Dr. Levin presents more than 100 seminars per year and is a keynote speaker for major dental conferences. He has authored more than 60 books and over 3,000 articles, and he sits on the editorial board of five prominent dental publications, serves as the practice management editor of Compendium, and is the managing editor of Dental Business Review. He is also a regular contributor to the Journal of the American Dental Association.
We recently spoke with Dr. Levin about how the current economic downturn is affecting the practice of dentistry, and what dental practitioners can do not only to survive but to thrive.
DrBicuspid: How has the economic downturn changed the practice of dentistry?
Roger P. Levin, DDS, chairman and CEO of Levin Group.
Dr. Levin: The recession was a serious game changer. We are a permanently changed profession in my opinion. Consumers have developed new habits and behaviors in terms of decision-making. The consumer purchasing psychology has changed, with longer decision-making times. Patients want more information than they did in the past, and they take more time to consider whether they are willing to take the time to have treatment. They also turn to other key decision-makers in their lives, for validation that they made a good decision. This changes the entire case presentation model.
According to the Levin Group Data Center, in 2009, dental practice production declined 11.6 %, and in 2010 it declined another 6.4%. Many patients are putting off treatment and recalls, and having only partial treatment done. So we are seeing a lot of changes because of the recession.
Having said that, I am very optimistic about our future. We have hit bottom, and practice production should be up 4.4% this year. But dental practices can't just open their doors, hang a sign, and expect to do well. Today, they have to run excellent businesses along the lines of excellent business models.
How can dentists continue to increase practice production despite the economy?
We know that any dental practice can increase production over 20 years by $8 to $10 million. But this can only occur by putting in place proven business systems. Two things have to happen. First, proven management systems have to be put in place so the doctor and his or her team can reach their full potential. Also, marketing today is now mandatory. It is no longer an option. And what we have found to be the most effective marketing, and also the least expensive, is internal marketing.
Most dentists have a concept of what internal marketing is, but they don't run it properly. First, you need an internal marketing coordinator who devotes four to six hours a week to this process. Unless someone is dedicated to this, it probably won't work. Also, you need a minimum of 15 custom-selected strategies. Having a couple of gimmicks doesn't work anymore. In addition, Levin Group's target is for 40% to 60% of patients to refer at least one other patient per year. This is a real, proven internal marketing approach. Finally, our data show that 40% of a doctor's production comes from new patients. So the bigger we make the new patient number, it has a significant effect on increasing practice production.
How much longer will the economic downturn continue to impact dentistry?
I believe we have turned the corner, but I also believe it will be a five- to seven-year return to a better economy and a better dental practice economy. There was a Wall St. Journal study in July about consumer purchasing psychology that showed even affluent people now ask three questions before making a purchase: 1. Do I really want it? 2. Do I want it now? 3. Do I want to buy it here? So even affluent individuals are working through more questions than they did prerecession. And because patients are putting off or purchasing less treatment, many dentists are going to work eight to 10 years longer. The solution is to reach their true practice potential, which is almost always 30% to 50% above current production. This changes the supply and demand curve significantly, as well as practice purchase and sale.
Are there other 'game changers' impacting dentistry today?
Student debt is at an all-time high, and that is causing a lot of students to look for alternative methods of practice versus straight private practice. So many are leaning toward corporate dentistry, which now accounts for 7% of all dental practices in the U.S. And 15 to 20 new dental schools are opening in the next five to seven years, most of them for-profit with high tuitions. In addition, while the cost of purchasing a practice is not prohibitive, it is certainly costly. So with fewer retiring docs, the increasing number of dental schools, and higher debt, dentists need to increase production as soon as possible through proven business systems in order to retire at a reasonable age.
What innovations will enable dentists to achieve practice growth and success going forward?
The first step is to do a practice analysis. Too many dentists knee-jerk changes without really understanding their situation. Before making any significant change, you need to analyze the practice itself. Analysis is all about comparison and identifying opportunities. When Levin Group analyzes practices, we look to identify a practice's position amongst four stages: start-up, growth, maturity, and decline.
The next step is innovation. What we've done with our systems is to create several new concepts, some from Harvard Business School so that we are bringing top business principles into dentistry. We've identified a new three-step method anyone can use:
- Set key targets and metrics to be achieved. For example, collect 99% of all money owed to the practice, have 98% of all patients scheduled at all times, have a less than 1% no-show last-minute cancel rate, close 90% of all cases presented, have 98% of new patient callers scheduled, and have 40% to 60% of patients refer at least one other patient each year.
- Create systems designed to achieve these targets.
- Use value-creation scripting to make the systems work better. Traditional scripting was about communication. Value-creation scripting is about the ability to influence. We want to influence patients to show up, keep their appointments, pay their bills, etc.
That is the three-step method we have brought to our dentists to help them keep growing. And of our 1,200 dentists, in each of 2009 and 2010, 99% had positive growth.
What other positive advancements do you see on the horizon?
The management software is better than ever. You can get excellent data from it. Then you have to know what the data mean so you can go back and compare it to your targets. Also, we like technologies that make the practice easier and simpler. I think in the next five years we are going to see a lot of simplification. Right now, technology can be frustrating to a lot of practices, but it is improving dramatically. For example, we're seeing a lot of nice advances in digital impressioning. But the caution is if you buy everything, you can have a real financial problem, so you need to have priorities.
Also, I think we are going to get better and better DNA testing for perio disease and oral cancer that will help our patients get better and add another service sector to our practice. I think diagnostic testing is not being highlighted enough by practices as a precursor to profitable treatment. Because as medicine improves, dentistry will improve as well.
Should dentistry feel optimistic about the next five to 10 years?
I speak about 100 days a year, and I make this statement in every talk I give: I believe that any practice that implements proven business systems will have 30% to 50% growth potential in one to three years. We see it here all the time, with every type of practice, so we know it can be done. So I am very optimistic about the future of dentistry. The only difference is you are going to have to run an excellent business. Dentistry has always been focused on excellent care, but now we also have to run an excellent business.