Let’s discuss what’s good for delta is BAD for dentists in our dental marketing strategies series….
Throughout the 50 U.S. states most dentists are finding that general dentistry is becoming an increasingly more difficult endeavor where longer hours or figuring out how to run faster to survive on decreasing reimbursements are the new requirements. Get used to it as that is the NEW reality.
You can broaden the above statements to most western industrialized countries except those who super-exporters of manufactured stuff (think Germany) or who are who have massive natural resources to sell to the developing world (Canada, Australia).
IMHO, this running faster option is no longer all that possible in practicality as most practices have been running ever faster as reimbursements have stayed stuck for the last 20 years—never mind the new round of nasties which are upon us. Technology and administrative complexity has already allowed the running to reach maximum speed.
Our medical siblings have been dealing with an even more gnarly version of all this for over 20 years and the end result is most physicians are now employees of some other entity (not themselves) and a big chunk of their earning power is now owned by someone else. Family practice doc’s could go back to fee for service but that’s a whole other discussion.
For those of you who keep waiting for the return of easy days in general dentistry, they are going to gone for a very long time—perhaps forever. For the ultra-religious in the profession, you could have only been so lucky had the “rapture” occurred a few weeks ago to take you away from what is your daily reality.
What the heck has happened? Well, this is NOT just a side effect of the great recession it is much bigger than that. If you don’t see the writing on the wall and have dental marketing strategies in place for the big changes ahead, you are in big trouble.
You see, the nice fluffy middle class that allowed the big blob majority of dentists in the technical ability middle of the bell curve to carve out a fairly easy and decent living for the past 40+ years is emptying out. For a very long time, good margins plus an ever increasing bounty of higher wages and assets post-WWII kept any dentist with a decent personality doing okay with a nice lifestyle and supporting his/her family. Those economics are gone and as a result it’s no longer the easy road of years gone by.
Whether it is a side effect of globalization, movement of manufacturing labor to lower cost locations, or simply a lack of innovation and intellectual content creation in the West, here is what you contend with.
- Less buying power for average consumers,
- the middle class segmenting into upper-middle and working poor,
- reimbursement mechanisms broken,
- household buying power retreating to 1975 levels EVEN with 2 family members working, and
- staglation setting into the economy as we are in full on “recovery.”
The fundamental indicators simply do not jive with things getting better any time soon or a return to a middle class with fat wallets ready to spend on your services.
On top of those things, you have overhead heading up with materials, technology and wages all pressuring upward.
The squeeze is happening even more via the reimbursement schemes. We’ll leave the government out of this as that’s too depressing to discuss.
As example: In the past month, I got word that Delta Dental back in my former practice location in Seattle has made a cross the board cut for it’s tier level programs of 15%. To maintain the same profitability before the cut, those dentists locked into Delta must now “run” 30% faster or add 30% more hours with patients to fill the time. At a 15% cut and 70% overhead, the net profit reduction is -50%. For Delta, that 15% cut means anywhere from 20-60% MORE profit depending on their overhead. Can you figure out which pig is getting the very sharp poke here?
Now fundamentally, we know this isn’t Delta’s fault. They have hit a wall with employers scoffing at paying for any more benefits or rate increases. Additionally, the dentists deserve their fair share of the finger pointing on this as over 90% of Washington Dentists are plugged into delta’s system. No one held a gun to any doctor’s head and said, “you must sign.” Of course, lastly, and most sickening, there is the dental society’s role, which in WDS’ case, the state association has defacto been in bed cuddling up to the policies of the anti-dentist business while putting the interests of its members to the side simply because Delta would sponsor a few of the WSDA’s pet charity projects. Delta has had the association leaders drinking the Kool-aid for decades…..
By the way, I was one of those rare dentists (less than 10%) that was not part of Delta Dental starting in early 2000. Yep, dropped it LAST CENTURY. Having dental marketing strategies to do this is a must in order to survive the down-sizing one can expect as a consequence. Perhaps I should release my “dump delta” consulting program and see if there is finally enough interest….. Many of our members adopt the same tactics as they begin the process of getting away from the danger of reduced fee contracts and use my proven dental marketing strategies to rise above the danger of drowning in insurance.
So, what to do. Well, a few suggested tactics have already crossed my desk.
One is to outsource your laboratory work to China to cut costs as shown above. Of all things, even endorsed by a former dental society president—shame on you Ronda Savage. You could say that her blurb is just one more example that most local societies/leaders really don’t have a grip on the harsh reality you all face and certainly aren’t helping you out with how your dues are being spent.
This China plan doesn’t sound very “All American” to me. If enough people flock to the foreign lab, that will make sure your local lab goes out of business so you don’t have a local expert to rely upon. With custom medical devices, how smart is this really? Don’t you think you’ll need your local lab to help trouble shoot a few cases every now and then.
Moving on……another proposal.
This one from a local coach in Washington State. Astutely remarking that the old model doesn’t work, giving some very business speak (meaning theoretical) terms as solutions, but no “how” being part of any suggestions.
So, what’s the answer. Well, ultimately, all of this goes back to positioning, promotion, measurement and training and systematic selling. On an even more direct level, we are literally fighting to push the margin (profit) back to acceptable levels to maintain the business and all of the thing that create long term growth. Just in case you think you are a commodity and can’t do this take a look at Starbucks and Apple. Both sell commodities but both don’t think about what they sale as a commodity. In fact, they do everything possible to keep it away from commodity pricing.
How much different would your margin be if you broke a commodity mindset and moved on to make sure your services were just as afar away from being a commodity as starbucks and apple. Personally, I can attest that life is good for the small minority who grasp this and go on to get help and do it.
With any practice facing these issues, one must have something that is unique (more clinical skills than average), promote differently than all of the other dentists—literally calling patients to you from the local environment and not because you are a delta member, and finally being systematic about selling everything in the practice because truthfully humans have characteristics and behaviors when it comes to buying and you are dropping the ball if you are not taking the psychology of decision making and behavior into account.
For those who are 100% insurance dependent, your best choice is simply to get better at ethically selling to who you have. In other words, improving your margin with what you’ve got and then moving on to the next steps. Even that most fundamental step requires a system.
For those only partially dependent, you can simultaneously market your way away from insurance (with the right messages for your clinical areas of expertise) while ethically and systematically selling differently to your existing and new patients. Again, the end result is a healthier margin. Once again, systems and guidance are called for and paying attention to others who already have been through this is the fastest way to get there.
Those choosing these baby steps can begin to avert their business from disaster and get back to safer margins.
If you refuse to address this by implementing a dental marketing strategy soon, you can plan to simple say, “thank you sir may I have another fee cut” because it’s guaranteed to be coming soon……good luck and run Forrest run……
Check out my website to get started here
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