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Foreward: Grim news about the global financial crisis dominates headlines. Consumer confidence in November was at its lowest point in history. Many can't recall a recession so severe and economists say related uncertainties about its consequences serve to prolong the downturn.

Whereas some dentists have managed market fluctuations before, others' practice experience has been characterized by steady and predictable growth. Both camps are concerned about what lies ahead.

This ADA News series will feature first-hand reports about what dentists from around the country are being confronted with and how they are navigating through difficult times. It will draw on the gamut of available knowledge and expertise to inform and advise dentists on how to help patients maintain good oral health, instill suitable practice management strategies and maybe even find the upside of a downturn.

	Read more from this series

By Arlene Furlong

Divergent predictions about the fate of the U.S. economy aside, dentists no longer have to depend on anecdotal evidence to determine how weakening economic conditions are affecting their peers and their profession.

Through the ADA Survey of Economic Confidence of Dentists, the ADA is collecting objective data for dissemination to members in something closer to real-time than has ever been possible before. Integral to the Association's mission to advocate for members, ADA leaders expect its findings to produce substantive information key in forming recommendations that will help dentists in their practices.

"This survey will be an indispensable tool in developing an accurate picture of what's happening in dentistry and in developing ADA resources to assist our members," said Dr. John Findley, ADA president. "We want to know how the economy is affecting dentists so we can be nimble in developing strategies to respond."

Informed by input from members of the Council on Dental Practice, the survey was conducted by the Survey Center of the ADA Health Policy Resource Center for the first time Dec. 8-16 and will be accomplished quarterly. An Internet survey, it inquires about 10 practice benchmarks overall and broken out by region; dental specialty, full-or part-time status; age and gender. It finishes with an open-ended question about respondent's practice challenges and strategies.

"We all know the economy is bad, but that information alone will not be of any help to us in managing our practices," said Dr. Frank Graham, council chair. "Our goal is to permit economic forecasting that will help members in managing their practices."

To gather information on successful strategies for coping in whatever the current economic environment may be, CDP at its November 2008 meeting created a committee on economic issues.

The committee is charged with analyzing models both within and outside of dentistry to find workable practice strategies and to share them with ADA members.

The first meeting of the group will convene in March.

The economy gets an F

Wayne Wendling, Ph.D., HPRC managing vice president, prefaced his Jan. 26 presentation to president-elects at ADA Headquarters in Chicago by saying, "Please don't shoot the messenger." Then he gave the economic environment an "F." He based his grading on four factors:

• Foreclosures—initial regional impact and broader impact on housing wealth;
• Food and fuel inflation and deflation—resulting volatility;
• Financial—loss of wealth and crisis of confidence;
• Fear and unemployment—uncertainty.

"Until there is stabilization of employment, we are in for some difficult times," said Dr. Wendling, while also acknowledging that the dental profession and health care overall have been somewhat recession-proof in the past. "With private insurance and patient out-of-pocket payments the primary source of dental expenditures, fear and unemployment are difficult conditions for dental expenditures. And that's where we are right now."

Although dental incomes didn't show a distinct downward trend in the third quarter of 2008, stronger regional effects were noted through the same period. Four states—California, Nevada, Florida and Arizona—carried 42 percent of all foreclosures. Since then, the country has seen an upward drift in foreclosures nationwide. Real estate values are still declining and the bad derivatives are still out there. Economists agree the country hasn't seen the effects of increasing unemployment yet. At 7.2 percent today, the U.S. Bureau of Labor Statistics estimates place unemployment at 9 percent by the end of 2009.

For perspective, today's downturn is reminiscent of 1979-1984 in terms of financial loss, crisis of confidence and volatility, according to Dr. Wendling. But how the economy will revitalize within an international environment when there are 4 million fewer manufacturing jobs now than 10 years ago is a question for economists worldwide.

Don House, Ph.D., a researcher and consultant in health economics has been involved with dental surveys and research for more than 25 years and currently serves on the Dental Economics Advisory Group, which reports to the ADA Board of Trustees on dental economic issues.

Dr. House predicts that health care, including dentistry, will be less affected by the recession than many sectors sensitive to recessionary pressures, such as auto, restaurant and high-end retail.

"Dentistry will be affected somewhat, but we will not experience significant decreases in real dental expenditure," he said. "Inflationary pressures will be significantly lessened, but patient visits should be only moderately affected, on average. However, some parts of the country will be significantly affected by employee layoffs, which are industry specific."

Dr. House says that although many dentists won't want to take business risks at this time, others may be in the position to take advantage of very low interest rates for large equipment loans, relocating or buying a new building.

