The Value Proposition
Dentistry is getting battered and squeezed from every angle these days and not just from an economy that refuses to turn skyward. The explosion of corporate dental conglomerates, the introduction of the mid-level provider in some states, the reduction in reimbursement rates from dental insurance companies and, most importantly, the new spending mindset of the consumer patient continues to erode confidence among general dentists. Results of the 2012 third-quarter Economic Survey conducted by the American Dental Association (ADA) indicate that the dentists believe the negative economic trend they have been experiencing will continue for the remainder of 2012 and most likely into 2013.1
With dentists’ future growth tied to consumer spending and the laboratory’s future growth tied to the dental practice, it would appear that 2013 may not bring the hoped for turn-around so many in the industry would like to see despite signs that the general economy is making a slow economic recovery. The fundamental shift in consumer spending habits over the past 5 years may not change even as the economy shows signs of an upturn. According to survey indicators, 42.9% of dentists in the third-quarter of 2012 felt negative about the overall economic conditions in the dental practice, which is a downturn of seven percentage points from the same survey conducted in first quarter of 2011. The negative trends continue with 38.3% of general dentists reporting that they have little confidence in convincing patients to accept treatment protocols and 51.2% concerned that open appointment times will continue as consumers put off or delay treatment.
Since the onset of the recession, the negativity reported by general dentists has not changed significantly, which is an indicator that most general dentists have not adapted to a new consumer buying reality and are stubbornly relying on pre-recession business strategies to wait out the downturn and the return of consumer discretionary spending on dentistry. And that thinking may put many practices and laboratories, also sticking to inflexible business models, at significant risk for the future of their businesses.
There is money being spent by consumers today; it is just not on dentistry. Consider that in the first weekend of September 2012, Apple sold 5 million of its new iPhone 5 and sales revenues from the Apple app store passed $6.5 billion.2 Consumers also spent $3.6 billion on Internet deals presented to them via e-mail.3 It is the value proposition being offered that is capturing the discretionary dollar. Consumers have switched to a “pause and buy” value-based spending behavior unless the value of what is being purchased has a clear and compelling value advantage.
The challenge dentistry faces over the next years is to recognize that a return to the past, when consumers felt confident about spending those extra dollars on elective dentistry, most likely will not happen any time soon, if ever. Today, treatment protocols must meet the demands of an impatient, immediate gratification consumer base wanting a solution to a real problem and a solution that will have an immediate positive effect. They also expect their healthcare providers to be their partners rather than simply treatment providers, and they want options in treatment care that fit their financial budget.
There remains extraordinary opportunity in dentistry today despite the negative perceptions. And those in the profession who have adapted their business strategies to meet the demands of the “new normal” will continue building a strong foundation for dentistry’s future.
1. Dentists’ Economic Confidence Survey (DECS). ADA. Available at: http://www.ada.org/1443.aspx. Updated October, 2012. Accessed November 7, 2012.
2. Fox J. Apple Reveals Impressive Sales and Usage Statistics. IGN. Available at: http://www.ign.com/articles/2012/10/23/apple-reveals-impressive-sales-and-usage-statistics. Updated October 23, 2012. Accessed November 6, 2012.
3. Consumers increase spending on online deals. infofree.com. Available at: http://www.infofree.com/consumers-increase-spending-on-online-deals/. Updated September 24, 2012. Accessed November 6, 2012.