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Podcast: Dr Roger Levin with Takeaways from the 2021 Orthodontic Practice Performance Survey


Alison Werner:

Hello, I’m Alison Werner, chief editor of Orthodontic Products. Today, we’re going to take a deep dive into our inaugural orthodontic practice performance survey. We at Orthodontic Products partnered with the practice management consulting firm Levin Group to survey orthodontists, like you, to find out about your practice’s successes and challenges in 2021. Joining me today to talk about this is Dr. Roger Levin, CEO and founder of Levin Group. A recognized expert on orthodontic practice management and marketing, he has written 67 books and over 4,000 articles, including for Orthodontic Products, and regularly present seminars in the United States and around the world. And I know he will be at the upcoming AO Annual Session in Miami Beach in May. Dr. Levin, thank you for joining me.

Dr. Roger Levin:

Alison, it’s a pleasure. A pleasure to work with you. And I’m really looking forward to the opportunity to present this information in our podcast. It should be very insightful for our listeners.

Alison Werner:

Yeah, definitely. So let’s dive in. When we first talked about doing this survey about midway through 2021, I know we were both really curious about the reality of 2021 for orthodontic practices. They’d gotten through the unprecedented year that was 2020 and the pandemic. And even though 2021 didn’t see the closures that the pandemic caused the preceding year, it was still very much affecting consumers and the practice’s bottom line, correct?

Dr. Roger Levin:

It was. But actually, Alison, what’s interesting is a lot of practices did really well. There’s a term I use called pandemic effect. And if you were in the restaurant business, as we all know, typically most of them got hurt pretty badly. But orthodontics actually benefited in ’21 from the pandemic in that people had more disposable income, more people were working from home so they had more flexible schedules. And we saw an uptick in a lot of practices. And then many practices actually had their record production in 2021. And there are a lot of reasons for that, but the pandemic had more of a positive effect on our orthodontics than other industries.

Alison Werner:

Yeah. And that was definitely kind of surprising to come away with. So let’s talk about the survey itself. Now, we collected the data from orthodontists between January and February of this year. And it was an online survey. And we asked respondents to consider their full year of 2021 for practice performance when answering the questions. Can you talk about who participated in the survey?

Dr. Roger Levin:

I can. And I want to stress to everybody that this is a 2021 survey. We didn’t ask about January ’22, February ’22, and what trends we might see going forward. Although if you want to touch on those later, we have enough of the year behind us to at least get a sense. But what we found, and I’m going to give numbers, and if I give numbers, I’ll try to interpret them along the way, otherwise it’s just a lot of data. And I love data, but you have to understand what the data means. So most of our respondents, 84% were owners or partners in a private practice. So the majority of this survey focused on private practice orthodontists.

Dr. Roger Levin:

We did get responses, only about 6% of the respondents were associates, which is been very typical of these surveys. Associates aren’t as motivated to answer them. They don’t even often have all of the information about the practice that they need. And 10% were employed by DSOs, which was a little higher than I expected, because very often when you’re employed by a DSO, you are an employee, there’s an employee sense, and you don’t typically respond to practice surveys. So it really is a private practice survey in that regard.

Alison Werner:

So what can you tell us about kind of the gender breakdown of the respondents? Because there is this influx of female practitioners with the residents that are coming out of school. So what would you break down there?

Dr. Roger Levin:

Well, I’ll break it down into four areas. Interestingly, but not surprising once I thought about it, the average age of the respondent was 51 years of age. And the reason at first I thought, oh, that’s interesting. What does that mean? But then I looked, as you know, I’m the CEO of a consulting firm, we were founded in 1985. And I would say the average age of our client base is about 47 years of age. So I thought that was interesting that the person who felt that they wanted to answer the survey was similar to the age group of people who are looking at, okay, what do I do with my practice? I think there’s a correlation there of some sort. Orthodontics for many years was a male dominated field. And 73% of the respondents were men, but 27% were women.

