Dental practices must be proactive to remain financially stable during an economic downturn, one exec recommends.
Barry Lyon, DDS, is a chief dental officer for the division of orthodontics and pediatric dentistry at Sarasota, Fla.-based DSO Dental Care Alliance. He recently spoke with Becker's about how dental practices can respond if faced with a possible recession.
Editor's note: This Q&A is part of a weekly series featuring Dr. Lyon focused on topics in the dental industry and DSO field. This response was lightly edited for clarity and length.
Question: How might dental practices be affected if the U.S. were to enter another recession?
Dr. Barry Lyon: According to Goldman Sachs, the probability of a recession in the next year has fallen to 20 percent. Whereas Bankrate.com’s survey reveals economists see a 59 percent chance of a recession by July 2024. The New York Fed’s recession probability indicator shows there is still a 66 percent chance of a recession in the next 12 months. Finally, The Federal Reserve’s most recent projections no longer predict a recession. So, your guess is as good as mine as to what to believe.
Should there be a recession in the next twelve months, dentistry will be impacted. If unemployment rates increase, there could be a loss of dental benefits followed by a reduced demand. The Great Recession of 2008 led to a 38 percent decrease in general dentistry visits and a 2.5 percent decrease in orthodontic visits.
While clearly a challenge, there are steps dental practices can take to help offset a downturn in the economy. The first thing practice owners should do is take a deep dive into their key performance indicators. Can your practice operate more efficiently? Are the operational costs higher than necessary? Is the revenue cycle being managed well? Can the practice operate with less staff? Are treatment plans presented with an emphasis on patient benefit instead of cost?
The proactive practice is better prepared to ride out a faltering economy.