The looming financial burden facing dentistry, according to 1 dentist

Dental practices will face increased interest rates in the near future, leading to decreased revenue and more acquisitions of smaller practices, according to one dentist. 

Michael Davis, DDS, of Smiles of Santa Fe (N.M.), recently spoke with Becker's about the biggest challenges and trends in the dental industry. 

Editor's note: Responses were lightly edited for clarity and length. 

Question: What are the biggest challenges facing the industry? 

Dr. Michael Davis: The dental profession is facing an absolute glut in oversupply of dentists within the employment marketplace. Existing dental programs are expanding. New dental schools regularly are initiated. All the while, average student loan debt approximates $300,000, which generally is not dischargeable in bankruptcy court. Recent grads often face years of little more than indentured servitude. Quality of care gives way to dubious shortcuts. Patients are harmed. Doctors burn out. The doctor/patient relationship is tacitly usurped by a corporate third party. This situation was horrific five to 10 years ago. It is only worse today.

Q: What technologies/innovations are coming into the industry that will improve efficiency and quality of care?

MD: I am particularly impressed with improvement in the technology of intraoral scanners. These can save time, avoid mess and cleanup [and] advance the patient experience with enhanced comfort. Naturally, this technology will not compensate for an inadequately designed or improperly isolated indirect preparation. No technology can fully compensate for a doctor’s lack in skill or judgment.

Another impressive technology is real-time [dental cone beam CT] scanning. A surgical implant fixture may be placed, and the practitioner is aware in real time of neighboring structures like a sinus cavity, mandibular nerve canal or proximal root surface.

Q: How do you see your company/the industry evolving in the next three to five years?

MD: The immediate future will bring rising interest rates. Some DSOs will not be able to obtain cheap money, which their expansion previously depended upon. Smaller operations will be acquired by the larger ones, which can better access funding.

Clinics will close. De novo startups will decline significantly. Dentists will face layoffs. In contrast, niche practices should not only survive but thrive.

Q: If you could change one thing about the industry, what would it be?

MD: I would get the federal government out of backing student loans. Dentists who defaulted on loans due to an inability to ethically generate adequate income would benefit from the safety net of legal bankruptcy. The consequence would be fewer dental student loans issued and far less money borrowed. Dental schools would be forced to cut back class size and enrollments.

Q: What industry trends are you following?

MD: Nonprofit dental facilities called federally qualified health centers and FQHC look-alikes are facing added scrutiny for taxpayer fraud. They frequently engage in the unethical and unlawful practice of abuse of patient encounter fees, often termed "patient churning."

I am also watching how the rise with interest rates impacts the subprime bond market. So-called junk bonds are essential to finance mergers and acquisitions within the DSO industry, and private equity generally. I cannot see the federal government propping up a selloff in the subprime bond market, as was done by the Fed through BlackRock, after the negative economic impact of COVID.

I am particularly disgusted by the voluminous rise in the dental education-industrial complex. Teaching institutes too often value revenue, versus the welfare of students. Ethics and understanding the critical nature of the doctor/patient relationship is being lost. Learning relevant clinical skills are also being compromised. Deans and various administrators too often make out like bandits, while rank-and-file faculty and students suffer.

Q: What is the greatest piece of advice you have been given during your career?

MD: I was told by my older colleagues to own my own business for my greatest personal and professional fulfillment. This is not for every dentist. These senior doctors knew my personality, my opinionated nature and what generated my individual sense of satisfaction.

It is not that I cannot work in a clinical setting controlled by others. I have done just that in my past. The reality for me is that I demand specific standards of care for patients. I demand other entities stay far distanced from my involvement in any doctor/patient relationship (contract). These perspectives are not congruent with working for publicly funded institutions, most DSOs or many smaller private practices.

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