The sky is not falling!

2010 Dental Economics®/Levin Group Practice Survey

The results of the 2010 Dental Economics®/Levin Group Annual Practice Survey show dentistry to be weathering the storm, with a modest production increase through the middle of the year.

While 2010 may not rank as a banner year, dentistry is showing itself to be tough and able to hold ground, especially at a time when many other industries have suffered significant revenue losses. Some recent trends include:

• 51% of doctors reported increased production in the past six months.
• Median annual gross production remained stable. In 2009, it declined by 3.5%.
• Average doctor compensation also held steady. In 2009, it dropped 7.8% from the year before.
• Average new patients per month rose from 27 in 2009 to 30 in 2010.

"The year 2010 is one to be proud of," said Dr. Roger P. Levin, chairman and CEO of Levin Group, Inc. "Many other types of businesses are in a near panic, losing significant revenue, closing locations, and laying off employees. That is not the case in dentistry. We're even seeing a modest upswing in production. I think we will see that increase become more pronounced in 2011. That will be good news for everyone!"

About the survey

With the Dental Economics®/Levin Group Annual Practice Survey now in its fourth year, our comprehensive findings serve an important role in giving dentists across the country an opportunity to gauge their practice against their colleagues, and review 2010 against the preceding three years.

Drawing on its 25 years as a leader in dental practice management, Levin Group designed the survey and collected and analyzed the data to provide dentists with accurate, comprehensive information about the state of dentistry for comparative purposes.

This year's survey asked general dentists to provide practice data in six critical areas:

1. Practice overview
2. Practice production
3. Collections and billings
4. Procedure mix
5. Practice overhead
6. Staff wages

Although the number of responses varies from year to year, the survey represents a cross-section of U.S. general dentists, ranging from solo practitioners to large group practices, from dentists in rural areas and small towns to those in suburbs and large cities. Thanks to all the dentists who took the time and effort to respond to our 2010 survey.

1. Practice overview

First, let's look at the demographic information provided by the dentists who participated in the survey. Findings indicate that 46.5% of responding dentists have been in practice 25 years or longer, 22.6% have been in practice for 16 to 25 years, 18.6% have been in practice 6 to 15 years, and 12.4% ave been in practice 1 to 5 years. This is a good representative sampling of dentist demographics.

Some 44% of responding dentists practice four days a week, with 47.3% taking three to four weeks of vacation last year (an increase of 4% over the previous year). While increased vacation time is good, it also should be noted that the number of dentists working five days a week increased from 10% last year to 14.6% this year.

"These figures are very representative of what is happening in dentistry right now," says Dr. Levin. "For nearly half the dentists surveyed, things are steady and they feel comfortable enough to take several weeks of vacation during the year. On the other hand, there are dentists who are really feeling the pinch and putting in longer hours to increase their revenue. We advise our clients to have the right systems in place and build a systems-based practice that enables them to work smarter, not harder."

2. Practice production

In the critical area of practice production, there's good news. Last year, production dropped noticeably compared to 2008. The 2010 survey showed no such production decline. The average production for all GPs showed a minor percentage increase.

More significantly, the percentage of doctors who reported increased production in the past six months is up - 51.4% of dentists reported increases. In 2009, that number was just 39.5%. A whopping 57.4% of this year's respondents are confident that they will increase gross production compared to their production from 2009. Only 17% of dentists said they expected production to decrease.

"These are all very encouraging findings," said Dr. Joe Blaes, editor of Dental Economics®. "The sky is not falling! In fact, the survey results should serve as tremendous reassurance to dentists who have expressed concerns about production declines in previous years."

The annual average practice production for the previous 12 months was $1,182,099; last year, that figure was $1,018,129. An area that remained flat was median doctor production, which was approximately $600,000 for both 2010 and 2009. Average annual hygiene production presented acceptable numbers. The dollar figure in 2010 rose slightly to $156,785 (from $147,500 in 2009). Average daily hygiene production rose slightly from $1,088 in 2009 to $1,103 in 2010.

3. Collections and billings

The survey offers mixed results in this category. This year's respondents collected, on average, 92.1% of their fees versus 92.7% in 2009. Obviously, a tighter economy is making it more difficult for some patients to pay their dental bills. As people are faced with job losses and foreclosures, paying dental bills takes on a lower priority. In response to the slower economy, doctors lost ground collecting their fees at the time of service, with 62.5% of accounts receivable considered current this year compared to 65% last year.

