corporate dentistry

When I was a kid, pharmacists had their own pharmacies and optometrists had their own eye clinics. Now these models have been replaced by Walgreens and CVS, with EyeMasters and Pearle Vision.

In France they actually have ATM machines for prescriptions. A physician loads the prescription onto a medical card and a patient can pick it up anywhere there is one of these machines. The machine dispenses however many pills the electronic script is written for, puts a sticker on the bottle and drops it into a drawer, the same way you’d grab chips from a vending machine. Prescriptions are now a commodity.

When we go get glasses, most of us don’t care if we look into a machine to tell us we have 20/80 vision because that number goes to a lab tech who crafts the lenses. Most of us are more worried about how the frames look. Glasses are now a commodity.

It’s like “The Jetsons” where a mechanized robot brushes George Jetson’s teeth, shaves his face and dresses him based on a scanner view of his body. What we once thought was futuristic and unattainable is here and now!

All this has me thinking about dentistry’s model and how it’s changing. What will the dental landscape look like in 2050? Will dentistry go the way of Walgreens and EyeMasters? I asked several of my colleagues this question and they shared their opinions, which we feature in this issue (page 64).

Let’s talk about the reality. Dentistry’s unique selling proposition is surgery. We work in an operatory. Our hands and fingers are in someone’s mouth. It’s not the same as a pharmacy or an eye clinic. It takes human hands and human eyeballs to perform dentistry.

Commodities are things you buy on price. When you buy corn, you don’t care if it’s from Iowa or Nebraska. The silliest ad campaign I’ve ever seen is the Florida orange juice one. Have you ever heard anyone at the grocery store asking for Florida oranges because they don’t want the ones from Arizona?

My practice is 25 years old. I have a lot of contacts from Dentaltown who have significant roles in the business to consumer (B to C) marketplace, and we all agree: half of America buys dentistry on price. Some of these people do perceive dentistry as a commodity and some buy on price simply because they don’t have money. If they have bad dental insurance and their insurance says they can only go to one doctor in town, they’ll go to that one doctor in town. This phenomenon is going to be around forever. There are people who are poor who really do value dentistry and there are rich people who don’t value it.

The other half of America has strong opinions about who gets to work in their mouths. The relationship with their provider has a huge impact on their choice of dentist. Have you ever once based whether you want a prescription filled at Walgreens on which pharmacist is going to be there? No! You just want to know when Walgreens is opened and if it has a drive-thru!

The argument is that corporate dentistry fuels the side that says dentistry is a commodity. These companies are representing a brand instead of an individual dentist. They’re often marketing on price, rather than procedure or specialty or dentist. So, yes, there are real-live dentists, not robots, performing the procedures, but it seems to be the beginning of taking the relationship out of the process.

Once you’re 50, you’ve seen everything at least twice, particularly in economics. This is the second time I’ve seen the idea of corporate dentistry come around. Black Monday in 1987 was just months after I graduated dental school. I was practicing during the stock market crash in 2000 and Lehman Brothers fall in 2008. When everyone thinks it’s the end of the world, it’s not. It’s a cycle. We create an economic bubble and then it explodes. It’s just economics.

Corporate dentistry chains have a good grasp on sophisticated marketing and management. When I got out of dental school, not a single dentist I knew, including myself, could use QuickBooks to make payroll. I hadn’t taken one class on management or communication with staff. For some, the answer is: let someone else do it. So if you hate dealing with all things social media and Excel, corporate might be the way to go.

For those who would rather learn it for themselves, check out all the practice management courses on Dentaltown.com. They’re only $18 each. Or, if you want more than a few hour-long classes, maybe you’re interested in going back to school. I went back to school in my 40s! I took two business classes each semester. I attended class on Monday and Wednesday evenings from 6-10 p.m. every week for two years. And I about cried when it was over because I loved it and learned so much! Another solution is to hire street-smart staff—an office manager, specifically. Recognize your limits and delegate!

The other advantages to corporate dentistry are better access to capital and better patient financing. It’s nice not to have to worry about these things. The CAD/CAM unit and other equipment is part of the package and there is no third-party when it comes to financing treatment.

It’s nice to have access to capital and to have patient financing, but you can have these things in a group practice, too. You can split the cost of the rent and the CAD/CAM and the payroll with other partners. You can work with CareCredit for patient financing. So in these ways, I don’t see how a corporate chain in all 50 states is any more competitive than an independent group practice.

I’m not opposed to corporate dentistry. I think it provides needed services for many Americans who need treatment. But unless corporate chains can preserve the one-on-one relationship that a patient gets when he or she visits her independent dentist, I don’t see corporate taking over the dental landscape or dentistry going the way of Walgreens. I think they’ll always be a spot in the marketplace for both private offices and corporate chains. – See more at: http://www.dentaltown.com/Dentaltown/Article.aspx?i=354&aid=4817#sthash.L80fMs9A.dpuf

Made popular by author Horace Greeley in the mid-1800s, the quote, “go west, young man,” was a proclamation to embrace new opportunity in the new western country. Granted, today I’d personally have to travel 1,457 miles east to get to St. Louis – the gateway to the west – from where I live in Phoenix, negating any literal meaning of the quote, but even so, it still has significance today. If you want to take advantage of new opportunities and possibilities, it might be necessary for you to move to an entirely new area or change your practice to accommodate a certain demographic.

