The trend facing dentist today can dramatically affect your practice going forward so being mindful of what is coming ahead and dealing with it pro-actively can ensure a successful business in the long run. Dan Barton wrote a great article detailing what trends they moving forward.
This article was originally published at evancarmichael.com and written by: Dan Barton
Growing up, Geoff’s family spent the summers in the countryside near Montreal, Canada. During the summer he was sixteen, his neighbour and friend Karen, who had very bad teeth, was unexpectedly taken to the dentist by her father. When she returned home with her father, Geoff was in his yard enjoying the sunshine with his friends, but instead of smiling, saying hello, and joining in, Karen got out of the car and ran straight into the house without a word. Her father walked directly over to Geoff with a smirk on his face, and wiping his hands, said, “We just had all of Karen’s teeth extracted, so now I won’t have to worry about Karen’s dental bills anymore.” Geoff was shocked, and it was at that _ moment he emotionally and partially unconsciously made the decision to become a dentist as Geoff knew this was a problem he could help solve, and did not want to watch anyone else suffer through an ordeal like Karen’s. After many years of school, and after finding the proper mentor, he found himself setting up his own successful practice in Ontario, Canada.
Geoff and many other practitioners both nationally and globally are being presented with unprecedented opporttJnities for investing their money and growing their practice. However, with these opportunities also comes the chink in the proverbial silver lining of the clouds that can either make or break your investment and the success of a dental practice.
Over the past year, we have taken surveys, researched practices, and spent countless hours finding and pouring over data to bring you this comprehensive, in-depth study. Through our research, we have isolated the five most dangerous trends affecting dental practitioners today. These are trends that each and every dentist will come across during their years of practice, and these trends have the possibility of quickly eliminating the positive results that all those years of hard work and dedication have created. We have developed this report in the hopes that it will shine a light on these often tabo. subjects, as they so desperately need to be addressed especially in today’s often confusing and changing market place.
While researching this report, a common thread we found to be the main underlying passion many dentists expressed, was to provide for their families in a way that they themselves never experienced in their own youth, coupled with their strong desire to help others maintain good oral health practices. Through their hard work and dedication, dentists have the ability to ensure that their children do not have to face similar hardships and difficulties in attaining their goals. Providing privileged and care free lives for their children is a top priority for most dentists; however, the nature of the profession makes that goat more distant than one might assume. In order to provide more and more for their families, dentists find themselves sacrificing precious family time, which can be far more beneficial to a child’s upbringing than iPod’s, PC’s and latest whiz games from Xbox and Nintendo.
Or. Bob Muster, having spent the last 14 years in the dentistry field, has seen the ins and outs of the subsidized dental market and believes a change is in order. Muster knows what poverty feels like firsthand. He grew up poor, and now, as a dentist treating Medicare patients, he knows the industry needs a change. Muster opened his first dental office in Huber Heights, Ohio, which focuses on treating Medicare patients both young and old. The 7,800-square-foot dental office will cost about $1.6 million to open and feature state-of-the-art waiting rooms and dental implements. Muster worked for several Medicare dental offices and as he found the quality of care to often be poor, he was prompted to open his own practice.
When posed with the question, “Why did you become a dentist?” another practitioner replied, “I wanted to be involved in a medical profession, and my uncle, who was a wonderful dentist, was a great role model for me. Dentistry has an artistic component to it as well; dentists use their hands to sculpt teeth. Sometimes they use their skills to create more appealing smiles especially in cosmetic dentistry. I wanted to be involved in a helping profession which would also allow me a reasonable standard of living. Dentists provide a valuable service to their communities and if they do their job competently, they are respected by their patients. I have been a dentist for over 25 years and I have enjoyed helping my patients, and I get great satisfaction from the work itself. I continue to find Dentistry both challenging and interesting.”
While each and every dentist has their own passion about why they originally got into this field of practice, another common theme we found is the passion to create more confidence through the smile. This is no wonder. Researchers of a study led by Dr. Dacher Keltner of the University of California were able to predict the future marital status, even 30 years down the road, of various 21 year-old women, just by looking at their photographs. The key appeared to be the intensity of the women’s smiles.