On a positive note, A/R older than 90 days decreased from 13% in 2009 to 11.3% in 2010. "Offering a variety of financial options has obviously helped many patients accept recommended treatment while paying in a timely manner," said Dr. Levin.

4. Procedure mix

Average annual need-based production was 80%, with elective production at 20% - an exact match with last year's figures. Dr. Blaes was pleasantly surprised by the results. "For dentists to continue generating one-fifth of their production from elective procedures in the current economic climate is welcome news," said Dr. Blaes. Dr. Levin agreed and added the following note: "Increasing elective procedures is a proven strategy for growing practices. If we see this 20% figure climb next year, it will mean dentists are experiencing greater profits and becoming more effective at educating patients about all of their services."

With the recovery proceeding slower than expected, many specialists were concerned that dentists would refer less and/or perform more specialty procedures in-house. To measure the impact the economy was having on interdisciplinary treatment, the survey asked dentists approximately how many times each month they referred patients to specialists.

This year's results were nearly identical to last year's. GPs, on average, referred to oral surgeons nine times a month - the highest for any specialist. Orthodontists and endodontists were next, respectively, with 6.9% and 6.8% average monthly referrals from GPs. Periodontists received 6.6% monthly referrals (up from last year's 5.1%), followed by pediatric dentists with 2.6% and prosthodontists with 1.7%.

"Once again," said Dr. Levin, "the fact that these numbers didn't go down says a lot about dentists holding their own. If dentists were genuinely in jeopardy, we would have seen referral numbers drop perceptibly. They didn't - and that's good news!"

5. Practice overhead

Controlling overhead is crucial to managing a successful dental practice. Average overhead for surveyed practices was 60.7% - nearly identical to last year's average overhead of 61%.

"It appears we are in a holding pattern in 2010 with slightly inflated overhead," said Dr. Levin. "Ideally, we want to see this percentage drop three or four percentage points, but it will take marked production increases for that to happen."

In overhead categories, there was little change - also good news considering all overhead went up in 2009. Supplies were at 11.6%, compared to 12% in 2009. Lab fees were 11.3% in 2010, while staff salaries were at 29.3% as compared to 29% in 2009. "This is better than in 2009 when we witnessed a 4% drop in staff salaries," said Dr. Levin. "That percentage drop showed practices last year were tightening their belts. This year, the axe didn't fall on staff salaries."

6. Staff wages

This year, we looked at the hourly wages for the following key staff members:

• Hygienists
• Chairside assistants
• Office managers
• Front desk/administrative personnel
• Treatment coordinators

According to this year's results, hygienists were the top earners at $36.24 per hour, which is to be expected due to their clinical training. The next highest paid employee group was office managers at $24.45 per hour, followed by treatment coordinators at $18.97, chairside assistants at $18.05 and front desk personnel at $17.37. These figures closely mirrored salary numbers from the 2009 survey, with some marginal increases.

Like staff salaries, average doctor compensation remained flat - $226,265. "The fact that doctors were able to prevent salaries from going down is commendable," said Dr. Levin. "Obviously, we all want to see this number go up. Increasing production through efficient systems is the key to increasing doctor compensation."

Dentists hunker down and get serious

Last year's data showed the challenges faced by dental practices in an economic slowdown. This year's data showed what happens when dentists hunker down and get serious about building their practices.

While there are many very positive trends (an astonishing 57.4% of surveyed dentists expect to increase production this year), a number of key categories indicate flat results in comparison to 2009. This may seem discouraging, but when compared to many other industries, dentistry is showing itself to be remarkably healthy and resilient.

"The results of the 2010 survey show a solid foundation for growth," said Dr. Levin. "Admittedly, the growth so far may be somewhat modest. However, the prospects for steady growth over the long term are clearly visible and this is what truly matters."

We hope the 2010 Dental Economics®/Levin Group Annual Practice Survey has encouraged you to think about your own practice and sparked your interest in making positive changes. Thank you to everyone who participated in the survey. You made your voice heard, and we appreciate the time you took to complete the survey. We look forward to your participation in 2011. To view the complete survey results, visit www.levingroupgp.com or www.dentistryiq.com.

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