Dr. Roger Levin:

And I think as we do this survey year after year, which we’ve kind of talked about making sure we have an annual survey, we’re going to see that number of female respondents going up. So I was delighted to see the 27% of the respondents were women. And basically we find that if you look at the field itself, about 73% of orthodontist are men and around 27% are women, different than the class makeup of undergraduate dental school where we’re running around 50/50. But the residencies become a filtering at a higher level. So we have a fairly representative response and I was glad to see that across the board.

Alison Werner:

Yeah. Definitely. I agree. Well, so let’s dive into the survey results. So we pulled all the results together into an article that you’ve written that will be in our April, May issue of the magazine and will go up online on our website where listeners to this can go find the full results and a full breakdown of what they mean. But when you were writing that article, you broke the findings into four categories. So I thought we’d move through those one at a time and kind of dive into what we found. And so let’s start with the first one, which was financials, which you broke out as production, profit, overhead and fees. What were the key takeaways there?

Dr. Roger Levin:

Yeah. And I want to stress to everybody listening that the data’s really important, but then you have to interpret the data. And again, I love data, but I never want to just report data. I also want help people understand, at least from our perspective and my perspective, what does it mean, and how might it affect you and how might it help you? So what we found was that 2021 in general was a positive year. And I want to warn everybody, not in a negative way, I tend to be an optimist, but I also try to be a realist, that 2022 might not automatically be as good for everybody as 2021. I hope it will be. But what orthodontists aren’t asking is, well, why did I do so much better in 2021? What did I do differently?

Dr. Roger Levin:

Because the pandemic effect, and we’re still having the pandemic to some degree as you and I are having this conversation, but the pandemic effect will gradually go away. And that might take away a little bit of the production increase that practices saw in 2021. So the first thing is the average production of an orthodontic practice in 2021 was $1,643,000 and change. And unfortunately, we didn’t do the survey in ’20. Well, if we did it in 2020, it wouldn’t matter. Even in our consulting, we throw out 2020 and we compare everything to 2019 and 2021, because 2020 was such a skewed year. So $1,643,000 plus is a nice revenue. It also substantiated, and I want to make this point, we have a belief that many practices can do $3 million in four days a week.

Dr. Roger Levin:

Now you have to have the patient flow. You have to have the referrals. Location helps, et cetera. There are a lot of factors. But it really substantiates, if you can do 1.6 million, you can do 2 or 2.2. I think most people would say, yeah, 1.6. This was the average, not the ceiling. So that was really good to see. So what’s really interesting is the breakdown. 79%, and that’s a big percentage of the pro practices increased production in 2021. Now, again, there’s pent up demand, but I’m going to tell you my opinion, just like I give some opinions in the article coming out in Ortho Products, Americans had two major factors that increased orthodontic patients. Number one, they weren’t spending money in four traditional areas, luxury, travel, entertainment and restaurants. I took my family out to a nice restaurant last week and it reminded me how much money I was saving during the pandemic.

Dr. Roger Levin:

It’s like I got the bill and it was like, wow. It wasn’t unfair, it was just like, wow. So there was a lot of extra money to spend in other places. And then government stimulus packages and tax benefits gave people a lot of excess income. And I’ve talked to many orthodontists that have heard from patients, oh yeah, I’ve wanted to do this for years. I can do it now. Or flexibility in their schedules. But what’s really interesting is of the 79% that increased production, 66% increased by over 10%. And that’s a very healthy number, but even better, 40% of the practices increase their income by over 20%. Now that’s a giant bump in a single year. So that’s really great. And I’m thrilled for the orthodontic practices, we just have to watch carefully to see what happens this year. I think we will see a little bit of a back tracing of production just for natural circumstances.

Alison Werner:

Yeah. Yeah. No, it sounds like it. Now, one of the findings that was interesting was what respondents reported with regard to overhead.

Dr. Roger Levin:

Yeah. Well, overhead, it’s always the item to watch. And when we look at 2021, overhead did okay. It was at 54% on average. We recommend 49%. And it is a big difference. It sounds like, well, 5%, not so bad. But what we don’t realize is if you are losing 5% on a $1 million practice, you are losing $50,000 a year of income, and that’s bottom line income. So if you could pick up $50,000 a year, year after, year after year, that’s a big deal. And this is where I love to correlate the numbers. We might say, well, if the average practice was doing 1.6 million, that 5% isn’t so important. But where it becomes important, and one thing we did not put in the article because we didn’t measure it, were student loans because many orthodontists today have student loan debt, and these private practicing orthodontists have practice debt.