“Women who displayed more positive emotion were more likely to be married by 27, less likely to have remained single into middle adulthood and more likely to have satisfying marriages 30 years later. This means we can take photos at a wedding and from them we may be able to tell how the marriage will go,” said Dr. Keltner.
Additionally, how intensely a person smiled was related to personality tests, and psychologists ranked the participants by how they expressed emotions like joy and happiness. How did they know the smiles weren’t being faked? They used computer technology to measure 44 aspects of facial activity. If a smile was not genuine, certain muscles would not move (for instance, certain muscles around the eyes that we don’t consciously control move when we feel emotion).
Dentists definitey seem to be on right path for creating more confidence through helping create better smiles. According to The British Dental Health Foundation, a smile gives the same level of stimulation as eating 2,000 chocolate bars. The results were found after researchers measured brain and heart activity in volunteers as they were shown pictures of smiling people and given money and chocolate. Dr. Nigel Carter, chief executive of the Foundation, pointed out, “We have long been drawing attention to the fact that smiling increases happiness both in yourself and those around you, so it is good to receive the backing of this scientific research … a healthy smile can improve your confidence, help you make friends, and help you to succeed in your career.”
What’s even better is that the more you smile, the more others will too. Says psychologist Dr. David Lewis, “Seeing a smile creates what is termed as a ‘halo’ effect, helping us to remember other happy events more vividly, feel more optimistic, more positive, and more motivated.”
Dentists are passionate about their work, and understand the power of good oral health and a great smile. However, despite their passion and desire to help others, their jobs, futures, and practices can still be placed at risk, which is why we have created this special in-depth study. As a real-estate investment company, Oasis Properties generally does not provide reports on other professions; however, considering that many of our clients who are dentists have expressed the same concerns and reasons for investing with us, we felt that providing this report would generate a high number of solutions for many of our current and future clients in this specialized field of work.
With strong reliance on scholarly journal articles, government published data and information from other reputable sources, this report will provide some unique answers and options that dentists typically will not expect from the traditional sources of knowledge and opinion. In the next section of this report you will discover one of the scariest pitfalls that have the potential to cause the most staggering amount of unnecessary damage in any dental practice. The top five most dangerous trends facing dentists today are trends which cannot be ignored, and we hope to set you back on the right track, mentally, physically, spiritually and financially. In this paper as we review case study after case study of dentists who are experiencing setbacks with maturing practices, we hope that this report will provide you with the answers needed to continue positively on with your life, your work and your mission in creating beaming smiles.
1. Lawsuits -The Single Biggest Fear
The first pitfall of practices that we will analyze is the one that has the potential to cause the most staggering amount of unnecessary damage. An article from the Journal of the Canadian Dental Association explains that since the mid-1980s, lawsuits have injected unprecedented levels of panic into the dental profession. An American dentist was successfully sued for the first time for neglect, which led to several of his patients contracting the HIV virus. The dental profession has since had to adopt a constant vigil to ensure patient safety. Following several lawsuits in the 1990s, dentists now have to face the threat of a lawsuit even for everyday missteps, such as spraying water in a patient’s eye. Though that particular case was successfully defended by the dentist, the doubt and fear that a lawsuit raises is enough to turn away future clients.
Running a dental practice requires the precious care of every patient’s safety. Managing one’s own practice s extremely time consuming, but incidents sometimes arise that compel patients to feel as if not enough precautions were taken with their dental procedure. This in itself is a stressful and dissatisfying aspect of the profession, especially as according to the Journal of Occupational Psychology, most dental practitioners cite interaction with patients as the highest cause of job satisfaction. Moreover, it is said that the single biggest fear of any licensed healthcare practitioner is being sued by a patient. Not only can a lawsuit be damaging financially, but it can tarnish a dentist’s reputation and place even further time demands on the office personnel through lengthy proceedings.
