Now that the economy is officially in a recession, is your practice feeling the slowdown?
- Enron, the seventh largest company in the United States goes bankrupt.
- AT&T is cutting 10,000 jobs—12.5% of its work force.
- K-Mart files for Chapter 11—the largest retail bankruptcy ever.
- Argentina is on the verge of bankruptcy that may affect South America.
- Ford to lay off 20,000 workers.
- Merril Lynch loses 1.7 billion in fourth quarter 2001—cuts 9,000 jobs.
- Exxon Mobil profits dropped 49% in the fourth quarter.
- Nokia profit drops 63% in the fourth quarter.
- Economic Research Institute’s leading index fell to 114.9 in December ending 2 months of gains.
- Japan continues to sink into deeper recession.
- US industrial production fell for the 15th month in a row, the worst record since WWII.
- JDS Uniphase’s sales dive 69% in the fourth quarter.
- Dupont posted a huge 74% loss in profits.
With convincing signs arriving almost daily, it’s time to “prepare for the worst and hope for the best.”
While no one can predict the exact effect a recession will have on a certain practice, I’ve developed a 10-step plan to be prepared in case a downturn occurs, and have tested it since the 1973-1974 recession. You might consider a similar approach.
MINE THE DIAMONDS IN YOUR PRACTICE
There is an old adage in marketing that states, “Your current customers (patients) are your best customers.” Why? Because they will tend to spend more on your services than new patients, as a result of the trust they have built for you as their dentist. So, why not offer your current patients the benefits of the latest techniques and technologies?
REVISIT OLD FRIENDS
As a result of the informal survey I did during my Beating Bad Breath seminars, I found that many dentists do not do new, complete examinations on their regular patients on a periodic basis; in fact, many rely on their hygienists to “find” the dental treatment that the patient needs. Let’s face it—by far the majority of dentistry we do today is dentistry that was done before: a filling breaks down, the tooth re-decays and it needs a crown; we find periodontal disease that is not responding to conventional treatments; or, we learn some new techniques that could benefit our current patients.
RAISE YOUR FEES
This point will probably be the most baffling to readers. How do I know? Because I raised this issue in my seminar every time and received many strong objections. Doctors would tell me, “You can do it because you live in a high income area,” or “We can’t raise our fees, the insurance company will reject more of our cases.” After talking at length with some of these doctors, my sense is that many of us believe that our fees are too high already, or that we are dependent on insurance companies for case acceptance.
PEOPLE WANT THE BEST AND ARE WILLING TO PAY FOR IT
This is one of the easiest concepts to understand, but for many dentists, one of the hardest to put into practice. In fact, because we already know that people will spend thousands of dollars to improve their smile, why do we believe that some won’t spend money to optimally improve their oral health?
Since 1979, when I first heard L.D. Pankey, I have done class V fillings. Every restoration I do is either gold or porcelain or both; we call them permanent restorations to distinguish them from fillings. Why? Because I believe that these are the best ways to restore teeth. I have only these in my mouth. Why would I do less for a patient? Yet, even though insurance does not cover gold onlays or porcelain inlays, our acceptance rate is near 100%.
MORE OR LESS INSURANCE?
Two of the most common situations that cause us as dentists to panic are a slowdown in the number of new patients and holes in the schedule. Our reaction at times like these is to sign up for more plans that promise to bring patients into our offices, albeit at a reduced rate. Of course, the more patients we see at reduced rates, the more regular patients we must see, or the higher our fees must be on nonplan patients to make up for the difference. In fact, it’s a pyramid scheme that is hard to get out of. It’s like the stock market: if you lose 20% on an investment (charge 20% less), you must make 50% more to make up for that 20% (work 50% harder or charge 50% more). What to do?
As far as I’m concerned, this recent development is as important as the rotary drill for the advancement of our profession. Do you know why most people can afford to buy automobiles, homes, furniture, etc? It’s because of the advent of credit. Credit allows the average person who wants something to spread payments out in an affordable manner. I’m pleased to say that dentistry now has this option with dental financing companies.
FIRE YOUR STAFF. . .UP!
One of the biggest mistakes that all businesses make at the onset of a slowdown is to see their employees as liabilities instead of assets. Of course, as an employer, this is easy to do because salaries are the single largest overhead cost in any business. But I’m going to suggest another approach based on my experience in management and consulting.
Without a doubt, this is the most important avenue of bringing in new patients in a recession. The concept works like this: Find complementary but different businesses than yours and enlist them in a win-win situation for increasing new clients for both businesses. Why is this important? Because instead of the usual ways of external marketing, where someone may see your direct mail piece or advertisement or newsletter, affinity marketing relies on “the transference of trust” between two businesses. If you, as a professional or business owner, recommend another business in your area to your patients, then those patients will become customers of the other business. It’s simply a different approach that you already take when someone asks for a referral to a physician.
NEW PATIENTS: INTERNAL MARKETING
The truth is that in periods when jobs are being lost, income is falling, and discretionary spending is declining, many people hesitate to do anything that changes their expenses—like see a new dentist. That is why up until now, I have emphasized ways to keep production up without increasing marketing expenses. But I have found a number of ways to entice patients to our office in all types of economic times. Affinity marketing, as I’ve already mentioned, is one of the best.
This particular topic is last because I believe it is the one over which we have the least amount of control. Yes, if you open the newspaper every day you can find one company or another that is laying off employees, or closing a new plant, or not going ahead with expansion plans. But, if you decide to keep your team intact and weather this storm with them, all the other expenses—laboratory, supplies, utilities, etc—have a very small impact on your bottom line.
If you draw up a plan and then follow some of the guidelines laid out here for slow economic times, you will see that the answer to your busy-ness problem lies in better service and more complete dentistry to those you currently count as patients and those new patients you will receive from affinity marketing or internal marketing techniques. While none of us can predict how long the current recession will last, simply being prepared will help you do better dentistry, with less worry and more financial security. And, best of all, by utilizing this approach, when the country emerges from this recession, you will have established the basis for a greater expansion of your practice in the next economic upswing.
Dr. Miller maintains a practice in Alexandria, Va. He is the author of the book Beating Bad Breath, an international lecturer on marketing and profit centers in the dental office, a consultant, and a pioneer in the use of direct marketing for dental practices. He can be reached at www.recession-proof.com, his website devoted to helping dentists thrive in tough economic times.