Dr. Roger Levin:

Yeah. And then if you want to have a house, you’ve got house debt and maybe car debt. And so today’s orthodontist has more debt opportunity than the last generation that typically had very little or no student loans. So to me, it’s really important to access every percent of overhead that you can. Now, here’s one more thing that people don’t think about, overhead was 54%. It might really be this year 57%, because the higher the production, the lower the overhead percentage. So if production drops back even 3, 4, 5% this year, the overhead percentage will go up 2 or 3%. So now we’re not talking 49%, we’re talking 57%. The gap gets bigger. So of course, we always encourage everybody to run as efficiently as they possibly can.

Alison Werner:

Well, let’s get into the second category within that you broke the results down into, and that was current challenges and future outlook. Now, no surprise respondents identified staffing as a major challenge, even a crisis. So how is that affecting practices and what did you hear from the respondents?

Dr. Roger Levin:

Well, staffing, early on I started making the statement, we don’t have a staffing challenge, we have a staffing crisis. And in reality, we have an employment revolution in the United States. Ortho is no different than the rest of dentistry other than the fact that they don’t have to deal with hygienists. And just out of interest, we’ve lost the equivalent of 10% of our hygienists if we look at full-time equivalents. So ortho, fortunately, doesn’t have to worry about that. Unlike in Canada, where you have to have hygienists in the ortho practices due to some of the regulations. So in reality, staffing is a very, very serious issue right now. And we could spend hours on this. When we look at challenges, 54% of ortho practices stated that staffing was their biggest challenge. And I can tell you from another survey in general dentistry, just to give an analogy, 46% of the practices are seeking staff members today, which is an unbelievable number.

Dr. Roger Levin:

The other problem we’re going to have, we have two major obstacles. Number one, we need certain people that are somewhat trained. Our technology is more advanced. You can’t take radiographs without being certified. And the other factor is that a lot of people are now going to insist on hybrid jobs. Part of the week in the office, part of the week at home. You can’t do that with your orthodontic assistants, for example, and some of your front desk. So we need to get really, really good at acquiring staff members and keeping staff members. By far staffing was the biggest challenge. Now here’s the part that you have to keep in mind. All of our data at Levin Group is showing that staffing costs are going up by about 10%. I mean, it’s just like inflation. It’s the biggest jump I’ve ever seen in 38 years.

Dr. Roger Levin:

And the only two ways to compensate for that, you can reduce your overhead, but keep in mind with overhead, the problem is you can only cut once. So once you reduce an expense, you can’t do it again. You can only go so low in overhead. So the infinite side and opportunity is increasing production. And I encourage every practice to focus on increasing their production, both because the pandemic effect that I talked about might go away, and because staffing costs, the single largest expense in the practice, they’re going to jump 10% in almost every orthodontic practice.

Alison Werner:

Yeah, absolutely. Yeah. No, I’ve heard the same things and the numbers just validated what we have been hearing. So, yeah. Now, just in addition to the staffing challenges, there were some others that respondents listed. So what were you hearing that they’re facing?

Dr. Roger Levin:

Well, 54% said staffing was the biggest challenge. Then second, 41% said overhead. And I’m not surprised. When you talk to orthodontists or any type of dentist or specialist, the two numbers they fixate on are practice revenue and practice overhead. So overhead became a challenge with PPE. Overhead became a challenge. But I think for a lot of people, it’s the staffing factor that also has them saying overhead. They’re watching their expenses go up. 39% said staff retention. And to me, the greatest solution in staffing is keep the staff you have. So that’s really important. And they’re recommendations of how to keep your staff happy, create a fun environment, little creative ideas, bringing in lunch periodically, stocking the refrigerator.

