By Drew Hinrichs, CPA, CEO of Engage Advisors
After almost two years of fighting our way through COVID, how are dentists doing now and what’s been the impact on practices? More importantly, is there anything dentists can do to prepare for future disruptions?
Now that we’re nearly two years into the pandemic, it seems like a good time to take stock of where the dental industry stands today and how things look going forward. Let’s start with a quick overview about the impact COVID-19 has had on dental providers to date.
High-Level Look at COVID-19s Impact on Dental Practices
The ADA Health Policy Institute (HPI) launched a monthly tracking poll that began surveying dentists when the shutdowns began in March 2020. The complete results, which can be found on their website, are based on 19,000 respondents.
Looking at the data HPI collected, what jumps out is the widespread impact of the initial shutdowns. For the week of March 23, 2020, 77.4% of non-DSO practices said they were only seeing emergency patients, while 18% reported seeing no patients at all. By April 2020, those numbers hadn’t changed much.
By the week of May 18, 2020, there’s a big shift with over 50% of non-DSO practices open but reporting lower patient volume. That same month we see the number of practices reporting business as usual climb from almost zero to over 10%. That number steadily increases until peaking in July 2021, nearly reaching 70%, after which it drops down to 61% in October as the Delta-variant takes over.
A separate survey released by The Center for Oral Health last February asked dentists to identify the biggest impact COVID has had on their practice. In their responses, 46% cited a drop in revenue as the number one impact, while 19% identified higher costs due to PPE. Looking ahead, 40% believe some combination of lower revenues and higher costs will be the biggest challenge they face this year.
The good news is that the Center for Oral Health survey shows that dentists remain undaunted. Here are a few encouraging statistics:
- 22% believe new opportunities have emerged as a result of the pandemic
- 36% report that COVID-19 allowed them to learn more about infection control
- 25% foresee production levels going up in 2021
- 59% believe COVID-19 has not impacted the quality of their products or services
- Over a third of dentists say they are prepared to deal with subsequent waves of the virus, continuing with the protocols learned over the last year.
In other words, despite the overwhelming challenges created by the pandemic, dentists have learned how to adapt and succeed.
Drilling Down to Our Clients
Now let’s look at the impact on the 500+ dental providers we serve.
Practices Have Rebounded
Most of our clients report being back to where they were before the pandemic from the perspective of dollars produced and collected.
Like everyone else, our clients have seen expenses go up. In addition to the costs of PPE supplies, pandemic-triggered supply chain disruptions have raised prices on other items. As the supply chain bottlenecks get resolved, some of those costs should come down, but no one knows how long that will take. Staffing is another area of concern. Given the tight labor market which has not fully rebounded, dental practices may find they have to raise pay to fill positions.
Eligible for Employee Retention Tax Credit (ERTC)
While some government assistance, like the second round of PPP loans are over, there are still opportunities for easing the financial challenges caused by the pandemic. For instance, the CARES Act enacted in April 2020 authorized ERTC to help businesses keep employees on their payroll. Eligible businesses will show gross receipts declining by more than 20% in 2021. One note – passage of the Infrastructure Investment and Jobs Act impacts ERTC by retroactively ending the program for most businesses on September 30, 2021.
How Dental Practices Can Prepare for the Future
Overall, the pandemic proved what we already knew – dentists are essential workers and practices need to remain open. It’s also reinforced a few ideas we always emphasize with our clients, including:
Work Smarter, Not Harder
Doing things like increasing reimbursements from insurance, and maximizing tax deductions are examples of working smarter, not harder. Making smart choices with your money gives your dental practice the flexibility and core strength it needs to better adapt to whatever situation life throws at you.
Harness Data for Quick Decisions
As recent history has taught us, we don’t always have the luxury of time before we’re required to act. Having quick access to good data, along with help interpreting it, is crucial to making good business decisions. This proved especially true in times of economic disruption where there were no precedents to look to for guidance. Dental providers with access to good information at their fingertips fared better overall during COVID.
We’re not totally in the clear but as more people get vaccinated, and our economy normalizes, all indications are that we will continue to move in a good direction.
If you’d like to talk about steps you can take to be better prepared for future unforeseen challenges, schedule a call with our team at Engage Advisors. We are ready to help you move forward and build a financially healthy practice.