Is this the year we return to normal, or a new normal?
- For dental practices to thrive in this type of market, business owners need to refocus their efforts on new patient acquisition.
- Making your staff more efficient through automated processes is a key cost-saving driver.
- Business owners should consider raising fees 4-6% in 2024.
This time last year, with inflation climbing, interest rates climbing and the news buzzing with talk of a deeper recession, most prognosticators painted a pessimistic view of 2023.
Thankfully, they missed. The stock market remained volatile but has largely righted itself. Inflation, while sticky, has started to ease, and the Fed’s monetary tightening has the economy on course for a soft landing.
With encouraging economic signs starting to emerge, is the dental industry on track to get back to the good ole days of 2019, or maybe even the heady days of 2021?
Judson Crawford, CPA and partner, says he’s once again “cautiously optimistic” that both the economy and the industry will keep improving in 2024, but the dental industry may continue to face challenges, especially in an election year.
“I am not overly concerned about the U.S. economy,” says Judson. “We’ve already overcome much of the headwinds, and I think 2024 will be about the American people adjusting to a more normal economy, or more accurately, a new normal.”
So, what does this new normal economy look like? While Judson sees both interest rates and inflation easing downward in 2024, he says we shouldn’t expect a return to the historically low rates we enjoyed pre-pandemic.
“We were abnormal for a long time, then the pandemic came along and made things even more abnormal,” says Judson. “What people need to remember is that a little bit of inflation is good, and we need interest rates to make money. We’re at a place now where we’re historically not that far from normal.”
For dental practices to thrive in this type of market, Judson says dentists need to get back to systematically targeting the elements of their business they focused on before the world went crazy, namely new patient acquisition.
NEW PATIENT AQUISITION
New patient acquisition is the name of the game in 2024, according to Judson, and that means leaning into the marketing efforts that many practices moved away from during and after 2020.
“The competition for patients is back at an all-time high, but there are still some dentists that haven’t re-engaged their marketing,” says Judson. “Up until now, it’s just been easy.”
While digital marketing, social media, marketing to current patients, and marketing to referral doctors is the baseline, Judson says the key to marketing to new patients is to differentiate your practice from the competition.
“A lot of practices push clean teeth and great smiles, but that’s table stakes, not a differentiator,” says Judson. “Culture is the biggest differentiator, meaning the company purpose, values, what they stand for. Practices that define, live and market their culture are going to win more new patients.”
For practices that don’t have a clearly defined culture, Judson says the time is now to define it and show your staff you are committed to it.
He recommends doing the simple things that show you are invested in them. Give staff a half day off and take them out to get manicures and pedicures. Bring lunch and a speaker. Turn this time into a casual working session where your staff is empowered to help create and define the company culture.
“When your staff feels like there’s a tangible culture and a defined purpose, especially if they had a hand in shaping it, they will start to live it, tell their friends about it, talk to patients about it,” says Judson. “Your people become your biggest brand ambassadors, and that’s the best kind of marketing.”
OPTIMIZE INCOME GROWTH
With the industry entering a period where dentists can no longer count on 10% productivity growth, Judson recommends focusing on lowering overhead to increase profitability.
“Practices may struggle in the near term to grow that topline revenue,” says Judson. “We have to keep our eye on overhead, looking at everything from staffing costs to supply costs to fixed costs that you may have recurring and perhaps you don’t need.”
Investing in technology that will streamline operations can also have a huge impact on optimizing operations. Judson says practices that have not added patient-centric tech like online scheduling, text reminders, email and text availability updates, and automated follow-ups are behind the curve on what people typically expect.
“Making your staff more efficient through automated processes is a key cost-saving driver and will improve the patient experience,” says Judson.” In a time when growth might be a bit slow, every little bit helps with your net income.”
RAISE FEES (AGAIN)
Another way to offset tepid topline revenue growth is to raise fees, a move that Judson sees as absolutely necessary, even as inflation ticks lower.
“I believe that at some point in 2024, dentists still need to raise their fees, and I’m targeting 4-6%,” says Judson. “We’re still at a point where patients accept higher costs, so now is the time to take advantage of that.”
“I’ve never had a client who raised fees call me back and say, boy, that was a big mistake,” added Judson.
The key to navigating a soft market in 2024 comes down to focusing on the things you can control, starting with being aggressive in optimizing your business.
“Practice owners have to keep pushing to cut costs, increase efficiency, and turn that marketing spigot back on to capture new patients,” says Judson. “In the end, you can’t control the market, who gets elected president or what war is happening overseas. But you can control your approach to maximizing your business.”