Dr. Roger Levin:

We have one orthodontic practice, every Monday is called miniature Monday. There’s a basket of miniature liquors in the staff room and everybody gets to take two or three home, with a joke being, don’t drink them at nine o’clock in the morning. But you really want to work to keep your staff in place. So staff retention is a big deal. 37% said general dentist doing ortho. And I get that. More GPs are involved with the liners. But I’ve got a huge point to make and I’ll make it now, which is when we looked at the data, and I’m sure you and I will get to this part of the conversation, we found using five different formulas, we approached it in five different ways and they all came out within 10% that 3.6 billion, not million, billion dollars a year of revenue is referred by general dentists to orthodontic practices. That’s not patients, that’s realized revenue, 3.6 billion.

Dr. Roger Levin:

So we absolutely have GPs competing with orthodontists, but we also have GPs supporting orthodontists. And very often it’s the same GP. They’ll do 6 aligner cases in a year and refer 25, or 35, or 50 cases out. So as you know, Alison, in the business world, it’s not unusual for your biggest customer to also be your biggest competitor, and dentistry now has that. And we need to work with that, not make a decision that GPs are doing everything because they’re not. But 37% saw that as a big challenge. 21% mention declining insurance. And the reason that’s not higher, at least not yet, is that in general practice insurance would be much higher in the challenges. It would be number one, or two, or three, because they’re lowering reimbursements for general dentists much faster. I don’t know that insurance company will lower orthodontic reimbursements as much as not raise them.

Dr. Roger Levin:

So that came up on the list, but only at 21%. And then 18% said competition from DSOs. And the reason for that, again, general dentists would rank DSOs in the top two or three, but DSOs don’t have as many orthodontists working for them yet. They’re getting into it. As you know, Aspen Dental has launched its own branded aligner in 900 offices at a fee of $1,999. And by the way, everybody, don’t shoot the messenger. I’m just stating the facts that are out there. It’s called confront the brutal facts [crosstalk 00:19:45] … what’s happening. But the DSOs have not engaged a ratio of orthodontists yet where it ranks as one of the top two or three. It may in the future, but we’re just not there yet. So that was really interesting to see the breakdown of challenges. I was fascinated by the list when it came in.

Alison Werner:

Yeah. No, so was I. Now, despite these challenges, when we asked if the respondents held a positive outlook on the future, the majority said they did, correct?

Dr. Roger Levin:

Yeah. For everybody’s benefit here, there is something in the business world called the Consumer Confidence Index. And it’s actually, economists use this a lot. I follow this very closely, because to some degree you can look at the Consumer Confidence Index in the business world, and that’s everything from how much groceries are going to cost, to gasoline, to buying a new car or house. And there’s a lagging time. When it’s really high, you can assume things are going to stay pretty good. And when it starts to slip, you can assume that the stock market or something, investment markets will start to slow down six months later or so. So what’s really neat that there was a very, very high feeling in regard to orthodontists confidence in what will happen next year. And I’m trying to remember the exact number, but it was very, very high in terms of about 70% percent stated … No, it was exactly 70% stated they were very or extremely confident that they’ll maintain a successful practice for the next five years.

Dr. Roger Levin:

Now having said that, and I think ortho’s going to be in great shape. I think there’s going to be more of a gap between practice success. But having said that, what we surveyed didn’t have the Ukraine war that we’re dealing with now. And I’m not getting into geopolitics, but that will affect certain supply chains, certain economics. So as you know, Alison, if gasoline goes way up, and so far we’re holding, but if gasoline doubles, that’ll affect what people are spending in other places. So even the high inflation that just came out yesterday from the Federal Government over 8% for the last month, but a lot of that was gasoline prices. That was a huge amount of that. So I’m glad orthodontists are conf fit in, but they are coming off one of their best years in history. And may it continue. I hope it continues and we get great results next year.

Alison Werner:

Yeah, exactly. Exactly. Well, okay. So let’s move on to the third category you broke the results down into, and that was patient volume and flow. And in terms of patient flow, the majority of respondents reported that they had recovered to their pre pandemic patient volume level. What do you think is contributing to this recovery, especially since staffing is such a challenge?

