Are you ready for the dental recession?

This one pains me to discuss but I think we are all better off facing facts and figuring out what they mean to us and to our business.

There is a major recession on in the US now. In some areas it hasn't hit yet. Like where I live and work, outside Washington DC, we are fueled by ever-growing federal jobs and the recession isn't visible. But in other areas such as Michigan or Ohio, and now Las Vegas and Los Angeles, the recession is started to bite or has been biting for a time already.

There is also a trend that is barely visible in the US but quite evident in the UK, and that is a trend towards corporate dentistry. And I think the recession and the trends towards corporate dentistry are tied together.

Let's first face facts. The past five years or so were unusual. The US Federal Reserve dropped interest rates to near zero and made credit abundantly available. The availability of very easy credit was intentional. The Fed used it as a way to escape a possible deflationary episode that was threatening due to the stock market crash in 2000.

People don't put cheap money and credit together with the housing price appreciation but housing prices went up up up as a result of this intentional policy. People would borrow money for expensive dentistry.  Patients felt rich because their house had gone up another 20%. Easy credit and the "wealth effect" made people in a mood to spend money on discretionary dentistry.

I can't tell you how many people I spoke to who borrowed on their house to get expensive dentistry. Meanwhile, on the other end of the spectrum, the working poor don't get even necessary dental work done because they have no money. These are people who make $10 per hour and have taxes taken out of that. They are in "service" businesses and live paycheck to paycheck.

I've seen guys who have made tons of money serving the low end of the market. Medicaid practices for instance, hiring associates and doing stainless steel crowns and ultra quick fillings. And I've seen guys make a lot of money charging $1600 per unit of crown and bridge.

So now the bubble has burst and credit is becoming hard to get. And what does that mean for these two different ends of the market, and maybe for your practice if you are somewhere in the middle?

I think the high end is going to have a bit of a struggle. I hate to say it. But the better off people like you and me are subject to a more varied income stream because many of us are self-employed. We will feel the bite of the recession. Patients will be more hesitant to get those full mouth reconstructions and those veneers.

Despite this, I think the high end will survive and flourish. But you will have to be more conservative, contain your overhead carefully, spend more on marketing, and make sure you can make money doing restorative dentistry.

In the medium run, dentists are in shortage in the United States. And people can't or won't commute to outside their area for a dentist. Boomers have the money and they will continue spending it. See can dental blogs attract Boomers with money?

But in the shorter run the recession will bite very hard and will affect high end practices too.

On the low end, you can make money hand over fist as long as you are being paid by Medicaid. I don't think this will do anything but expand. I am not in favor of social programs but regardless of what I am in favor of or not, they will expand and more money will be spent by government on dental care.

As usual it's the midrange that is most troublesome. The middle class is absolutely strapped and getting more so with the recession. Once again, cutting overhead, spending more on marketing, an making sure you can make money on more restorative dentistry is crucial. Large discretionary cases will be there but much harder to sell because people feel so strapped.

I see the future of dentistry in the high end and the low end. The middle is the toughest spot to occupy and will be vulnerable to the corporate dentistry takeover after the low end has been swallowed up.

What do you think? Leave a comment please!

And make sure you are prepared for the recession. First, make sure to explore getting one of my dental blogs to market your service better and take advantage of the long tail of search terms.

Second, get my $59.95 book on case acceptance and dental practice marketing, entirely free, along with very important marketing tips and information that you won't want to miss. I never share your information with anyone, ever, and you can opt out anytime.