Survey results

A balanced distribution of responses characterized practice experience reported in the ADA Survey of Economic Confidence of Dentists during the third quarter of 2008 with some stronger regional influences. The survey, to be repeated quarterly, drew 1,749 respondents and permits comparison across regions. Examples:

• 51 percent of dentists reported declining incomes and 45 percent said their incomes were the same or increased;
• 53 percent of dentists reported an increase in open appointment time and 43 percent said open appointment time was about the same or decreased;
• 45 percent of dentists said treatment acceptance rates were lower and 51 percent said they were about the same or higher;
• 45 percent of dentists said gross billings were lower and 51 percent said they were about the same or higher;
• 47 percent of dentists said they were not at all confident about future gross billings and 50 percent said they were somewhat confident or very confident about future gross billings.

Regional breakdowns revealed greater disparities in some areas of interest due to geographic weaknesses. For example:

• The largest percentages of dentists reporting declining incomes reside in the South Atlantic and Mountain regions, 59 and 57 percent respectively; 37 percent of respondents from the South Atlantic and 36 percent of dentists in the Mountain region reported incomes that stayed the same or increased;
• Increases in open appointment time were reported by 59 percent of dentists in the South Atlantic, 56 percent of dentists in New England and 54 percent of dentists in the Middle Atlantic region.

"Before the holidays, geographic location seemed important in determining which dentists were feeling the affects of the recession," said Dr. James Willey, CDP director. "But it keeps changing. Now everyone is beginning to perceive it; we're starting to see a more uniform reaction." (A new ADA survey will be conducted in early February.)

Major themes in terms of challenges and strategies emerged from responses to the open-ended question that asked dentists: "What is the biggest challenge facing your practice and what are you doing to overcome it?"

Dr. Wendling identified common challenges that have emerged from the survey, and strategies dentists are using to cope.

Challenges

• Existing patients, because of economic uncertainty and job loss, are very reluctant to accept treatment plans. Patients are reluctant to use their discretionary dollars for dental services, except for acute care.
• Reimbursement issues with insurance carriers/managed care plans are increasing.
• New patient volumes are down.

Strategies

• Dentists are watching expenses closely and trying to manage their overhead.
• Dentists are initiating both internal marketing —more frequent calls to patients and asking for referrals from patients —and external marketing, where permitted.
• Dentists are spending more time educating patients about oral health and the cost of delayed treatment.

Some 47 percent of survey respondents answered the open-ended question—"What is the biggest challenge facing your practice and what are you doing to overcome it?" Responses included:

• We work four days each week but are really only booking two to three days per week and those days aren't even full;
• Patients are canceling appointments due to loss of insurance resulting from layoffs;
• We are really busy and my biggest challenge is scheduling.

In a separate dental practice survey, conducted by FTN Midwest Securities Corp., 9 percent of survey respondents had shorter wait times for dentist appointments and 2 percent had shorter wait times for hygienist appointments in January 2009 than in January 2008. FTN contacted 125 dental practices in 25 cities to discuss wait times.

FTN findings suggest demand for dental procedures stabilized over the past three months, with January survey results consistent with November and December results and representing an improvement from October.

"Shorter wait times suggest demand for dental treatments is slowing," said Ed Snyder, FTN managing director and senior research analyst. "While January wait times were down, results from our survey suggest demand for dental procedures has stabilized over the last three months. January survey results were consistent with November and December results and represented an improvement from October."

Dr. Jeff Sameroff, CDP member, says even though the economy is affecting most practices, some dentists may actually be a bit busier now as patients rush to get treatment done while they know they still have insurance.

"People are afraid of what will happen with their jobs; afraid of how their choices will effect their finances," said Dr. Sameroff. In practice for some 32 years, Dr. Sameroff says despite ups and downs in the past, he can't remember it being this bad. He's already noticing more open appointments, more cancelled appointments, more no-shows and decreasing treatment acceptance. "People are very reluctant to take money out of their pockets."

The unemployment rate is 7.2 percent today and projected at 9 percent by the end of 2009. The Kaiser Commission on Medicaid and the Uninsured estimates that an increase in unemployment from 4.6 percent, which was the pre-recession rate in December 2007, to 7 percent translates to 5.9 million people losing employer-based health insurance coverage.

Early concerns

Dentists fear that reprioritization of household expenditures could lead to precipitous declines in the numbers of patients seeking regular dental care. And how likely is it that many will postpone treatment or seek inexpensive temporary amelioration rather than accept more expensive treatment plans?

"There are certain things patients will give up and certain things they won't. The ADA membership believes one thing people shouldn't give up on is their oral health," noted Dr. Mark Ritz, a member of the CDP Committee on Economic Issues and vice chair of the council. The group will have its first meeting in February.

"We have to learn what we have control over and what we don't," said Dr. Sameroff. "We don't have control over what the market returns and interest rates will be, but we do have control over our savings and expenses, how we purchase our supplies." He says dentists will face moral or ethical dilemmas regarding their patients and staff.

"How will you treat a patient who has been coming to your practice for 35 years and suddenly can't afford a needed root canal? What about staff? The income an employee gets from your practice may be the only income that family has."

"Patients may be waiting for the economy to get a little better, just like our members," said Dr. Willey. "The ADA is gathering regional practice information in order to help members anticipate and make plans to weather the current economic downturn."