"Failure isn't fatal, but failure to change might be." - John Wooden
Macy’s. JC Penny. Sears. Kmart. Blockbuster Video. Kodak. What do these companies have in common? More importantly, what do they have to do with your dental practice?
Each were once leaders in their industries, giants that were often considered too big to fail. Today, each company is a tale about how corporate giants may be too cumbersome to change with the times. Worse, they may not even realize they need to change, or they may not even want to change.
You might say, “Oh, I’ve heard this before. I need to be on social media, or I need to rebrand my practice, or do something different than I have for the last 20 years.” You’re right! I hear dentists say that their revenue is flat or down, new patients are few or non-existent, and that their patients are leaving, dying, or aging out.
Why is this important, and why am I, a financial advisor, discussing this topic? Because your practice could be a vital part of your retirement income, and the health of your practice could dictate how financially healthy your retirement remains.
It’s pretty easy to figure out what the causes are for the change in retail chains. But what are the causes in dentistry? Here are some theories.
1. Millennials
The people born between the mid-‘80s to 2000 are doing everything differently, including how they “get” dentistry. Word of mouth doesn’t cut it. Forget the Yellow Pages, radio, and TV. If you want the millennial demographic, you’d better have a believable social media and internet presence. This is more than having a decent website for your practice because it’s a given these days that you have a website. You need a social media presence.
2. Corporate dentistry
Face it, corporate dentistry is here to stay. Marketing, location, services … all packaged and right in front of lots of people when they pick up their $5 cup of coffee at the mall.
3. Multi-office practices
Similar to corporate dentistry but more localized, multi-office practices can use economies of scale for marketing dollars, supplies, and finding the best locations, while gobbling up other practices to increase patient files. New patient acquisition comes with the practice acquisition, so marketing to the public does not have to be as efficient or effective.
4. Millennial dentists who “get it”
Young dentists understand how their constituents consume information. They understand what motivates their target growth demographic, and further, they tend to know how to get other demographics due to their study of modern marketing.
5. Statistics
If you’ve read the book “Outliers” by Malcolm Gladwell, you know how statistics may have impacted the success of many famous Americans. In dentistry, the statistics I’ve found are simply this: dentists starting their career in the mid-‘70s and ‘80s were part of a large graduating class in America, trying to get started in an aging industry with few established practices to buy into. In short, the supply of practices were low and the demand was high, so a retiring dentist could hold out for more money. Many young dentists became more likely to hang out their shingles and start from scratch.
Fast forward to today when the docs are considering retirement. Now the market is flooded with practices for sale, and today’s graduating class is not only smaller from a historical perspective, but also over 50% are female. Today’s market has a large supply and a low demand so that young dentists can either easily launch a practice from scratch, or purchase several practices at a discount. (Read more on my theory of how statistics impact dental practice transitions.)
There are plenty of other forces impacting today’s dental industry, but leaving the topic with these five leaves enough room for general dentists to improve their practices. In Part 2, I’ll share some ideas on what you can do to help with these five challenges.
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