, the first woman appointed dean of the Medical College of Georgia School of Dentistry, as well as the first female dean and chair of the American Board of Periodontology. The percentage ratio of females to males enrolling in US dental schools is rapidly approaching 50%, and the percentage of females currently practicing dentistry has risen to more than 20% of the total number of practicing dentists. The impending gender shift becomes more apparent when examining the age demographics of younger practicing dentists, where the majority (60%) of dentists under the age of 44 are women. What impact this trend will have on the future practice of dentistry remains unclear, but there are some signs that a field dominated by women and the next generation of dental professionals will be very different than today’s status quo.
What has been the driving force behind the dramatic gender shift in dentistry? Drisko attributes it to the breakdown of barriers prevalent prior to the 1970s and 1980s for women wanting greater career choices in higher education and to enter into previously discouraged careers in the sciences. At that time, only 1% to 2% of first-year dental school enrollees were female. However, the opportunity for advanced education, coupled with federal legislation and grants that followed the women’s movement of the 1960s and 1970s, translated into ever-increasing college enrollment among females and helped encourage women to enter the healthcare profession. Today, what is happening in the dental schools mirrors in general the overall gender shift in American colleges—the numbers for enrollment, graduation, and advanced degrees have tipped nationally to a female majority, and on some campuses today women outnumber men at a ratio of three to one.
“Anytime you have a large pipeline of educated women they are going to gravitate toward the more desirable professions,” says Drisko. “A recent report published by US News & World Report on ‘The 100 Best Jobs’ named dentistry as the #1 best job in the US.” Drisko believes that dentistry strongly appeals to the nurturing and artistic instincts of women and is also attractive as a career choice because it is one of the few healthcare professions where you are your own boss. The flexibility and freedom that dentistry affords women plays into their strong need to balance family with work life. “In 2012, according to the American Dental Education Association (ADEA) statistics, the numbers of women and men enrolling in dental school were nearly 50/50, with 2,865 men and 2,579 women entering schools of dentistry that year,” says Drisko. “The gap between the numbers of men and women enrolling in dental school is closing quickly.”
A Sign of the Future
Over the next 10 to 20 years, the increased influx of women into the field of dentistry may be one of the most defining forces in the make-up, culture, and practice organization of the dental field. Statistics gathered by the American Dental Association (ADA) provide an important clue as to the structural form dentistry may take if this trend continues to play out.
“One of the primary forces impacting new graduating dentists is their debt load,” says Drisko. “Most are graduating with $150,000 to $300,000 worth of loans that must be paid back.” Although women graduates tend to carry a smaller debt load than their male counterparts, Drisko says that 41% of all graduating dentists say their debt load influences their practice choice. That statistic has translated into many newly graduated dentists joining a group, associateship, or corporate dental practice model to avoid the further financial strain of establishing a solo practice. These financial havens also provide a consistent salaried income with none of the business management responsibilities as well as set working hours, which play into the need to balance lifestyle and family.
“What we know about these new women graduates is that they are more likely to work part time or less than 30 hours a week compared to their male counterparts and both genders are less likely to own a dental practice,” says Drisko. “Of those new practicing dentists surveyed by the ADA, 36% of men and 53% of women indicated they would be less prone to establish a solo practice.” That said, the total number of hours that women practice per year is, on a national average, only 3% fewer than men says Drisko. That percentage may double in the next few years as more women enter the field and take time away from practicing for childbirth and childcare.
The new generations of dentists that Drisko works with on a daily basis at the dental school are different than the generations that preceded them. They are much more concerned with their quality of life and home life, and will actively seek to balance their work and personal time. In addition, these Generation X/Y dentists and students tend to be more civic and community minded, are technology dependent, service oriented, and culturally much more open-minded and accepting of other ethnic, religious, and gender groups than the dentists of past generations. This open-minded attitude will benefit the next generation of practitioners, as US cultural demographics will only become more diverse.
For laboratory owners planning to be in business for the next 10 to 20 years and into the foreseeable future, it is clear that the face of dentistry will gradually morph from predominantly male to female, as the old guard retires and the new generations take their place. The business and goals of best practices dentistry will remain untouched but the culture, practice models, service choices, and methodologies for communicating with customers and patients will rapidly evolve, changing forever the current structure of the dental-care system.
