February 5, 2021
Dental Industry Trends to Watch for in 2021
Are you ready for dental industry trends in 2021? Professional Transition Strategies is.
After the dumpster fire that was 2020, we may finally see a light at the end of the pandemic tunnel in 2021. While the past year was anything but typical, it certainly shed light on the latest exciting trends and emerging technologies in the dental industry to look forward to in the new year.
Kyle Francis, Professional Transition Strategies founder and president, thinks “there are plenty of reasons for optimism in the dental sector,” even though “predictions may be riskier than usual this time because we’re exiting a turbulent year that disrupted normal life and business in ways that are still coming to light,” according to an article in DrBicuspid.com. (1)
“This year has been challenging for everyone, personally and professionally, but the dental industry remains strong, and the future is bright,” Francis predicts. “The industry will continue to evolve, and the pandemic may accelerate some of the trends we’ve already seen emerge this year. Dentists who stay ahead of the curve can look forward to a happy and prosperous 2021.”
The experts at Professional Transition Strategies are here to offer our best-educated guesses about what the year ahead will hold in hopes of answering the all-important question:
“Is your dental practice ready for 2021?” (Spoiler alert: Yes, it is!)
As a bonus, by reading between the lines, we’ll also help you answer these questions:
- Is the dental industry growing?
- What is the highest paying dental specialty?
- What type of industry is dentistry?
- What are the latest trends in dentistry?
- What makes a dental practice successful?
- Can I make my dental practice stand out?
- How big is the dental market?
- What kind of technology do dentists use?
- What is the biggest challenge for dentists?
The role of technology in dentistry
AI LEADS THE WAY
Advancements in computer processing, data analysis, and cloud computing have driven the convergence of innovation and technology in dentistry. Of all technology, artificial intelligence is “poised to change the dental industry significantly,” Francis said.
Specifically, AI can be used to help dentists interpret X-rays more effectively by simply saying, “Alexa, show me the bitewings of number 19.” It can also pull up patient records and analyze them using machine learning, and even book appointments and communicating with patients directly thanks to chatbots.
More recently, AI has been used to help dentists identify carious lesions more accurately, and detect dental decay, periodontal disease and oral cancer. In the future, augmented reality will be used with implant procedures.
Graphical processing units, Internet of Things devices, advanced algorithms, and application programming interfaces will all contribute to the evolution of AI to make it smarter and more useful.
3D PRINTING FOLLOWS SUIT
3D printing has come a long way from custom-made keychains. The dental industry 3D printing market is expected to reach $930 million by the end of 2025, according to Medical Technology. (2) As recently as 2020, dental scanners can now mass customize aligners and night guards, crowns, surgical guides, models and dentures quickly and inexpensively in-house — a benefit to both dentists and patients.
“As a result of today’s COVID restrictions, currently more and more doctors are making their choice in favor of clear aligner therapy versus braces,” said 3D Predict Founder and CEO Marina Domracheva, M.D. (3) “Treatment using clear aligners requires less frequent and shorter consultations with less manual procedures, so it is safer and more convenient for doctors and patients in the current environment.”
NO REAL CHANGE IN TELEDENTISTRY TRENDS
“Dentists shifted gears quickly, using their skills to take care of patients and protect their businesses under challenging circumstances,” Francis said. While teledentistry filled in the proverbial gaps when COVID-19 forced dental practices to shut their doors because of social distancing, it is not a long-term solution. Even though “dentistry is highly specialized and tactile,” it is not feasible to expect dentists to gauge the depths of caries with an iPad right now, though it’s a quick step toward addressing any concerns with a patient who may be reluctant to come back after the pandemic.
It is important to note: Teledentistry sessions are not generally reimbursed in part or full by insurance companies.
ADVANTAGES OF LASER DENTISTRY
Laser dentistry (“light amplification by stimulated emission of radiation”) has made leaps and bounds in the world of drill-less treatments since its inception in 1989, using a narrow, concentrated beam of light to remove or shape soft or hard tissue, such as around a wisdom tooth, crown or inflamed gums. The result is decreased bleeding, faster healing, reduced risk of infection, and less of a need for sutures during procedures, including treating hypersensitivity, tooth decay and gum disease.
