By Taylor Richardson, CRPS®, AIF, Financial Advisor
Dental practice owners often complain about the rise of corporate dentistry and it’s “bottom-line” approach to healthcare. These dentists are genuinely concerned about the long term impact of letting business executives set the standard for patient care in the dental industry. Given that, it’s been surprising to find that some of these same practice owners are choosing to work with large, discount 401K companies, rather than smaller financial firms that emphasize quality over cost and set high standards for service.
The fact is, there are many direct parallels between corporate dentistry and the discount 401K model. They each base their primary appeal on costing less, but the bargain prices come with some big tradeoffs. If you’re considering the low-cost 401K route, make sure you understand the deal you’re making before you decide.
One of the biggest concerns about corporate dentistry is that the drive for profits plays an out-sized role and can lead to questionable practices. The same can be said about corporations offering low-cost 401K plans. Unlike a small financial firm that’s privately owned, corporations need to pay investors. As a result, decisions are evaluated chiefly for their impact on profitability. The risk is that long-term benefits are lost to short-term gain which can be especially worrying when it comes to 401K products, which are fundamentally about long-term planning.
Low Fee – High Volume
Corporate dental offices often get people in the door by promoting dental care that’s steeply discounted. To remain profitable at these lower prices, they must follow the same sort of philosophy as big retail stores by placing a premium on volume. That means moving as many patients through the system as possible each and every day, a goal that doesn’t encourage the type of individualized care necessary for optimal patient outcomes.
Low cost 401K companies operate on the same principle. They work hard to attract lots of clients by offering rock-bottom prices. In addition to volume, they also rely heavily on add-on costs for things like documentation fees or charges for additional compliance testing, the kind of things a small financial firm would automatically include in its 401K estimate.
Because no two dental patients are alike, factors like bone strength and density, general health, medications, lifestyle issues, etc., need to be considered when making a treatment plan. It requires a thorough examination, consultations, and conversations, which pretty much describes the process in a dental-owned practice. It’s a different picture at a corporate-owned practice, where dentists have production goals they need to hit, and they don’t have a lot of time to discuss individual preferences, or circumstances. In corporate dentistry, if a patient has Condition X, they will provide Treatment Y, in part because they know the insurance will pay for it. Don’t expect nuanced conversations or personalized treatment plans.
The same is true in the financial world where the corporate 401K model also has production goals and quotas. At a small financial firm, they’ll want to take time to understand the long term goals of a new client and then develop a benefit plan to match, whereas the corporate approach is more one-size-fits-all. If you want to get creative with your employee match or want employees to be eligible on a shorter or longer timeframe, there might not be options for that, or you’ll be left to figure out how to do it on your own.
High Staff Turnover
The high-pressure environment of corporate dental practices often results in high staff turnover and leads to placing patients in the hands of less experienced dental professionals and support staff. The corporate 401K companies follow a similar playbook by hiring inexperienced staff at lower costs and churning through employees. Clients don’t have access to a dedicated person they can turn to for help, so any questions that come up go through a call center. Under the corporate model, keeping costs down has a higher value than employee experience or client relationships.
Big Marketing Budgets
While the corporate dentist model works hard to lower costs in their practice, they’re not shy about spending money on marketing to get people in the door. Low cost 401K corporations do the same. A popular approach is to hire famous spokespersons, like motivational guru Tony Robbins. Remember, spokespersons are paid to say positive things about a product. Writing a bestselling self-help book does not make someone an expert about 401K plans.
Before signing up with a new 401K company, be sure to check out their website and find out who works there. If you can’t find the names of employees, or can only find one or two names, you should probably steer clear. The same goes if you can’t find an address or phone contact other than an 800 number.
If you value delivering highly personalized service in your dental practice, you should look for the same quality service in your financial relationships. Discount 401K plans may appeal to your budget, but in the end they will eat up more of your time and can lead to worse results.