6 Dentistry Insights From Q4 2022 and What They Mean for You
December 14, 2022
With the global economy battling a large inflationary wave, the dental industry has faced its own challenges of wage inflation and increased operating costs. However, more recent economic data provides silver linings: the dental jobs market appears to be improving, which may subdue the inflationary pressures providers have experienced. Despite rising costs, the demand for dental care has increased as data around in-person remains strong. The pandemic also spurred merger and acquisition (M&A) activity to build economies of scale; to remain competitive, dental practices are changing their business models by incorporating greater uses of technology, such as augmented reality and 3D printing.
Here are six key trends to watch as we look forward.
1. Overall, the healthcare jobs market is improving with more hiring and fewer employees quitting
Growth rates in job openings are slowing while job quit rates decline. For employers, this creates a better hiring environment.
Key takeaway: As a whole, the healthcare jobs market remains robust. As labor conditions loosen, employers should start to be able to negotiate more balanced compensation packages. Since the economy may slow down, employers should look to lower overhead costs by negotiating fairer wages with new and existing employees.
2. Healthcare wage growth continues to climb despite the loosening labor market.
Wage growth in the healthcare field has accelerated quickly to its highest rate in over a decade. However, with decreasing quit rates, competition for employees is diminishing and may ultimately restrain wage growth from increasing further.
Key takeaway: A looser labor market typically puts downward pressure on wages, causing wage inflation to subside. With the appearance of a potential inflection point in labor and wages, look to optimize your overhead costs with the optimal number of employees and fair remuneration.
3. Augmented reality can reduce patient anxiety with real-time results.
Technology is reshaping the dental patient experience. For example, augmented reality has become increasingly popular and useful in dentistry.
Key takeaway: Costly dental reconstruction procedures can create anxiety among patients because of the lack of clarity around what results will look like. However, augmented technology software can provide them with real-time visualized results, enabling the manipulation of teeth length, width and shape to patients’ liking. This technology can also improve workflow efficiency over traditional plaster casts.
4. 3D printing is thriving in dental practices when custom solutions are needed.
Interest in 3D printing rose exponentially in 2012 and has remained at peak interest to this day.
Key takeaway: 3D printing has changed the dental landscape by offering quick, custom solutions for consumers. In dentistry, where no one set of teeth is the same, the versatility and efficiency of incorporating 3D-printed dentures, crowns or clear teeth aligners into your practice can differentiate you from your competitors.
5. M&A activity has reverted to more normal levels in 2022.
M&A in the healthcare space surged in 2020 and 2021 but declined to more normal levels in 2022.
Key takeaway: Following a surge in M&A activity spurred by the pandemic, while private equity activity broadly has slowed, the pace of dental consolidation appears to be defying this trend. With the dental industry less fragmented than before, it is exceedingly important to focus on scale to compete with the increasingly larger dental platforms. Look to leverage more technology in your practice to improve profit margins and scale your business to a more competitive level
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About the Author
Simeon is the Chief Investment Officer of Aprio Wealth Management and the Director of Aprio Family Office. Simeon brings two decades of professional investing experience in publicly traded and privately held companies, as well as senior-level operating and strategy consulting experiences.
As partner-in-charge of Aprio’s National Dental Industry Practice, Brad McKeiver arms dentists with real-time financial data about their practices. He has helped numerous dental practitioners make informed business decisions that focus on driving increased practice profitability, growth and value.