The Dental Industry is Undergoing a Post-COVID Shift
By Maryann Czarnota, Partner, Accounting Services
In the aftermath of the pandemic, there are more questions than answers when it comes to the economy. Federal funding has ended, which means struggling dental practices must look for other resources as they cope with industry-wide consolidation. Projections suggest that 20-25% of dental practices will be backed by private equity.
Why is this shift happening?
Even in the last quarter of 2022, businesses are still navigating post-COVID economic challenges. Inflation, workforce shortages, and supply chain disruptions are impacting every industry. In addition to these nationwide challenges, dental practices are also struggling with patient retention, low reimbursement rates, and student debt.
Patients are quick to cancel appointments, which creates uncertainty for practice owners. It’s important to take the proper measures to put patients’ minds at ease. For example, patients want to know that there is enough personal protective equipment that employees are asking the proper health screening questions regarding COVID exposure, and that temperatures are checked daily.
Due to declining reimbursement fees, practices must see more patients without disrupting the standard of care. Standard of care is significant when it comes to patient retention because if patients feel like just another number to their dentist, they will likely find a new provider.
At the same time, young dentists are struggling with student debts and experienced dentists are dealing with inflation and supply chain disruptions. The increased cost of living has created workforce shortages in the industry. It’s more expensive to keep quality staff, and that will likely continue over the next few years.
What your practice should consider?
Practices should start by evaluating their business model. Each practice is recovering from the pandemic at a different pace. It is important to understand that trends come and go, and practice leaders need to figure out what works best for them. There are various pros and cons to consolidation:
|Reduce administrative workload||Organizational structure changes|
|Access to capital||Loss of practice independence|
|Long-term growth and strategic planning||Platform changes|
|Additional marketing opportunities||Client adaptability|
Each practice must consider its own goals and challenges as it navigates any post-pandemic issues. Frequently evaluating financial health and the success of current operations will help practice leaders understand the true value they deliver.