Recent state and provincial laws disallowing dentists from refusing clients that are infected with life threatening diseases adds another level of risk to a practice. While patients with perilous diseases are undeniably entitled to dental care, it means that dental practitioners are obligated to dedicate even more of their already limited time to ensuring procedural tasks such as sanitation are properly completed. A recent case against Dr. Stable in Ontario proved that some clients will pursue legal action even after a minor incident such as a non-scarring burn that occurred during a routine dental procedure. In addition to having to close his office for the duration of the trial, a trusted legal expert from JW Dental Legal malpractice lawyers, expressed that “The financial cost to Dr. Stable and loss of trust in dental professionals by Mrs. Fretter could likely have been avoided.”
The only way to truly protect oneself from potential lawsuits is “not only to do well, but to be seen doing well.” There are four common methods to ensuring your protection. The first is to keep up to date on new practice standards and keep informed on any developments or research within your field. The second is to maintain and enforce a constant level of communication with staff so that they do not omit any pertinent patient information. The third is ensuring all dental equipment is diligently inspected and maintained, and the final and- most effective method is to meticulously record all patient information and keep it well organized and separated. These files should also contain relevant conversations so they can be referred to should a patient pursue legal action.
While the above methods will provide piece of mind to concerned dentists, it further leverages a dental practitioner’s time towards administration tasks as opposed to patient care. By adding so many safety precautions to a dental practice’s existing administration tasks, it becomes necessary to hire additional staff. However, as we will see, this solution is not as simple and pain-free as one might believe.
2. Staff- The Leading Cause of Office Losses
In light of all the aforementioned time commitments that dentists must sacrifice to their administration and safety tasks, it becomes apparent that most dentists need qualified help within their business operations. As lawsuits can be costly and damaging to an office’s reputation, hiring quality administrative personnel and dental assistants becomes quintessential to the long term success of a practice.
Unfortunately, the process of identifying quality help can be extremely time consuming as well. In fact, the difficulty and level of expertise required to adequately staff an office has resulted in the opening of several businesses that focus exclusively on matching prospective dental assistants to offices in major urban centres. For any potential candidate, it is extremely important to check their qualifications as well as conduct a reference check. Administrative personnel hold a great degree of responsibility, as their organization and awareness on the job is the first line of defence against a lawsuit.
Aside from causing damage to the office through negligence, the Canadian Dental Association (CDA) warns that dental assistants and administrative staff can also knowingly cause damage. Many dentists have listed employee theft as one of the leading causes of office losses.
While the risks and difficulties of hiring adequate staff for a dental practice can be viewed as a necessary evil, they also bring with them rising costs. As a dental practice expands its personnel to take on more clients, its profit margin is significantly reduced. In 2000, a study by the International Journal of Health Studies showed that Canadian dentists spent a total of $928 million on administration expenses. When all the admin expenses are factored in, the actual practice owner can only expect to receive 35% of total revenues in compensation.
Possible mitigating measures may incorporate the use of staffing agencies. These agencies can save countless hours in pre-screening employees and finding- suitable matches. They can also provide valuable training to employees such as CPR certification or radiography training. One of the best features of these agencies is that many will allow for a trial period, whereby an employee can be tested out for a short period of time to make sure they will fit with the organization. However, the best staffing practice remains holding on to current staff members and keeping them satisfied with their job. Tenured employees will know what is expected of them, they will be less likely to break an employer’s trust, and they will develop a sense of ownership and responsibility for the practice.
3. Job Satisfaction -A Highly Emotional Decision
In Geoff’s story at the beginning of this report, we identified one common factor that was shared by most dentists: that the decision to become a dentist is usually an emotional one. For many dentists such as Geoff, the profession of dentistry offers a promise that one day you will be able to protect people and ensure that those closest to them smile brighter and more often. For many others, their dedication to their profession is a way of ensuring that their family will always be well taken care of. Unfortunately, in today’s times we are seeing a trend of dentists fearing the response of their patients and sacrificing treasured family time to ensure the success of their practice. We have taken the time to analyze some of the main factors contributing to the high levels of work stress that is attributed to the dental profession.
