What are the options for an Independent Dental Practice?News & Announcements
Posted: December 4, 2017
Now that the initial corporate acquisition has steadied the dental marketplace is starting to settle, a clearer indication of future trend is emerging.
Some corporate entities are still digesting their acquisitions and identifying good performing practices from under performers. Others are either merging or closing non-viable practices.
Most have realised that the market has been well picked over and long-term high performing practices are hard to find and very expensive due to the competition for them. Several have moved from an acquisition model to a start-up strategy as a lower cost option free of the takeover issues.
New private equity groups are still entering the industry as a long-term profit option for their investors but at a more sedate pace as they try to avoid the mistakes of the earlier player. There is also an increase in the number of dentists trying to accumulate a small chain of practices to achieve the benefits of scale and hoping to eventually sell to a private equity group.
Health insurance funds with preferred provider networks are also changing their strategy as they continue their drive to lower operating costs and face the consequences of a high rate of policy cancellations. Their focus appears to be on the establishment of their own clinics in areas of high member concentration and rationalisation of their preferred provider network to the lowest cost options.
A clear indication of this is that some preferred provider practices are seeing less and less new fund members attending their practices. Another factor affecting health insurance fund preferred provider practices is the level of influence the fund is having on their profitability with some funds severely limiting fee increases and in some cases freezing fees for several years.
The stand-alone independent dental clinics are experiencing a slowdown in new patient flows as the younger generations search for services via the internet and rely on social media guidance to select their providers. They are also experiencing increased competition driven by quality and volume advertising from both health insurance funds and corporate entities.
They also face the opening of multiple new start-up clinics in their catchment areas as foreign born dentists move to establish their own clinics and recently graduated dentists and those disaffected by their corporate dentistry experience strive to establish a new practice.
On top of all the forgoing factors all dentists are seeing the effects of the rising pressure on household disposable incomes reflected in gaps in their appointment books.
It is safe to say that the golden years of dentistry are gone and the current and future markets will by highly competitive and clearly segregated into three main streams
1: Health insurance fund clinics and networks.
2: Corporate dentistry.
3: Independent dentists.
With the benefit of high retained profit reserves and ready access to investor capital the health insurance funds and corporates will have a distinct advantage over stand-alone independent practices.
Facing increased competition from the health insurance funds and corporates plus new start-ups established independent practices face a difficult future unless they can unite to form a critical mass to achieve a scale that equals or exceeds their major opposition.
It will be difficult for a lot of independent dentists working in isolation to be able to see the big picture and a number will just settle down to a less profitable future and settle for a good living.
Others who are not willing to see their industry taken over by profit driven corporates and not willing to have a high health insurance influence in their practices will realise that the only real option is to unite with other independent practices to be able to access the equivalent services and cost of operation as corporate entities.
They have the ability to personalise their relationship with their patients through long-term trust driven care. This is something that corporate entities cannot do and health insurance funds cannot do due to their conflict of interest in selling insurance and dictating treatments under those policies.
Independent dentists will appreciate that having a common co-brand and a single market image that reflects the values and benefits that independent dental clinics can provide to patients will enable them to compete on a cost effective basis due to the syndicated cost of marketing and excel in a very competitive dental market if they have a common simple message to the market that their collective marketing promotes and patients can identify with.
No matter the generation and technology changes that come along people still want a dentist they know and trust to have their best interest at heart. This is a need independent dentists can fulfil and capitalise on through collective marketing and adherence to a high code of conduct.
In simple terms independent dentists can reclaim their industry and reset the professional standards that previous generations of dentists set and strived to achieve. Through the Independent Dentist
Network they can raise their visibility, achieve a competitive status and ensure their long-term profitability.