In times past, the performance of the economy was not a major factor in dentistry. Most people typically kept their six-month recall appointments and had their basic dentistry performed regardless of economic conditions.
Things changed. Competition increased. The role of insurance grew. And dental practices had to adapt. The most obvious change over the years has been an expanded service mix in many (if not most) practices. Dental practices today offer numerous services, many of them elective in nature. Elective services, like any discretionary purchase, will increase or decrease in popularity depending on trends in the economy.
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THE EFFECTS OF A SLOWER ECONOMY
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There always will be economic swings and cycles. It is inevitable. Dentists are well-advised to be prepared for them. Although we are not in a "down" economy at this time, all practices should have a plan for the proverbial rainy day.
Economic declines will affect dentistry more significantly than in the past. Why? Because patients will be more reluctant to purchase elective services, which are a greater percentage of many practices’ service mix now than at any point in history. In a slow economy, factors such as higher gas and home heating prices combined with patients who have less disposable income create challenges for practices trying to grow their elective services component.
When the economy slows, practices are far more likely to notice
- – a decrease in treatment acceptance;
- – an increase in accounts receivable;
- – a higher rate of no-shows or last-minute cancellations;
- – an increase in patients who switch to practices that participate in their particular insurance plans.
Dental practices should track their performance numbers (total production, average production per new patient, average production per patient, accounts receivable, hygiene production and so forth) to determine if one or more of the preceding situations are occurring. If so, the practice will need to adapt.
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PRACTICE MANAGEMENT IN A SLOWER ECONOMY
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A slower economy does not have to mean that practices decline. However, certain actions should be taken to ensure that goals are achieved.
Enhance case presentation skills.
Improving one’s case presentations will help patients better understand why dental care may be a more desirable choice than another purchase. In an economic downturn, patients tend to weigh one purchase decision against another. Unfortunately, some patients will decide to reject or put off even treatment that has a direct effect on their health. This thinking is even more notable in the case of elective services.
Tighten up accounts receivable and collection methods.
In a downward economic cycle, patients will tend to pay much more slowly. Practices should implement an effective collections system that requires patients to pay the complete fee (or a significant portion of it) at the time of service. Patients should be made aware of this policy through oral communication, signs and collateral materials. To reduce accounts receivables, a member of the practice staff should make telephone calls regarding payment to all patients whose payment is one day overdue. Follow-up telephone calls, as part of a collections system, should continue until the patient has responded. In addition, during case presentation, practice staff members should give patients a variety of financing options, including major credit cards and third-party financing from a quality vendor. These options can make treatment more affordable for patients.
Enhance verbal skills to emphasize the importance and value of each appointment.
By emphasizing that patients should keep their appointments, practices will experience a decrease in no-shows and last-minute cancellations. Practices also may want to request a 10 percent deposit of the total fee at the time longer appointments are being scheduled. It stands to reason that a 10 percent deposit could reduce the no-show and last-minute–cancellation rates dramatically.
Increase and re-engineer the customer service system in the practice.
Customer service, when handled properly, increases patients’ perception of the value of dental treatment. To prevent patients from switching to offices that participate in their specific insurance plan, customer service needs to be paramount. Remember that customer service is a system that needs to be developed, maintained and enhanced, just like any other system in the practice. An excellent customer service experience often enhances patients’ perception of the quality of clinical treatment. Conversely, poor customer service can cause patients to devalue the clinical treatment they received. Superior patient care and excellent customer service go hand in hand. Providing both ensures that patients will continue to value the treatment they receive in your office.
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CONCLUSION
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Economic swings will affect dentistry and many dental practices. Dentists should not be lulled into a false sense of security during a good economic cycle. It is called a "cycle" for a reason. Things will change. Steps need to be taken to ensure the future success of the practice. These steps not only will protect the practice in a downward economic cycle, but they also will increase practice performance greatly during times of economic prosperity.
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