Despite holding re atively strong job security and accumulating a high level of pay, dentists continue to cite extremely low levels of job satisfaction. While every dental practitioner will likely have their own life factors that are adding to their level of stress, there is a common denominator that appears to be present within most of the profession. Constant time constraints appear to be the number one cause of stress for dentists, as they also inhibit them from properly performing the tasks that bring the most reward. As a possible solution, we will examine how dental professionals can leverage their time in order to overcome this stress factor.
Firstly, it is important to identify the aspects of dental work that contribute most to job satisfaction levels. A case study by Harry and Rutter et. al, for the Journal of Medical Education, has shown that the most gratifying aspect of dental work is interaction with the patient and being able to help the patient to the point where they are satisfied. Not only is properly treating a patient beneficial in promoting the practice, but it provides a moral reward that reminds dentists that they are helping people, not just servicing teeth. Dentists who expressed the most opportunity for personalization with patients also provided the highest job satisfaction ratings.
Two of the five most common factors to stress are patients’ negative perception of the quality of service received and staffing problems. It is understandable that a lack of appreciation by the patient could cause extreme job stress, as pleasing the patient is the main reason why most dentists started practicing in the first place. The aforementioned difficulty with staff is statistically one of the most common sources of job stress for dental practitioners. Not only is it difficult to find qualified professionals to trust one’s practice to, but sometimes friction can arise between employer and employee, and absenteeism is a common problem.
The remaining three most common causes of job dissatisfaction are all interestingly enough, time related. Most dentists we spoke, interviewed and studied, expressed that working under constant pressures, keeping to appointed schedules, and conflicts between profit and ethics are the leading causes of stress in their life. Due to rising overhead expenses, dental practices need to schedule in clients on a tight timetable that does not leave a lot of time to focus on clients’ distinct needs and concerns. This work environment means that practitioners are placed in a position whereby they must sacrifice quality of care provided for quantity of patients serviced.
The relationship between profits and quality of service places many dentists in a desperate cycle, where in order to keep increasing profits they must continue sacrificing their own work satisfaction. Several studies (including the aforementioned one completed by the Journal of Occupational Psychology) have even proven that the described work environment when combined with the perpetual time constraints, can often lead to severe health problems for dentists.
Not surprisingly, these job stress factors extend far past the office. The aforementioned research has also shown that dentists can face detrimental effects from these stressors such as elevated levels of cardiovascular disease, alcoholism, drug abuse, divorce and suicide. The real irony of this comes into play when one considers that many dentists enter this field in order to provide a happy upbringing for their family.
After assessing all the above stress factors, it becomes clear that the key to increasing job satisfaction is to allot more time for patients and personal needs. However, due to increasing expenses and administrative needs, dentists across the country are finding themselves working longer and harder hours. One viable solution is for dentists. to delegate more of their administrative responsibilities to handpicked assistants they can trust. In order to cut down on the daily patient load, a dentist will have to ensure that his practice is generating revenue as efficiently as possible. Under many circumstances, this may involve investing revenues into passive income sources such as stocks, bonds or real-estate.
4. Exit Strategy- A Buyer’s Market
It seems that current students suited for the dental profession are confused about what dentistry may offer them and if it justifies the necessary school commitment. With the average 20-something now changing careers over 5 times in their lifetime, dentistry needs more of a commitment. Attention spans are shortening with the introduction of intense video games, cell phones, and technology, making commitment harder for people who would have been ideal for the position just a few short years ago.
In an online thread, an Australian student was looking to undertake a number of interviews to hopefully gain insight into pursuing a dental science program. In preparation for these interviews, he was looking for feedback from those reflecting on their reasons for wanting to study dentistry, and was hoping someone who had been through a similar experience could offer him some feedback or advice.
The biggest questions he had to answer for himself were, “Why dentistry?” and secondly, “Why dentistry over medicine?” Provided below is one of the most sincere replies he received:
“My personal motivation to pursue a career as a dentist comes from the very nature of the work. It’s diagnostic, technical, and surgical enough to be continually interesting. I realize that like any job, some aspects would become mundane, but with the human form, I feel like there would be enough patient variation to constantly pose a challenge. Coupled with this is the human aspect. I’m not an extremely outgoing “people person,” but I do enjoy communicating.”
