THE EDITOR'S CORNER
The Economic Outlook
For the past year or so, the business segments of the evening news have been rife with stories of gloom and doom. Even as key economic indicators like the stock market seem to assure us that the recession is over, little improvement has been seen in areas such as employment, new housing starts, and discretionary spending. Whatever the long-term indicators may herald for the future, the average orthodontic consumer has thus far felt little relief, as demonstrated by our biennial JCO Orthodontic Practice Study.
In this issue, the third article in our four-part series examines practice growth (or lack thereof) since the 2007 Study and expectations for 2009. This is perhaps the most disturbing portion of the current survey, because far fewer respondents reported growth in case starts and gross income over the past two years than ever before. The percentages of practices reporting growth in both case starts and gross income have actually declined every two years over the last decade, but this is the first time that more respondents reported decreases in case starts than reported increases. Also for the first time ever, a majority of orthodontists expected things to get worse before they got better, with some geographical variations. When asked to explain their lack of practice growth, most respondents pointed to local economic conditions.
Similar articles from the archive:
- THE EDITOR'S CORNER The 2007 JCO Orthodontic Practice Study January 2008
- THE EDITOR'S CORNER Booms, Echo Booms, and "Millenni-Booms" November 2005
- THE EDITOR'S CORNER Manage to Succeed October 2003
In light of these results, one wonders if there is room for anything but pessimism. I believe so. If the economy has indeed improved since the time we collected our data in the first part of 2009, the survey would not yet reflect that improvement. (Of course, since the current Practice Study reports figures from calendar year 2008, it also may not be measuring the bottom of the recession.) In addition, most orthodontic practices use payment systems that spread the cost of orthodontic treatment out over 18-24 months, affording them a bit of a buffer against hard times. Many doctors I talk to tell me they are experiencing more delinquent payments these days, however; in fact, median delinquent accounts (90 or more days overdue) rose in the current Study to their highest level in 10 years.
But there are other reasons for hope. One of the fundamental aspects of any economic recovery involves cutting costs. Either as a result of or in anticipation of reduced income, practices in the 2009 Study have reduced full- and part-time staff and kept salaries in check since 2007. Although delegation of many of the mundane tasks in an orthodontic practice to ancillary staff can improve the bottom line in a large and busy practice, when things slow down, delegation becomes a costly endeavor. This can seem like a hardship imposed by a threatening economy, but on the other hand, it can be an opportunity for closer communication and interaction between doctors and patients.
In my own practice, we have several staff members out on extended maternity leave. In light of the economy, we decided we could handle the current patient flow without the services, and costs, of temporary assistants. There can be no doubt that I do much more direct patient care now--I have no choice, having no one to whom I can delegate such tasks as tying in archwires. There can also be no doubt that I am much more tired in the evening after a busy clinic schedule, but I have to say that I actually enjoy having more direct contact with my patients. All too often, in the economic boom times, I would spend only a few moments at each chair, looking in the mouth long enough to decide what to tell one of our many available assistants to do. Now it is rare for me not to have a real conversation with each and every patient. One of the best things about being an orthodontist is that the majority of our patients are in what I consider the most fascinating period of life--the time when they are transformed from gangly, gawky adolescents into attractive, interesting young adults. A major perk of our job is that we get to help them along the way. In fact, a number of my former patients whom I treated early in my orthodontic career, when I was not so busy, still write or e-mail me on a regular basis. There are few such patients from my busier years, when I delegated most practice tasks and spent little time communicating. So my income may be down, but my enjoyment has gone up by a measurable degree.
Other orthodontists I talk to have gone back to the basics in various ways. I know of one who has begun doing all his own lab work; he says he enjoys it, and I believe him. Others are taking their own records.
In orthodontics, our gross income is determined by the number of patients we see. One way to increase that number is through delegation, which allows more patients to be accepted. This was a common occurrence throughout the boom years, as indicated by our Practice Studies. In leaner times, however, a more effective strategy for increasing net income is to cut costs. Getting back to the basics is fundamental to that end. And despite their rather gloomy present outlook, the respondents to our Practice Study seem to be doing just that.