Recession Proof Your Practice

While opinions on whether the US economy will enter a recession in 2022 or is in one already diverge, nobody argues that the economy has slowed and that this will persist for some time in the future Moreover, rapid inflation in the first half of 2022 has led to declines in real wages and a rise in interest ratesfor loans of all kinds.

Many of these factors have already impacted dentists on the ground, and will continue to do so for some time. So what will happens to a dental practice during a recession:

Dentistry in a recessionary environment

Consumer incomes get squeezed, and they become more sensitive to price

Most patients are reluctant to pursue dental care, when the economy is good, but as consumers have less money in their pocket, they become less inclined to pursue care and will need more financial support to afford care.

Lenders underwrite fewer loans and raise interest rates.

The impact of rising interest rates has already had a major impact on consumer lenders in three ways.

• Lenders are being forced to hold more collateral to account for a potential rise in default rates from their existing loan portfolio.
• Lenders are becoming more sensitive to risk and are likely to tighten lending requirements.This will result in fewer patients being approved for loans and for approvals to be for lower dollar amounts.
• Finally, the interest rates on the loans being offered will rise for patients, making loans more expensive and less attractive. Promotional financing programs will also rise in cost for providers that are subsidizing them.

Insurance coverage drops, and consumers pay more out of pocket.

Insurance coverage tends to decline during weaker economies, driven by an increase in unemployed patients and a tendency of patients to switch to cheaper insurance coverage to save money. The net effect of these is that more patients will pay for more of the cost for their care out of their own pocket.

Inflation will drive up practice costs, squeezing practice margins

Inflation has caused prices to rise across all sectors, but dental practices can find it difficult or impossible to raise their prices enough to account for these increases. The net effect is that dentist practices will find it hard to maintain their margins.

RECESSION PROOFING YOUR PRACTICE

Despite a challenging macroeconomic environment, now is still a great time to own a dental practice. These circumstances give you the opportunity to recession proof your practice, leaving you stronger and more profitable than before. Here are three ways to recession-proof your practice.

Plug sources of revenue leakage

The easiest way to improve your performance is to collect the revenue that your practice is owed. Revenue leakage is a major challenge for many practices, and the most pernicious type of revenue leakage is collecting on open patient balances. It can be expensive and time-consuming to collect on these balances. FeatherPay makes collecting on a patient’s balance easy for your practice to implement and the patient to pay We send out automatic reminders to patients and enable modern payment options like pay-by-text, Apple Pay, Google Pay and more. The result is less open patient AR and more revenue for your practice.