The U.S. Food and Drug Administration has approved the use of lasers in the dental industry after dentists undergo training from manufacturers, professional organizations or dental schools. But despite its benefits to patients for general dentistry, the American Academy of Periodontology has reported there isn’t sufficient evidence to support that treatment with a laser is better than traditional treatments for periodontal diseases, such as scaling and root planing. (4)
The American Dental Association has yet to approve laser dentistry as a treatment option for dental conditions, but stay tuned as this emerging trend continues to develop and evolve.
IMPLEMENT CLOUD-BASED PRACTICE MANAGEMENT SOFTWARE
If your dental practice doesn’t already use cloud-based management software, what are you waiting for? Simply put, cloud-based software runs on the internet rather than being hosted locally on the computer in your dental practice office. In a digital era, it might be surprising to learn that cloud-based management software is not the norm—but it’s moving in that direction thanks to backup and integration capabilities, virtual access, and savings on physical space within the office.
From new patient counts to cancellations and all of the day-to-day operations in between, it’s no small task to keep up with it all. The advantages of software that lives on the cloud include remote scheduling, document storage and sharing for X-rays and images, contact databases and reporting, such as dental history charting, patient notes and treatment plans that can be easily accessed by front-desk staff and dentists from any computer. The software-as-a-service may also include communication platforms for staff, assistance with filing and tracking insurance claims, and integration with billing or accounting software.
The efficiency afforded by the right program can make the difference between a smooth operation and confusion for staff and patients alike.
Just make sure to do your research on software that has good reviews, is compliant with the U.S. Health Insurance Portability and Accountability Act, offers easy-to-access customer support, and comes with a free demo or trial period so you and your staff can learn more about it in real-time without a big investment.
Navigating the transition process
SHOULD YOU JOIN A DENTAL SERVICE ORGANIZATION?
If anything, the strength of dental service organizations was solidified in 2020 since independent practices have treaded water navigating the storm of business ownership during a pandemic, displaying “incredible resilience,” according to Francis. During these uncertain times, you may be hesitant to make a drastic change. But now more than ever, DSOs are looking for private practices to purchase in spite of economic standings.
In turn, new buyer groups have emerged due to the recent changes. Fewer legacy DSOs will be buying practices at this point because they need to concentrate their efforts on managing the ones they have. Smaller DSOs, small business investment company-backed DSOs, new private investment-backed DSOs and family office-backed DSOs will emerge as frontrunners when it comes to buying.
Analysts on staff to help dentists make data-driven decisions, bulk purchasing power to secure personal protective equipment, and human resources professionals to handle staffing issues have all become attractive solutions available through DSOs. DSO membership can also be an excellent way to boost practice value for a profitable exit when the time comes and achieve a better work-life balance in the meantime.
Deals now will receive 2019 values thanks to earn-outs in the next year, if not sooner, while those that wait will see a lesser value. Waiting puts at risk lesser values in 2021 since 2020 numbers will weigh heaviest during the valuation process. What’s more, tax rates are expected to double, and DSOs can pay more for a dental practice than a single practitioner based on private equity money, economies of scale, cost structure optimization, and loan amount.
DENTAL PRACTICE MERGERS AND ACQUISITIONS MOVING FORWARD
It would be an understatement to say the dental industry was hit hard during the pandemic. While the American Dental Association reports revenue is down in total, many dentistry practices have managed to turn a profit in the five months since they have been allowed to open up again after catching up with the pent-up demand. (5) However, practice expenses are up as patient visits need to be spaced out and the need for extra cleaning costs and personal protective equipment continues to rise. Dentistry Today says all signs point toward an increased interest in selling dental practices or joining DSOs. (6)
Private equity groups have turned toward dental practices as an attractive investment opportunity, particularly specialty practices such as endodontists and oral surgery groups, since they were deemed essential services. Investors typically would analyze the past 12 months of earnings with interest, taxes, depreciation and amortization, but investors are now either writing off 2020 or looking at the past 15 months to make up for the time when practices had to close their doors.
Likewise, dental practices need to continue to rebuild their staff and patient bases in the year ahead, which will inevitably turn up in a valuation down the road, during which improvements like laser technology will only improve the value of your dental practice.
