At the time of writing this article, most economists expect the US economy to enter into a recession in 2023. As a dental practice owner or professional, it is critical that you set up your office properly to withstand the change in economic conditions that is coming.
What dental treatments do not perform well in a recession?
During a recession, consumers are very concerned with stretching their paychecks, and will put off any non-essential treatments.
All cosmetic dentistry such as veneers, and even supplemental cosmetic procedures performed by dentists such as botox will tend to see a significant reduction in volume as economic times tighten.
What dental treatments perform well in a recession?
Even if your office normally tailors to a higher end clientele and offer top of the line pricing, you should consider adding lower cost options for treatments in order to avoid missing out on conversions from customers who would have otherwise been able to afford the treatment in better economic times.
How does a patient’s ability to pay change during a recession?
In a recession, patients will tend to be very strapped for cash, and are very mindful of where every penny is being spent. They are more likely to need financing, but with the catch that many of the patient financing companies will become stricter with their lending criteria, and so ironically you will see less financing available even though patients need it more.
In this environment, offices that are able to accept the widest range of insurance will fare better, and those that can accept Medicaid and state insurance plans will fare the best of all. This is especially true because in a recession, Medicaid enrollment grows as recently unemployed individuals leave their employer plans to join the state insurance plans. Additionally, dental offices that offer in-house payment plans have a huge advantage over the competition and will capture a larger share of the new patient market as the general financing options for patients in need become less available.
How will my dental practice cash flow be affected in a recession?
The natural expectation is to believe that cash flow would be reduced to your dental practice in the event of an economic downturn, but this is not necessarily the case, especially if you recession proof your practice by incorporating emergencies into your schedule. There are three dynamics to cash flow for a dental practice that you need to consider when in a recession:
- Patients become more price sensitive, so offices having high initial visit fees will see their conversion rates reduced. Patients will also put off cosmetic and other non essential treatments. Patients will also generally prefer lower cost options, for example, they may prefer braces over invisible aligners.
- More state insurance patients, which can also translate into more cash patients if they can not find an office that can take their state insurance.
- On the other hand, you may find that you have an easier time hiring staff such as dental hygienists, etc. and that you are able to keep them around longer, reducing expensive hiring and training costs.
You’ve already seen this before
If your dental practice was open during the lockdowns that came at the beginning of 2020 when COVID-19 first started spreading, then you’ve seen a microcosm of what happens when patients have uncertainty and only take care of the emergency treatment that they can’t put off. Many practices actually embraced emergency dentistry after this period because they realized that it is a profitable dentistry niche that can weather through any economic climate. Another wildcard to consider is that there is a big unknown with regards to how the federal government will respond to another recession. If they elect to go the route they did with the 2020 mini recession, then cash outlays to citizens can actually greatly help patients who may have been saving up for treatment.
How can I prepare my dental practice to better handle a recession?
The way to best prepare your dental practice for a recession is to make sure your office incorporates emergency dental services into your practice workflow. This not only means having an effective emergency dental marketing program to attract urgent care dental patients, but also having your office set up from the front desk to your back end payment options to maximize the chances of converting those emergency patient calls.
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