Dental offices, like vets, have gone from being all-star businesses that, on average, lasted more than 25 years in the same establishment to simple companies exposed to the same issues as the rest of industries. The dental industry will never be the same, and the only dental practices that will survive the economic aftermath of COVID-19 will be the ones that will find a way to reinvent themselves.
1. Social Distancing and Impact on Office Structure
Federal Government advice to citizens regarding protocols for social distancing and face coverings will be in place for many months in the future or until a vaccine against the coronavirus is available for the population.
It means that dental offices wouldn’t be allowed to have more than one patient in reception areas, and would be better equipped, those offices that have closed O.P.’s or rooms (old school) due to the belief that the virus revolts in the ambient for so many hours and ease its transmission. Closed treatment rooms allow after each patient procedure to be quickly disinfected and sterilized for the next patients, rather than semi-open spaces with so many chairs sharing one big space with no walls from floor to ceiling to individualize and privately rooms. This unprecedented situation for which any office isn’t prepared would be a constant in the months to come, and nobody can say how long it will last.
2. Impacted Office Revenues and Reduced Collections
The direct repercussion of the aftermath crisis is still evolving with no clear horizon about when this emergency will end. However, in this FDA article from Health Policy Institute about COVID-19’s Impact on the Dental Care Sector, we can learn the following:
● The COVID-19 pandemic has significantly impacted the U.S. dental care sector. Over three-fourths of dental practices in the U.S. are seeing emergency patients only, and another 18 % are closed entirely. The vast majority of dentists report their volume of total collections is less than 5% of what is typical.
● Their modeling predicts that U.S. dental care spending could decline by up to 66% in 2020 and 32% in 2021.
● Their analysis is subject to significant uncertainty at this stage, and they will update it as more data become available. Nevertheless, COVID-19 is likely to have a long-lasting, multi-year impact on the dental care economy.
The FDA research validates the reality of our own South Florida findings. After having numerous conversations with local dentists, they all agree that dental office collections would be significantly and negatively impacted. Some of these dentists estimate that annual collections could be potentially reduced, on average, by 50%, taking into consideration that the first half of the year is the best season for the dental industry.
3. The Pandemic and its Effects in the National Economic
Undoubtedly, the effects of the coronavirus pandemic related to loss of revenue in the dental industry are a direct consequence of its devastating impact on the U.S. economy. As reported in the newsletters.time.com online edition of April 20, 2020, the Oil Industry is experiencing one of the most pervasive economic effects of this pandemic. Times quoted, “This afternoon, prices for crude oil futures fell to -$1.98 per barrel, based on the U.S. West Texas Intermediate benchmark. That’s not a typo—as of writing, oil futures are trading below zero. By some accounts, that’s the lowest since 1946, according to data from the Federal Reserve Bank of St. Louis. With economic and industrial activity essentially halted, the U.S. oil market has become so oversupplied that pricing implies, sellers are now willing to pay for others to take oil off their hands”.
4. When Dental Offices would be open again
The Federal Government has announced as of mid-April 2020, conditions regarding virus transmission vary significantly across the U.S. Therefore, they are now considering reopening businesses considered “essential,” including dental practices, as they phase their communities back into normal operations. The federal government recently released guidelines to open America Back again for states to help them make decisions related to elective health care availability and sheltering in place mandates.
4. 1. Watch-out with the Boomerang Effect
Following Federal Government guidelines looks like sooner than later, most of the U.S. states that by now are in quarantine will start easing their own imposed guidelines. However, opening America too soon may signify a boomerang effect if authorities loosen controls, such as has been evidenced in cases around the world. Singapore is a clear example of what could happen to us. For instance, Times.com reported on April 20, 2020, in their article Once a Model For The World, Singapore Lost Control of Its Outbreak. Singapore was once the north star on how to control the spread of COVID-19 for the world. But now the city-state, with a population of 5.6 million, has the most reported cases in Southeast Asia. Read more here.
5. What are your Options and what Can you Do?
Undoubtedly, the negative repercussion COVID-19 pandemic has caused to the U.S. economy as the contagious cases increased along within the country, forcing governmental authorities to implement measures that otherwise wasn’t unthinkable, all with the purpose to combat virus spread. As a consequence, the normal life of the population has been interrupted, and with them, the economic sustainability of cities, counties, states, and the entire nation. The impact of the pandemic has shown one of its edges, 22 million Americans have filed for unemployment benefits in the last four weeks, according to CNN Business. As unemployment grows, the shutdown of small businesses makes its unstoppable march, thousands of small businesses are closing, hundreds of dental offices in South Florida, and tens of thousands in the U.S. This situation will end up forcing many dentists who are close to retirement age to accelerate the inevitable decision to sell their practice.
Whatever your decision could be, whether reinventing yourself or selling your practice, feel free to contact Hector Yusti of DentalBrokerFlorida.com for free advice on your possible course of action.
Stay Safe. Stay Healthy.
Héctor Yusti, MBA
Dental Broker Florida
CRE @ DBF
I’m in the business of keeping customers satisfied