Recession-Proofing Your Dental Practice

Within the ever-changing landscape of healthcare economics, dental practices face unique challenges when economic indicators begin to turn south. While dental care remains essential (and is generally inelastic compared to other industries), patient priorities shift during financial uncertainty. This can often result in postponed appointments, treatment plan hesitations, and even completely unpaid bills.

The good news?

Well, if you batten down the hatches properly and approach turbulent times with strategic planning and financial savvy, your practice can not only weather economic storms but potentially emerge stronger.

Because remember, in a volatile economy cash flow is king. And if you’re feeling the crunch from reduced collections, declining case acceptance, and increasing overhead, you can follow the lead of smart practices that are navigating economic uncertainty.

KEY TAKEAWAYS

• While daunting, turbulent economic cycles can be seen as opportunities for auditing your practice’s operations.
• Follow the pareto principle for triaging practice KPI downturns: 80% of your issues can be addressed by 20% of the causes. In most cases, addressing RCM gaps is a good place to start.
• Though counter-intuitive, investing into practice technology will yield a higher ROI than trying to optimize other overhead costs

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The Problem: Understanding the Financial Impact of Recessions on Dental Practices

When economic uncertainty looms, people tend to reprioritize their spending. A lot of these people will be your patients. While they might not abandon oral care entirely, many from your patient base will:

• Delay elective procedures and cosmetic treatments
• Opt for basic preventative care over comprehensive treatment plans
• Request payment arrangements more frequently
• Become more price-sensitive and insurance-conscious

For practices, these expected behavioral shifts translate to real financial and operational challenges. Appointment schedules can fluctuate and become inconsistent, case acceptance rates can decline, and (most importantly) accounts receivable (A/R) balances can grow and stagnate. 

At this point, it’s time to monitor the KPIs that define your practice, as metrics like production-to-collection ratio, no-show rates, and treatment acceptance percentages, will all be core indicators of your practice’s wellbeing.

The Solution: Optimizing Your Main Financial Lifelines

When economic headwinds blow, efficient revenue cycle management becomes your practice's strongest anchor. After all, it doesn’t matter how high your case acceptance rate is if production doesn’t turn into collected revenue. Here's how to strengthen this financial foundation:

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Transparent Financial Communication

It all starts from your practice expectations and how they are communicated during a treatment plan presentation. Patients appreciate clarity when money is tight, so consider implementing:

• Clear, jargon-free financial policies shared before treatment
• Treatment presentations that include detailed cost breakdowns
• Multiple communication channels for financial discussions (in-person, email, SMS, patient portal)

This last part is incredibly important because every patient has a preference for how they want to communicate, and opening the right channels for your patient base is necessary for covering your patient base.

Smart Cost Management

Cost-cutting doesn't have to mean compromising care quality. It also doesn’t have to mean resource austerity for your staff.  Look for expenses that don't directly impact the patient or staff experience:

• Audit utility usage and implement energy-saving measures
• Review software subscriptions and eliminate redundant or unused tools
• Identify high ROI tools (billing, imaging, PMS, etc) that maximize your staff output
• Consider sharing certain specialty equipment with neighboring practices
• Evaluate lab costs and explore alternatives for non-complex cases
• Optimize supply ordering to take advantage of bulk discounts while avoiding excess inventory

Fee Schedule Evaluation

While across-the-board fee increases will likely meet resistance during economic uncertainty, there are strategic adjustments you can make:

• Review fee-to-production ratios across all common procedure codes
• Identify underpriced services compared to regional UCR rates
• Consider modest increases on frequently performed procedures
• Maintain competitive pricing on "shopable" services (exams, cleanings, etc). Even consider bundling some of these services for patients
• Adjust lab-dependent fees based on actual cost increases

Optimizing Payment Solutions

Convenient payment options can mean the difference between paying a bill on time and waiting several months. But nowadays even “convenient” doesn’t cut it–you need to offer preferred payment methods for each individual patient. This means:

• Offering as many options as possible for your patient demographics. Some people still want to get a physical statement (preferably with a QR code for quick payment)
• Consider third-party financing partnerships with promotional interest-free periods
• Implement membership plans for uninsured or under-insured patients, creating predictable revenue while offering patients valuable savings
• Provide modest discounts for prepayment of larger treatment plans to improve immediate cash flow. These can be rolled into your membership program.
• Offer tiered payment plans based on treatment cost or procedure type

For this last point, remember that even after accepting treatment, having an activated payment plan ensures that patient portions will be collected at predictable cadence. This is essential for your cash flow situation.

Automating Your Billing Processes

Manual billing processes consume valuable staff time and introduce costly delays and errors (which further compound those costs). Modern RCM software solutions deliver significant advantages:

• Automated patient statements with consistent delivery timing and convenient payment methods
• Digital payment options (patient portals, text-to-pay) for faster collections
• Insurance verification tools that reduce claim rejections
• Analytics dashboards to identify billing bottlenecks and streamlining opportunities

Proactive A/R Management

With any economic uncertainty your carried patient accounts receivable balance should deserve heightened attention. Every past-due patient will be weighing the decision of whether or not to pay a bill every day, and scaled up to your entire patient base, these decisions can have a dire impact on practice financial health.

We’ve covered this topic extensively in previous A/R management guides, but some key best practices to consider here are:

• Segment your A/R by age and amount to prioritize collection efforts
• Conduct reporting campaigns to work large amounts of A/R over designated periods of time
• Test different billing modalities, frequencies, and language styles across a gradient of patient cohorts.
• Train team members on compassionate but effective collection conversations
• Consider early-payment incentives for accounts approaching 60+ days
• Review aging reports weekly rather than monthly (or in an ad hoc manner)

The Takeaway

Economic fluctuations are inevitable, but their impact on your practice isn't predetermined. In fact, they can be viewed as opportunities to dial in your operations, cut costs, and improve your patient experience.

To position your practice for long-term success, you will need to know what to invest your resources into.

Remember that technology can act as a force multiplier for maximizing your staff output. When evaluating technology investments during a turbulent economic cycle, calculate both hard and soft ROI factors. While initial costs might seem daunting, the right technology often pays for itself through improved collections, reduced administrative time, and enhanced patient retention.

By implementing strategic financial management practices your practice can create resilience and robustness that will allow you to operate smoothly in both challenging and prosperous times.

Survive, thrive, and enjoy the crazy ride.

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