Ever wondered how the financial crisis has impacted the dental industry? The following article details the impact it had and how to overcome it.
Source: DentalEconomics.com – “The Impact of the Financial Crisis on the US Dental Industry”
“The financial crisis of 2007-2009, which is regarded as the worst crisis since the Great Depression, had devastating effects on the U.S. economy and led to the global recession of 2009. Unemployment surged, financial institutions collapsed, and consumer confidence slumped as a result of the crisis. Also, the economic downturn had negative effects on the U.S. dental industry, causing patient visits, practice collections, and net income to plummet.
The U.S. dental industry
When the financial crisis hit the U.S. economy, the dental industry was already in a bleak financial state. According to a recent study by the American Dental Association (ADA), the average net income for general practitioners has exhibited moderate or no growth since the early 2000s. In addition, net income, which measures how profitable it is to run a dental practice, started to decline sharply in the mid-2000s. More specifically, the average net income dropped 13% during 2006 to 2009 (from $219,501 to $191,495).
The decline in net income for dental practices is attributed to several factors including 1) declining utilization of dental care by the adult population, 2) increased financing by lower paying public programs and less out-of-pocket payments, and 3) a change in procedure mix. For example, dental expenditures per capita started to slow down in 2002, several years before the financial crisis. The declining utilization of dental care is driven by the increase in the number of people lacking dental benefits and the austere financial climate.
The financial and clinical impact of the crisis
Critical performance measures such as practice collections, patient visits, and doctors’ gross production plummeted in the wake of the financial crisis. Practice collections alone dropped 5% between 2009 and 2010 (Fig. 1). However, the dental industry has exhibited strong growth since the crisis. Collections are up 8%, doctors’ gross production is up 12%, and patient visits are up 7% since the slump in 2010. The recovery is driven by a steady increase in both patient flow and gross production per visit, which is a result of the better overall economy. For example, the U.S. unemployment rate has decreased from 10% in 2010 to 7.5%, resulting in an increase in the number of people with dental benefits. According to Sikka Software’s client data, the percentage of cash patients in the dental industry has decreased from 20% to 17% during the same period, which constitutes a drop of 15%.”
To continue reading this article click here.
Improve you practice and increase patient numbers by continuing your dental education. Call Aesthetic Advantage to enroll in their dental continuing education classes at 212-794-3552. Visit the website to learn more at www.aestheticadvantage.com.