In late November 2013, I started a message board thread on Dentaltown.com, which links to an article in The Denver Post titled, “Flood of new dental patients in Colorado meets trickle of caregivers” (Editor’s note: To view the thread, please visit www.dentaltown.com/ColoradoPatients). The article explains the new dental benefits Coloradans will receive via Obamacare and Medicaid, but that dentists are concerned that they won’t get paid enough to treat these new patients and keep their doors open. Also in the article, nine Colorado counties are listed as having no dentists in them whatsoever. In just a few days, this thread generated more than 130 posts from Townies. I invite you to check out this particular message board. It’s a pretty touchy issue, but I feel the concerns of some dentists surrounding this issue aren’t correct.

One of the arguments I hear is that those nine counties in Colorado have no money, hence, no reason for a dentist to open up a practice there. That’s ridiculous. Were that true, there wouldn’t be any Wal-Marts or McDonald’s in those counties either (and there are). If Wal-Mart and McDonald’s are in those counties, why can’t there exist a dental practice? For 25 years I’ve said all major businesses start with this equation:

Price – Profit = Budget
And I’ve always said that dentists seem to arrive at their price backwards:
Cost + Profit = Price

Ford Motor Co. has no problem starting with the average price of a Ford Taurus (at around $26,000 minimum average), from which they will subtract their profit, and from which the engineers will work off of the budget. Similarly, if they are designing a lower cost Ford Escort, they will say, “Here is what we are selling a Ford Escort for, we will subtract the profit we need to remain healthy, and then we will arrive at a budget.” Dentists don’t do that. Dentists don’t think they have two distinct markets. They will go into an area that has less income, taking HMOs and PPOs, but they won’t do amalgam. They’ll insist on doing composite. They won’t use a lowcost lab – they’ll go with some high-end cosmetic lab. They’ll insist on providing high-cost dentistry that much of the poulation of that town cannot afford.

These are the dentists who say, “I refuse to do dentistry on my patients that I wouldn’t do on myself.” That’s very altruistic of you, doc, but let’s get real here. The dentistry you would do on yourself is high-cost, high-quality dentistry only the upper class could afford. If that’s the way you think, you have to stay in the upper-half of the market and only that section of the market. You can’t be everything to anyone because eventually you will become nothing to no one. If you cannot figure out that there is lowcost dentistry, and that some people get amalgams and extractions and flippers and partials and dentures, and you need to use a low-cost lab, then you need to stay away from that geographic zone and let another dentist in who will make a killing offering low-cost dentistry. If all you offer is high-end dentistry, you’re going to make money on some patients and lose money on others – it will be a wash. You might as well pick low or high, run off half of your patients and only focus on the demographic you want to treat.

Also, consider the underserved areas themselves. No, they are not San Diego, Manhattan, Florida or Arizona where everyone seems to want to practice these days, but you have to remember those areas are already oversaturated with dentists. If it was always your goal to become a dentist and practice somewhere warm, you’re going to need to do something major to differentiate yourself from the rest of the pack. It takes a lot of work to practice in a saturated area. On the other hand, if you’re the only dentist in an entire county, people are going to flock to your practice in droves. When you serve the masses you dine with the classes, and that’s what will happen if you practice in an underserved area of the country. Do you really want to practice in San Francisco now, when you can make a killer living in a part of the country with no dentists and visit San Fran any time you want? Think about it.

There are already practices that are moving into underserved areas – corporate practices like Aspen or Heartland – and they’re doing it the right way. You know, the scariest question being asked around the dental profession is, “Is dentistry going to go the way of Walgreens and CVS the way pharmacies did?” Mom-and-Pop pharmacies collapsed because all the profit margin came from the buying power to purchase the pills. Group purchasing of drugs by Walgreens and CVS was everything that the small independent pharmacist couldn’t do. Secondly, there was not a single continuing education class pharmacists could take that would differentiate them from other pharmacists. We all know what happens when a dentist goes through Pankey or LVI or the Misch institute; we all know how dentists who take tons of CE each year for a decade can differentiate themselves from their competitors so much they’re almost playing a different game.

Corporate dental practices like Aspen and Heartland are making some very smart moves. They’re opening up practices in rural, underserved areas where there are few or even zero dental practices, and they’re making a killing. We’ve all heard why corporate dentistry is dominating – buying power for supplies and lab costs, and better marketing. But its Achilles Heel will always be staff turnover. How many dentists who sell their practices to corporate chains are still there three, four or even five years later? In my backyard, they are all gone. And when the dentist leaves, the patients stand around wondering what happened, and they become a lot less loyal. Staff turnover trumps brand name every time. While writing this column, I asked my office manager Sandy how big a blow it would be to our practice if we let Jan, my assistant of 25 years, go, and Sandy literally gasped. It would have a devastating impact on our patients and our practice.

There is a lot of opportunity out there, doc. You don’t have to sit in an oversaturated area spinning your wheels trying to figure out how you’re going to get your next new patient. Take a look at demographics in your own state or states around you. Figure out where the underserved live. “Go west!” – See more at: http://www.dentaltown.com/MessageBoard/thread.aspx?s=2&f=2606&t=219440#sthash.ba2IC3ce.dpuf

The Changing Landscape of Dentistry

Go West, Young Man