The U.S. Economy has had 13 recessions since World War II.
The Great Recession went from December 2007 to June 2009. Real GDP contracted about 4.2%.
In 2000, at APM we created a “Dental Dow.” This collection of 36 mature area practices. We factored out variables such as major expansions, loss of doctor(s) or any other major change. A sample of 36 is by no means definitive but it is at least a reasonable frame of reference. If you were able to get on the telephone and talk to 36 of your friends to tell you whether their practices are up, down or sideway, we think that by the end of the conversations, you’d have a pretty good feel for what’s going on. Plus, the Dow stats have been pretty consistent with that of our extensive client base.
Please see the table below.
In general, Dentistry was less affected than other sectors of the economy. The years between 2008 and 2011 were not great growth years but they weren’t that bad either. Only 2009 saw a decline in collections (-0.4%). Most years saw an increase in patient flow (which we measure by total patient exams).
Over the last 20 years, we’ve found that generally practices have grown by 3% to 4% in Production and a little less than that in Collections (due to PPOs increasingly digging in over the years – for example, in 2008, the Dow practices collected 90%.. the Dow now is just under 80%.
LESSONS FROM THE RECESSION:
The worst way to deal with recession is to make it a self-fulfilling prophecy. Base all your decisions on what is going on inside your practice – not in the Wall Street Journal! In 2008, I remember dentists asking me if they should cut back on staff or hours because of what they read in the papers even though their practices were plenty busy.
For example, a practice grows through its hygiene capacity. Sometimes a Doctor, feeling pessimistic, will not fully replace hygiene time due to a change in personnel or other factor (e.g., maternity leave). Less check-ups mean less exams and practice production will decline proportionately…thus creating the outcome the Doctor was worried about.
We are fortunate to be in such a resilient industry. Patients really do value their dental health. Although we certainly have complaints about dental insurance, Delta, etc., there is no question that insurance is a stabilizing factor and continues to help bring patients to the dentist.*
That doesn’t mean that you have to take everything the PPOs dish! We’ve found practices that have had little or no PPO participation did fine during the recession as well – the patients still had their out of network insurance benefits.
Post COVID, we’ve never seen so many practices generally close to maximum capacity. In 2019, our Dow showed practice production was up 10% compared to 2018. The great majority of practices fully recovered (and then some) post COVID. The biggest hitch has been able to have adequate staff, particularly clinical staff (e.g., hygienists) to keep your active patient base active and cared for.