Canada’s dental community is currently undergoing extreme changes that will affect the exit strategy of current dentists. Retiring and selling one’s practice has always been a careful process, and the decreasing number of potential buyers is sure to make this process even more difficult than in previous years.
Traditionally dentists have been known to retire at an earlier age than most other professions. Due to the high level of stress produced by the job and the generally high wages, dentists usually need to retire earlier and can afford to do so. However, in the upcoming years, Canada will be faced by the predicament of many baby-boomer dentists retiring within a narrow time frame. As over 30% of the country’s dentists are over the age of 50 already, the upcoming decades will see a large sum of dentists and dental workers going into retirement. Recent studies by the Canadian Dental Association (CDA) have revealed that this generation is expected to retire at an even earlier age, as “inheritances, safe investments, and a changing attitude towards full-time work will encourage this segment of professionals to sell or close their practices and enter into full or semi-retirement at an earlier age than the previous generation.”
In recent years, medical schools have seen their ranks filled to 50% or more by female students. While male dentists on average pursue their careers for an average of 35 years before retiring, CDA statistics show that female dentists will usually retire 15 years earlier than their male counterparts. As women only started entering the industry in numbers equal to men in the mid 1980s, the Journal of Dentistry (2008) stated that we should be feeling the consequences of these early retirements in the upcoming decade. This trend has a twofold effect, as not only will it further increase the amount of dentists selling their practice, it will also decrease the amount of part-time employees that are available, as well as increasing the numbers of dentists who decide to reduce their hours or accept part time work.
Dental journals and professional associations have forewarned the dental industry about a shortage of dentists for several years now. The Canadian government has reacted by increasing the accreditation standards for immigrating dentists that received their degrees from outside of Canada, which means that they will have to take additional coursework in order to be able to practice in Canada. Ironically, the demand for qualified dentists is at an all time high in Canada, as the population ages and proper oral hygiene continues to be increasingly accepted by the general population. With Canada’s growing need for geriatric dentistry, many new graduates will be able to quickly establish a client base and set up their own practice rather than purchasing an established office. Thereby, in the words of the CDA, “It becomes clear that there will likely be a shortage of full time dentists across Canada. This shortage may lead to lower selling prices for established practices when combined with normal death, disability and retirement rates.”
In terms of finding a solution, there are no creative strategies for overcoming the current market condition. The best course of action remains to follow traditional guidelines and maintain a healthy business while awaiting the sale. The following four steps are widely considered the most appropriate for efficiently and effectively selling a practice:
1) Plan 3-5 years in advance. Giving yourself plenty of time to find an adequate buyer and set yourself up for retirement will ensure that this crucial career stage is handled properly with ample due
diligence. During this time it is also important to access professional legal advice to ensure the
process is handled properly. Setting a deadline also ensures that you continuously take steps in reaching your goal, rather than constantly putting it off.
2) Enhancement of the practice and aesthetic details can greatly increase the value of a practice. Equipment renewal should only be considered if it is absolutely necessary to keep the practice running safely.
3) Choose an appropriate buyer. Sometimes it is not necessarily best to sell to the highest bidder. For example, if you accept the financing in order to make the deal go through, there is a chance the buyer will not be able to make their payments. Additionally, the whole sale process might be streamlined if the practice can be sold to an associate.
4) Access the professional help of an accountant and dental attorney. As the buyer and seller will
want to present the assets in different ways for tax purposes, it is important that a tax accountant handles the matter fairly and professionally. Also, in order to be protected from future legal repercussions, it is wise to seek the help of a dental attorney when finalizing the sale.
5. Retirement- Affording the Lifestyle Your Family Deserves
The sum of all these pains that are plaguing dentists is that the average practitioner will see a diminishing return on time invested towards his or her practice. Dentists that chose not to own their own practice might even be at an advantage in some cases, as selling a practice is becoming increasingly frustrating. As there are dwindling numbers of dental practitioners, many retiring dentists will be forced to sell their practice at a much lower price than desired. Similarly, as a practice’s number of patients continues to grow over time, more and more administrative expenses will amass and decrease the overall profit margin.