The big picture
A CHANGE IN ESSENTIAL HEALTHCARE WORKERS’ STATUS
“This year proved that dentistry is, in fact, an essential service,” Francis said. “Delayed preventive care led to restorative care. Delayed restorative care led to endodontic care. Delayed endodontic care led to replacement procedures.” While it’s gratifying to recognize that dental services are vital to overall patient health and well-being, essential medical services are subject to health care reforms. In the immediate future, dentists across the U.S. have been surprised to learn they don’t qualify as “health care workers” under the distribution program from the Centers for Disease Control and Prevention that will dictate who receives the first round of COVID-19 vaccinations as part of the phased-in approach.
CAPITAL GAINS TAX RECKONING
Massive government spending programs during the pandemic will come at a cost, even after helping to keep the economy afloat. A capital gains tax is most likely the solution, because, Francis says, “It’s hard for politicians to raise taxes on individuals and keep their jobs.” He thinks this may drive dentists to seek an affiliation or exit sooner than later.
Financial advisers are advising those in dentistry to hang up their proverbial hats in anticipation of an increase in capital gains tax. For example, a 20-point increase would reduce the net profit from the sale of a practice valued at $3 million by $600,000 on the first day.
A BENEFICIAL COMMERCIAL REAL ESTATE GLUT
The value of commercial real estate is likely to drop in 2021 with partially or fully remote workforces. Because dentists can’t do house calls or work remotely due to diagnostic equipment, leasing professional office space is a necessity, which gives dental practices the upper hand when it comes to renegotiating a lease, rental rates or other concessions. Rent should still account for 10 percent or lower of your standard overhead costs.
Focusing on the dental industry
DECREASE IN DENTAL CARE SPENDING
The American Dental Association’s Health Policy Institute reports that, “depending on the scenario, U.S. dental care spending is now projected to decline from 31% to 38% in 2020, and anywhere between 0% to 20% in 2021 compared to pre-COVID-19 estimates.” (7) In particular, dental practices, especially solo practices, will feel extra strain to retain patients and replace churn, and staffing shortfalls will continue to impact the dental industry.
It’s not all doom and gloom, though.
Studies have shown that ongoing communication with patients and even staff about changes made to your dental practice since the pandemic will help put everyone at ease and set expectations for all parties. This will also give dentists the opportunity to focus on attracting new patients to the practice.
FOCUS ON GOODWILL
While not tangible and maybe a bit harder to understand, the goodwill within your practice will make up a good part of your practice’s value (as much as 80%!). The goodwill comprises those non-categorized assets, such as your community status, patient relationships (shown many times through your recall systems, active appointments, patient charts and referring doctors), and staff loyalty and longevity (so now is a good time to focus on appreciation for your dental team throughout this past year!). This goodwill, when the practice is transitioned correctly, ensures long-term income for the buyer.
ADOPTION OF CONVENIENCES FOR PATIENTS
If 2020 has taught us anything, it’s that now is the best time to reinvent the way we communicate with others. For dental practices, that means the ability to schedule appointments for patients online, complete intake paperwork online, ask questions to staff via chatbot, and pay online or on mobile devices. What’s more, expanded office hours to accommodate spaced-out patient appointments as a result of social distancing make finding a time that’s convenient for patients easier and less intrusive rather than spending a seemingly endless amount of time in a waiting room with other patients.
INVEST IN EMOTIONAL DENTISTRY
All of this is to say that, yes, improvements to your dental practice and its procedures will hopefully make the lives of your staff easier, but especially, your patients will reap the rewards. Steps like using software to show patients how their smile will look after treatments will make the patient feel invested in their own well-being, as well as that of your dental practice. Similarly, a focus on patient education will increase registration efforts, in addition to tackling the age-old question of why adults avoid going to the dentist, especially getting patients to return to your dental practice after the pandemic. The rising value of convenience is sure to pay off for your staff and patients alike in the new year.
Contact the experts at PTS to help you navigate through the new year and beyond!
- Medical Technology
- 3D Printing Media Network
- American Academy of Periodontology
- USA Today
- Dentistry Today
- American Dental Association