Dental practice economics have shifted in ways that likely won’t reverse. Wages increased, reimbursements didn’t follow and the gap between the cost of delivering care and what payers return has formed into a permanent structural constraint, not a temporary squeeze.
According to leaders, the approach to sustain margins has moved from surgical to micro-surgical, with revenue cycle management and staffing emerging as two of the most controllable levers left at their disposal.
These four dentists and DSO executives discussed the discipline required to survive that gap at Becker’s 5th Annual Future of Dentistry Roundtable in Chicago.
Note: Responses were lightly edited for clarity and length.
Question: What has fundamentally changed about the economics of running a DSO or dental practice, and which of those do you believe are structural now rather than temporary?
Haim Haviv. CEO of Hudson Dental (New York City): The main thing is the cost to deliver services versus what you get reimbursed for from insurance. There is only so much you can pass in terms of cost increases. The reimbursements do not increase to meet what your costs are today, not even close, and your costs are way higher than what it used to be. If your margins are squeezed, you cannot afford the best people in your practices. There’s a lot of stickiness in wage increases, and those wages aren’t going back down. That’s a meaningful change, and we’re all seeing that. That means that you have to be more operationally efficient.
Jaleh Pourhamidi, DMD. COO of Today’s Dental Network (Tampa, Fla.): Margins and efficiencies and economics are just less forgiving nowadays than they were a few years ago, so you have to have tight control. I used to say you need surgical precision when you’re looking at your margins. Now has to be micro-surgical precision to understand where the leakage is. Revenue cycle management is a big one. That’s one of my top things that I lose money on because for the doctors, for the group practice, for the individual doctor, you’ve done the work, but just haven’t collected the money. You don’t go to a dermatologist and walk out without paying, and the dermatologist is embarrassed to ask you to pay that day, right? So these things just kill your margin. Work you’ve done, money you haven’t collected. That to me is the worst thing you could do in any business, especially in dentistry.
Peter Rivoli, DDS. Owner, founder and orthodontist of Rivoli Dental (Spencerport, N.Y.): Staffing and insurance reimbursements are the two areas that affect us the most. Staffing, I think in the long term, is the one that’s going to kill a lot of us. There’s only so much you can pay a front desk person to answer the telephone, and then they get to a peak point. I look at the insurance side of the equation, and the RCM is tough. I just went through a whole review of our RCM, and there were holes. I was pouring more water into the bucket, and more was going out than was going in. I’ve noticed that more doctors are dropping out of insurance or not taking insurance, and more of the smaller private practices are dropping out of the insurance program. That actually gives the groups still in these programs a little bit more leverage.
Bill Simon, DMD. Owner of City Smiles (Chicago): I’m coming from the independent practice owner, not on the larger scale of some of the DSO or group practices. I come from a time in dentistry long before any of this that we’re talking about existed. Early on, dentistry was a cottage industry. Next thing we know, everybody starts showing up to the party. I really encourage our entire profession to stay away from the word “insurance.” In my book, it’s a coupon book, and our public has been misled to believe that it is insurance. Certainly the dental benefits companies have really encroached on the margins of dental practices.
Now we see the influx of entities that can manage things on a larger scale, like DSOs where you have economies of scale. That has also put a lot of pressure on the margins for independent practice owners, as far as managing your margins. To me, it’s all about the approaches to the productivity of the practice that make the most sense.
At the Becker's 5th Annual Future of Dentistry Roundtable, taking place September 14-15 in Chicago, dental leaders and executives will gain insights into emerging technologies, practice growth strategies and the evolving landscape of dental care delivery, with a focus on innovation, patient experience and operational excellence. Apply for complimentary registration now.
