Dental Specialist Marketing and the State of Referrals Part 1
While this article series is centered on the specialist, be aware that if you are a generalist doing niche procedures, there is value for you in understanding the trends which will be discussed. Feel free to forward this article on to your specialist colleagues who can benefit.
Dentistry as it relates to the traditional referral model for specialists continues to evolve and change rapidly. The changing nature of referrals has a direct impact on the economic health of the specialty practice. Being aware of the biggest trends affecting referrals is the first step in equipping one’s self for good decision making.
For most specialty providers, dental specialist marketing will be an ever growing and more critical aspect of the business for those who want to have thriving practices. We’re fast approaching a point where only those specialists who market and advertise will stay among the ranks of the self-employed soloist.
Dental specialist marketing can be completely internally focused on cultivating and growing a core group of referrers which requires time and leadership, dental specialist marketing can be tilted toward a heavy focus of going directly to the consumer, or finally dental specialist marketing can be a bit of both. The ultimate primer for how to approach advertising any specialty service be it performed by a recognized specialist or a generalist with advanced clinical training can be found here.
The broad based news that most specialist colleagues will consider “bad” is that the numbers of total referrals of what used to be routinely referred services continues to trend downward. More “basic” specialty services are being treated broadly across the total pool of practitioners.
There are a number of key trends converging economically and clinically contributing to this. Specialists as individuals and as a group via their associations have limited to no control over any of the major trends. Thus it’s up to the specialty practice owner to inform one’s self and take individual action especially in respect to dental specialist marketing.
First, let’s go into the major economic trends that continues to affect referrals.
Economic Trend 1 – Dental Insurance
The first economic trend is industry specific and is related to reimbursement for services inside the 40+ year old dental insurance model. The total insurance reimbursement pool isn’t expanding significantly and the average maximum annual insurance plan benefit, in inflation adjusted terms, continues its decade long decline with no sign of a reversal. While the revenue pool and benefits have shrank, what has grown is the exclusion of services and headache and hassle to collect benefits for each patient. More effort is required to collect while more costs are gradually passed on to the patient/consumer.
Economic Trend 2 – Middle Class Wage Growth
The next economic trend involves changes in the fundamental economics and income growth in the broad middle class. In the U.S., to achieve the same inflation adjusted household income as experienced in the early 1970’s now requires two full time wage earners in a household. [For our Canadian docs, be aware that your middle class is in better condition economically!]
There’s a long list of contributing factors underlying what has occurred including everything from globalization where goods and services move from high cost production countries to lower cost countries, inflation, loss of bargaining power on wage growth, governmental credit habits, corporate rules that encourage profit taking outside the U.S., the overall erosion of the manufacturing sector, as well as monumental efficiency gains throughout production systems which translates into millions fewer employees required to product goods and services. We continue to set year on year records of record U.S. GDP with fewer workers than before the Great Recession.
The outcome of all of the above is reduced buying-power of a very large part of the middle-class continues to shrink and that reduced buying power translates into less demand for generalist and specialist services.
Nothing we can do as individuals or associations will alter these trends thus the only recourse is to manage your business appropriately and to acquire missing capabilities and business skills to navigate the changes.
Next week, I’ll continue with a discussion about relevant clinical trends at work as well as how all of the trends ultimately affect the specialty practice.