Aspiring and current group dental practice owners are in the midst of industry transformation. Economic conditions, staffing, and technological advancements are changing the way organizations operate, creating new opportunities for the year ahead. Here are a few of the trends we think you should keep your eye on in the New Year.
Associate recruiting will remain competitive
The number of dental school graduates has been ticking up, and by 2040, it’s estimated that there will be a potential 32-110% surplus of dentists compared to market demand. While this would give one the impression that practices currently recruiting associates would have an easier time finding the right match for their practices, or owners might be able to create more favorable employment terms, the truth is that the need to be highly selective will still be critical for the future health and growth of group dental practices. According to our own client Dr. Tanoory, while win-win equity models and supportive systems can maximize associate commitment and productivity, hiring the right associates that already embody the values and motivation desired by the practice and are the right cultural fit will ensure future success and growth.
Group practice owners should also closely watch the impact of the anticipated 2024 ruling on the FTC’s proposed ban on non-competes, which could affect future associate retention. It could be increasingly challenging to enforce noncompete covenants, introducing potential risk into associate equity agreements and businesses.
The promise of AI is not just for clinical applications
Much of the discussion around AI’s application in dentistry has been to support clinical work (patient treatment plans, X-ray reading, etc.), but we think it also holds the power to streamline operational tasks, helping solve for office and call center staffing challenges being reported by dentists across the country. In a call center and patient recruitment context, AI can be applied to measure missed calls (one of the leading sources of revenue loss), grade the quality of calls, measure customer sentiment, and track marketing activities. It can also support scheduling, helping gauge predictability based on historical patterns: days of week, hours of the day, seasonality, etc. AI can also contribute to more accurate and timely revenue cycle management, managing claims verification, claim submission, and collections tracking and posting of claims, which reduces the administrative burden.
A drop in the cost of capital is coming
We anticipate a drop in the cost of capital by mid- to late-2024. For group healthcare practices that are interested in pursuing a sale, now is the time to be proactive and prepared for the shift in market dynamics. We are observing that quality of earnings is receiving more attention, and buyers are being meticulous in evaluating recurring revenue, quality of earnings, leverage ratio, geographic footprint, and growth rates of the business. If dental practices don’t already have a strong sense of how their business might be valuated, now is the time to take action to be prepared for the impending market shift. Read more about the 2024 anticipated market conditions.
No matter where the trends take us, a few things will always be true, including how to measure your practice’s business and financial health. Check out the 10 most important key performance indictors (KPIs) your practice should be measuring now.