Dr. Roger Levin:

So orthodontic practices, Alison, did better in volume than the rest of dentistry for many reasons. One of which is if patients were in the middle of treatment, they had to be seen at some point. And secondly, orthodontists did far better with teledentistry than the rest of dentistry. In fact, they’re the only aspect of dentistry really using teledentistry to some degree right now. So the volume in orthodontics was not nearly as affected as other parts of the profession. And 80% of practices reported that in 2021, remember that gave them all of 2020 to figure it out 80% reported the same or higher volume that they had had pre COVID, which would be 2019. 82% reported the same or higher number of new patient volume.

Dr. Roger Levin:

So when I said that orthodontics is held up well, well, that only happens if you get enough new patients in the door. And the volume of new patients and the volume of patients for most orthodontic practices is pretty close, in my opinion and the data, to what it was pre pandemic. And I see many practices that are at the exact volume they were two years ago. So ’21, orthodontists did very well in volume and they weren’t struggling nearly as much as other parts of dentistry.

Alison Werner:

Yeah. No, I definitely agree with that. You mentioned teledentistry as kind of helping them manage that patient volume. Were there any other efficiencies or factors that you think helped with patient volume, especially given the staffing issues?

Dr. Roger Levin:

Well, first I’ll comment on teledentistry. When the pandemic hit, we started hearing about all kinds of teledental companies coming out. And I’ve been around long enough, it reminded me of some of the other emerging technologies that exploded on the scene, and then there was a huge pullback. But in ortho, teledentistry really lends itself extremely well. You can do new patient exams. You can do checks, especially with aligners. You can do post ops. You can do retainer checks. The only thing as a subjective comment, I just encourage practices be careful. If you keep patients out of the practice too much, they’re going to start to think about the value for the fee. Even though it’s more convenient not to come in right, there’s always that relationship and face to face factor.

Dr. Roger Levin:

But teledentistry was excellent. Ortho has always been a volume based business, Alison. So most ortho practices that we see could easily handle 50 to 60% more patients. Now the systems they have often hold them back. The scheduling holds them back. Here’s a great example. We do something called procedural time studies, and I encourage everybody listening to this to go do them. You can do them. And if we save 10 minutes in hour, which is now routine when we do these studies, and we rebuild a schedule, saving 10 minutes an hour increases the orthodontist production time by two months a year. Two entire months a year. 32 days in a four day a week practice, 48 weeks a year. This is not arguable. This is just math. We do this study. So many practices are in a habit pattern.

Dr. Roger Levin:

Ortho has a huge opportunity to access time potential, and that’s making a big difference. The second thing is technology. Digital impressions are much faster. Workflow, a lot of the workflow. I’ve listened to all your podcasts on workflow. I read your articles, which are great on different technologies. Ortho should access any technology that makes practice faster. Certainly we can talk about quality and efficiency or return on investment, but speed is always a return on investment. And if ortho can use technology and workflow, which a lot of practices are doing to be faster, then they’re going to be able to see more volume. And then you fill that up with your referrals, and production goes up and across, and everybody knows what that means across the board. So, great question. Thank you, Alison. I like that question.

Alison Werner:

Well, no, thank you for diving into that. Now, for a final category in the survey, you broke it down to sources for new patients. Now, what did our respondents say, or where did our responds say they are getting their new patients from?

Dr. Roger Levin:

Yeah. Well, as you know, I have been studying new patients for ortho, in fact, that’s my lecture coming up with the AAO, for 38 years. And I’m going to preface it by saying that our opinion, this is just opinion, not data yet, I’ll get to the data, is that there are five areas that orthodontic practices can access for referrals. And our opinion is go access all five. The first one of course are the patients. The second are the parents. Third are referring doctors. Fourth is social media. And fifth is the community. And the reason it’s dangerous to rely on one, one can do it all for you, but if that stream starts to slow down, then you got to go hunting for more referrals. So we found that 37% of referrals to the orthodontic practice came from referring doctors.