As most practice owners will seek to avoid this profit spiral, they will end up taking on more and more administrative responsibilities themselves, which means even more time will be dedicated to their practice instead of to their family.
According to research conducted by Woolhandler, Campbell and Himmelstein, the final drain on profits that most dental practitioners encounter is an extremely high tax bracket. The average annual income for a dentist in Canada, working full time, is $105, 800; hence, the average dentist will have a solid portion of their earnings fall into the highest provincial income tax bracket and the second highest federal bracket. For the average British Columbia dentist, this means that over 27% of profits are lost to federal and provincial taxes. Through investments such as RRSPs and TFSAs, many will be able to protect a part of their earnings from taxes. Unfortunately, RRSPs are fully taxable upon withdrawal while contributions to a TFSA are not tax deductible. Additionally, Canadians are only able to contribute $5000 a year to their TFSA, which essentially rules them out as a retirement financing vehicle.
Traditional investment strategies that have been embraced by dental practitioners in the past have also added to the grief of securing long-term financial security for practitioners and their families. The last few months of 2009 have seen even the most conservative investments plummet in value. Although all mutual funds have been devastated by the after-effects of the sub-prime credit crisis, the CDSPI (the investment arm of the CDA) has shown that even its low-risk investments are a gamble.
While dropping at rates comparable to the market average over the past year, most CDSPI funds show negative or marginally negative value increases even over a ten year time frame (see table below). This volatility is due to the fact most investment funds depend on the US stock exchanges, which have always been extremely susceptible to speculation. CDSPI’s conservative investment options share a common characteristic with most conservative mutual funds -their portfolio is made up largely of bonds. As seen from the graph below, the most steady (bond based) funds provided a minimal return on investment (about 4% over five years).
Alternative investment methods, such as investing in emerging markets or investment trusts, have also proven to be unreliable when retirement is at stake. Emerging markets will often require qualitative analysis due to a lack of relevant historical data. While this strategy has been known to discover diamonds in coal mines, it has also been prone to much higher, longer-term uncertainty than most investments, due to limited availability of information, political instability, and market limitations. Investment trusts, though a staple of the Canadian investing for many years, seem to have reached their peak. Due to recent government legislation, they will no longer be able to benefit from the same tax protection. Consequently, the Canadian Real Estate Investment Trust announced in its 2008 management discussion on operations and financial condition that it is expecting an 11% decrease on its return on investment.
Protect Yourself in Uncertain Times
As we all know, it can be stressful time in today’s busy world. Terrorism, natural disasters, bankruptcies, world hunger, global warming- the list of frightening events goes on. These are just a ew of the issues that bombard us every time we turn on the TV, open our newspaper, or log onto the nternet. Let’s face it: our world is changing at an astoundingly rapid pace. Technology is advancing a speeds we never could have imagined, and seismic shifts in global economic powers are happening overnight. In fact, we’re even walking faster than we used to.
An experiment conducted by Professor Wiseman in his book, Quirkology, revealed that in a sample of
32 cities, average walking speeds have increased by about ten per cent since 1994. Psychologists said the findings reflected the way that technology such as the internet and mobile phones had made people more impatient, leading them to cram more and more activities into a day.
The steepest acceleration was found in Asian “tiger” countries such as Hong Kong and Singapore, which have experienced particularly marked social and economic change. Pedestrians in these nations walk between 20 and 30 percent faster than they did in the early 1990s. Singapore has the quickest walkers in the world.
Such rapid change has brought along with it more uncertainty about our own lives, practices and financial situations. The more unpredictable the world becomes, the more we strive for a sense of control over our practice, our investments and our life.
As for, Geoff, he has recently been able to diversify his portfolio between well selected CDA advised investments and investments in private equity opportunities such as real estate investment firms. He currently took the initiative to protect his investment funds in five positive cash flow rental properties and believes this is helping secure his future should it become too much of a challenge to sell his practice. By diversifying his portfolio into real estate, Geoff has effectively eliminated the market uncertainties that plague other dentists while continuing to steadily increase his wealth.