Looking Forward – Looking Back

Looking Forward – Looking Back

Health Fund Updates

Posted: April 20, 2016

Looking Forward – Looking Back

Many dentists enter the profession with a firm conviction that they had a clear idea of the career path they had chosen and the rewards they could expect.

For older dentists that vision was fulfilled. A rewarding and financially sound career with security and a comfortable retirement ahead.

For current dentists it is a different situation.  Whilst the care and treatment of patients remains rewarding the long-term future security and comfortable retirement are things to aspire to but there is no certainty.

The reasons for choosing dentistry as a career have also become clouded as historically primary care was the driver for most dentists but over the past 15 years dentistry has been seen by many as mainly a guaranteed path for wealth creation.

This change in motivation has had a big influence on the industry and to an extent changed the public perception of a dentist for a dedicated and trusted health professional to business person practicing dentistry.

That changed perception has been entrenched by the ever rising costs of dentistry driven by competition to have a market “edge” in latest technology and access to new treatment options to offer patients.

On a stand alone basis the technology advance factor would not have consolidated the changed perception of dentists but add on the evolution of Health Funds and the entry of corporate ownership of dental practices and the image of public perception of dentistry changed .

Additionally the Practice Owner dentists became aware that the technology cost changes had directly affected their profit margins yet they were still paying employee dentists the same commission rates as before the added costs. This led to another major change as business owners tried to educate their employee dentists that the margin to pay 40% commission rates no longer existed and adjusted the rate to a 35% base commission plus productivity incentives.

The next major change came with the Government driven perception that there was a shortage of dentists that allowed practices to inflate fees. They decided to introduce higher competition into dentistry to force down dental costs. They opened the door for overseas dentists and created the climate for some universities to offer high fee dental courses and open new dental schools.  The result of those initiatives is the emerging chronic oversupply of dentists which will result in new and ongoing changes to dentistry in Australia.

Dentistry has never seen such a convergence of change factors in such a constrained time frame.

The result is a new dental industry that is foreign to older dentists many of whom are looking eagerly to their retirement.

For middle aged and younger dentists the industry is now competitive and dynamic. Dentists compete to full time positions and at lower commission rates. Many who cannot find full time employment now work part time in multiple practices and are sometime being exploited.

While many dentists now complain they were never taught how to run a profitable dental clinic. The truth is that there was no such need as the industry was so secure that any average dentist could succeed.

Dental Practice owners today are genuine small business owners competing against multiple corporate owned entities and profit driven Health Funds. They now face issues like Health Fund major advertising campaigns stating that patients should come to Health Fund preferred provider clinics to get better care at a lower cost – then guarantee that outcome by reducing the members rebate claims for treatment at independent dental clinics.

Health Funds are also promoting a total care approach to their members claiming that they can provide best care via their associated health entities. They are focused on creating the public image of dentistry to dentists being a service provider/technician rather than a Health professional with specialised knowledge.

Corporates are competing with large financial backing advantages that enables them to establish in high profile locations with modern and attractive clinics. They advertise quality care over extended hours and a one stop dental solution that meets all of a patient’s needs.

With all these changes the individual dentist is now engaged in a different industry.

Employee dentists with permanent employment are now working for lower commissions and in some cases working over weekends. Part time dentists now settle for one or two days’ work in quieter clinics with reduced earning potential. Finally, some are undertaking Locum work that entails family disruptions and added work pressures whilst others are choosing to open low cost basic dental practices in established marketplaces in the hope of earning a reasonable income and still being able to work in their chosen profession.

Practice owner dentists are now evolving into true small business operators. They are having to learn how to actively compete with Corporates and Health Funds. How to market their practices against sophisticated marketing campaigns and the direct interference in their practice by Health Funds actively trying to divert their patients away to Health Fund clinics.

They are now focused on cost containment and rate of return on every dollar they spend. The YTD balance sheet is now of prime importance as they strive to maintain a profit margin that allows wealth creation at the same time as margins for purchase of the ever changing new technology products that they need to stay a modern and full service dental clinic.

The entry point for new dentists to become Practice Owners is becoming higher due to the combined pressures of education debts and the increased cost of housing. Additional factors are that traditional financiers   are taking a more conservative lending approach as dental bankruptcies increase and practice profitability decreases.

It is not a doom and gloom future- it is a changed future.

Dentistry will always be needed and people who can afford it will still prefer to have a personal trusting relationship with their dentist. The challenge will be for the dentist clinic owner to acquire the many new skills it now takes to become a business success.

It is also essential that all dentists become pro-active in promoting their professional skills and expertise to the public and that they maintain a high standard of ethics and behaviour that engenders respect and trust.

It is up to dentists to make sure that the future of dentistry is driven by independent  dentists and not by profit driven corporate entities and Health Funds.

Mervin Saultry

Dental Innovations. www.dentalinnovations.com.au

Tel: 03 98214990

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