Trends to watch

Trends: Matt, Shelly, Robyn and myself make over 600 onsite visits per year. Here is an informal list of trends that we are observing:

1) Multiple location group practices (e.g., Midwest,Heartland). See our previous newsletters on this. (They are online at www.AdvancedPracticeManagement.com under “Dental News.”)

2) More GP’s doing ortho. For example, about 22% of offices now offer Invisalign.

I remember my travels to Outstate MN over 20 years ago when lots of GPs did ortho but that faded. It’s coming back now with the new technology and approaches.

3) Technology in the Operatories: Over 60% of Dentists have digital x-rays and in-operatory computer monitors. Add to that Laser Caries Detection (45%), Intra-Oral Cameras (65%), Patient Education Technology and Lasers.

This technology can easily run $14,000+ per operatory and that’s in addition to your clinical delivery equipment (chairs, dental units, etc.). So, you have to get “Result Control.” See the article on this at www.AdvancedPracticeManagement.com.

4) More Delta Participation: In 2004, provider Delta Premier participation was down to about 81%. Nowadays, 87% of area practices are with Delta Premier. With Delta continuing it’s domination of the dental market, it can be quite challenging for Doctors to be outside the network.

Another 31% of Dentists are with a “Delta within a Delta” (Delta PPO). In our opinion, many practices with Delta PPO do not need to be with Delta PPO… and it costs them thousands. Essentially, their Delta write-offs are almost doubled and there isn’t enough gain (in our opinion) to make up for the write-offs. Likewise for Met Life.

Other PPOs such as the Premier Group, Health Partners, etc., pay fees more akin to regular Delta Premier and, if an office is running efficiently, the bottom line can be fine.

5) The Internet as a Source of New Patients: I’ve seen several instances this year where the Internet had overtaken the Yellow Pages and other sources (e.g., Direct Mail) in the number of new patients brought into offices. This is not universal. In some places Yellow Pages are still pulling. Visibility (signage) remains a very major factor. Of course, so are patient referrals which still account for 50+% of most office’s new patients.

6) Treatment Coordinators: A treatment coordinator is usually a hygienist or an assistant who presents treatment all the way from the x-rays through to the financial arrangements. The most ready model for this is orthodontic offices who have had treatment coordinators for years. The Doctor looks at the treatment plan, the treatment coordinator goes through it with the patients, holds their hands and works out the financial arrangements.

It’s easy to hire a hygienist and plug them into your operations. Developing a treatment coordinator is a little more tricky. It is a less defined job description. It takes a unique set of skills (a good dental background with good communication skills) and can be hard to work into your routine if you are not used to it. However, when we see offices with treatment coordinators, they do well.

This is by no means a comprehensive list but the trends mentioned are worth your attention.

Group Practice: Doctors, You Are Sitting on a Gold mine

Step outside, please.

If you can step outside yourself for a moment and look at your labor as a Doctor separately from your role as an owner, you can see what a desirable investment your dental office is. Now let’s look at key points in increasing the profitability of a practice (whether you own just one or 20):

1. Hygiene productivity makes a big difference on the bottom line. Your sweat aside, it’s largely where the profit of ownership comes from!

An approximately $10 per hour (or patient visit) increase in hygiene translates to an almost 10% increase in profits. The average hygiene production per hour is $139 in the Metro Area and $122 for Outstate. Why would any Doctor (owner) in his right mind pay market rates for hygienists that are producing at less than the market?

2. Lower Costs: Some of these group practices have negotiated better prices from the supply houses and labs.

3. Negotiating with PPOs: Because they have a network of practices, they are sometimes able to negotiate better reimbursement.

4. Standardized Systems, training and supervision.

5. Serious Business Ethic: These groups are less tolerant of sub-standard performance than private practitioners often are.

Your Advantage:

You don’t have the group buying or bargaining power that these large groups do but you have one key advantage. You’re an on-site owner! You are totally invested in your practice, both financially and personally. And one more thing, you have the best management team in the upper Midwest (if not the country) eager to support you and add to your success (us). Our depth of experience and perspective in advising and receiving data from over 200 offices gives you a powerful ally in the marketplace.

Our Job:

Group practices aren’t the enemy, but as long as you own your own practice, you are competing with them and their economies. It’s our job to help you continue to thrive in an increasingly competitive marketplace.

So, relish the fact that you own your own business. Be resolved this year to leverage our recommendations and your business systems into greater profits.

Be resolved to let your staff know that you want them to be happy and focused. And, be resolved to hold them accountable for working the systems as planned and be resolved to reward them well for performance.

You and your staff will prosper in direct proportion to how well you follow through on our advice.

The Growth of Multi-Location Group Practices

Like Arby’s?

Years ago we thought the trend would be franchise practices in retail settings. It hasn’t exactly happened that way but there has certainly been a growth of multi-location group practices.

In most cases, the model is less formalized than say an “Arby’s.”

Of course, there are the more “corporate” type of large clinics in multiple locations, such as Metro (37) and Park (23).

But, if you look at the recent activity in the Midwest, what you see are groups such as Midwest Dental and Heartland (word is Heartland is coming to our area). Midwest Dental owns more than 77 upper Midwest practices. Heartland (centered in Illinois) has about 300.

Then there are smaller multiple location groups such as Main Street Dental (5 locations in southern Minnesota) and Family and Cosmetic Gentle Dentistry (12 locations) in the Metro area.

There are other niche-type practices such as The Smile Center (7) and Emergency Dental Care U.S.A. (7 Nationally).

Midwest Dental and others are eager to buy and they’re growing. Heck, Heartland Dental even owns a corporate jet! You have to be making some serious moola to have one of those. Let’s take a look at how some of these groups do it.