Patients and manufacturers continue to pressure dentists into adoption
The explosion of new options in digital impression technology and chairside millable materials is moving clinical dentistry ever closer to making the critical transition from conventional processes to a fully digital workflow that will change the dynamics of the dentist/laboratory working partnership. It is considered by Andrew Koenigsberg, DDS to be one of the most prominent trends seen in the industry this past year. Koenigsberg believes that this paradigm shift will continue to dominate the dental industry, with critical aspects of the digital workflow falling into place as soon as 2014.
According to Koenigsberg, digital intraoral impression scanning is a “wedge” technology—meaning that as it gains a foothold, the rest of the digital workflow will follow soon after. In the past three years this technology has witnessed significant growth, with the market for digital impression systems increasing 21.5% from 2011 to 2012. In addition, the market is expected to grow at a compound annual growth rate (CAGR) of 13.3% by the year 2019.
Judging by the number of new intraoral scanners introduced to the market just in the past year, combined with a strong marketing push directed at dentists, Koenigsberg believes many practitioners will be jumping onto this specific technological bandwagon in 2014. “In the coming year we will likely see a significant uptick in the number of dentists using intraoral impression scanners,” Koenigsberg predicts. “Dentists are getting the message that digital scanning is faster, more accurate, and more comfortable for the patient. This message is coming at them from every direction, including the equipment and materials manufacturers as well as their laboratory partners.”
In addition, Koenigsberg notes a recent move in the orthodontics arena that is forcing the issue, where some companies have begun to demand digital transmission of case information. One such company is ClearCorrect, which, in May of this year, announced it would no longer accept models, opting to work only with PVS impressions or digital intraoral scans. “I sent my first case to ClearCorrect last week in the form of CEREC® scans. There is no longer the option to send models,” he says.
Growth in Chairside Milling
New developments in chairside milling materials, the growth of corporate dental practices, and the lure to offer same-day services will drive the demand for chairside milling systems. However, Koenigsberg says the transformation will not happen overnight and estimates it may be 3 to 5 years before this becomes a reality.
More immediate will be the proliferation of millable materials. There are already a number of millable options on the dental market, but Koenigsberg predicts that the industry will be seeing more and more as time goes on. “We are going to see an explosion of indirect chairside materials that can only be processed via digital means,” he says, adding that these new materials are not only easier to process, but also result in a superior end product. As more and more manufacturers pour R&D dollars into millable materials, he says, analog methods and materials will be further inched out of the dental space, effectively forcing those in dentistry to adopt digital workflows whether the end product is manufactured in the laboratory or the practice. The endpoint of this trend as Koenigsberg sees it will bring production of the single unit chairside. “Single unit dentistry is going to move into the dental office,” he explains. Koenigsberg, who uses a chairside milling unit in his office, believes speed of service and patient demand will be major driving forces behind chairside milling adoption. He is able to design and mill a veneer chairside in just 15 minutes using a multi-layered, feldspathic porcelain block. “Digital workflows enable dental offices to offer new services, like same-day dentistry. In the future, same-day single-unit restorations will become routine at dental offices across the country.”
The market for chairside milling is slowly, but steadily, increasing, with an expected CAGR of 10.5% between 2012 and 2019, which will increase the approximately 12,650 chairside milling units in use in the United States in 2012 to an estimated 22,087 by 2019.
A further industry trend currently supporting the proliferation of chairside milling units is the rise of corporate and large group dentistry. Koenigsberg draws a connection between the two, “These corporations, such as Pacific Dental Group, add value to dental practices in that they have the resources to equip dentists with the latest technologies. Members of corporate dental practices will be the early adopters of these new technologies.”
The Dental Technician’s Role
As dentists transition to a digital workflow, dental technicians can position themselves as a valuable resource for their clients. “With single unit restorations moving into the dental office, there is an opportunity for owners of smaller laboratories to help their dentist clients not only get on the digital bandwagon, but excel with this new technology. Becoming a resource for dentists who adopt chairside milling will help these laboratories cement their relationship with the dental practice,” explains Koenigsberg. For 2014, this means that these dental laboratory technicians should be learning all they can about digital workflows, and positioning themselves technologically to function in an entirely digital environment. “The key added value that the laboratory brings to the dentist is improving the single-unit restoration. To do that, smaller laboratories have the advantage if they are very close by, or in the same office. Providing immediate service for dental clients will become critical,” he says. “The laboratories that figure that out and position themselves to offer immediate, close-proximity service will be the ones that survive and flourish.”