Dr. Roger Levin:

And that was the beginning of our mathematical analysis, where I get to say now the $3.6 billion in revenue to ortho is coming from referring doctors. 29% comes from parents of existing patients. And the way we say it that way is the 14 year old’s probably not referring. We like to think that if the kids have fun, they go out and refer their friends. They may tell their friends, but the parents are just an enormous opportunity. I’m not a very good joke teller, but in seminars I make the statement that the mother net is bigger than the internet, and everybody laughs because we understand what that means, mothers talk to mothers. 13% come from your adult patients. Ortho still has not accessed the number of adult patients. Now last year they had a lot more, because people had more money and more time. But I think the adult market is, whatever challenges ortho has going forward, the private practices have a huge opportunity to expand adult patients.

Dr. Roger Levin:

Social media, excuse me, is obviously huge and growing. The problem is that everybody’s on social media. So if TikTok comes out and you’re on there first, that might be a great opportunity. I think social media is really important, but I only see it as one leg of the five leg stool. And then lastly, only about 4% of patients, according to practices, are coming from their community activities, meaning sponsoring sports teams, having their name up there, being in the ad book or the yearbook. Now I do want to give you a caveat that after all this data, which is this data’s based on what practices are measuring. We think that practices are making one huge mistake in that when they say to a patient, how did you hear about us? One of the most common answers is your website. You’ve got to go back one level more, because a lot of times they might have been referred by a parent or a referring doctor then went to your website.

Dr. Roger Levin:

And when you say to them, how’d you hear about us? Oh, the website. So the website companies can say, well, we’re going to get you all the referrals you need. Well, actually, they’re good, but they’re step two, not step one. So we’re not digging deep enough to really analyze where they’re all coming from.

Alison Werner:

Absolutely. I definitely agree with that takeaway. So pulling all this data together, what should practices take away?

Dr. Roger Levin:

I love the word momentum. In the world of marketing, in the world of business, the word momentum is so important. And the takeaway is congratulations orthodontics, you’ve got momentum. Whenever you’ve got momentum, everything is easier. But don’t rest on your laurels is my other takeaway. 2021 was a great year. And believe me, I’m thrilled. I want success for everybody. But some of that success was not because practices did anything differently. The question is, okay, we had a great year. Did we do anything differently? And part of that great year, or maybe all of that growth was because of the pandemic effect. And while you have momentum, that’s the best time to increase referrals, to have a very solid referral marketing program in multiple areas to shore up your staff. Don’t wait till people leave. Create that fun, positive culture.

Dr. Roger Levin:

Here’s a great example. Their practice is losing one, or two, or three staff members and they’re hyper focused on replacing them, but they’re burning out the existing staff in the meantime. Take care of your staff, because if you don’t, you’re going to lose some of them too. So it was a good year in a lot of ways, but there are underlying factors. I see competition in ortho growing. So you use that momentum to keep your flywheel spinning fast and keep propelling yourself forward by focus on referral marketing, get systems in place, solidify your team. And then of course I can’t help myself, my favorite subject, do everything you can to provide five star customer service, not only to your patients, but to your team.

Dr. Roger Levin:

And Alison, you haven’t heard me talk about this concept, but we are now telling dentists, and I just gave a lecture to a group of orthodontists about this, treat your team like customers. What’s your customer service plan for your team this year? They’re no longer employees. The days of transactional employment are coming to a close, which means I pay you, you do work. That’s coming to a close. People want to belong to something. They want a relationship. Treat your team as if they are your customers and put a plan together. And then you can go on for years having great, great growth in production. And you want your production going up every single year. If it does, you’re going to be fine.

Alison Werner:

Well, great. Well, thank you so much, Dr. Levin, for taking the time to dive into the survey results with me. I really appreciate it.

Dr. Roger Levin:

Oh, it’s a pleasure. I hope it’s interesting to people. And I’ll look forward to next year’s survey. It’ll be fun to compare this year to next year, which I’m sure will be part of our podcast next year.

Alison Werner:

Yeah, absolutely. Absolutely. And for those who would like to read the full findings, check out the full article on orthodonticproductsonline.com. And to our audience, thank you for joining us for today’s podcast. We will be back soon. In the meantime, you can find past Orthodontic Products podcast on the Med Corp Podcast Network. And to keep up with the latest orthodontic industry news, visit orthodonticproductsonline.com. Until next time, take care.

 

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