Dental Business Coach – stagflation and the next ‘crisis’ in dental hygiene

Dental Business Coach stagflation

This month the Dental Business Coach, Chris Barrow, addresses the stagflation in dental hygiene and offers some hard truths on how to survive it. 

‘Just over two years after Covid-19 caused the deepest global recession since World War Two, the world economy is again in danger. This time it is facing high inflation and slow growth at the same time. Even if a global recession is averted, the pain of stagflation could persist for several years – unless major supply increases are set in motion.

‘Amid the war in Ukraine, surging inflation, and rising interest rates, global economic growth is expected to slump in 2022. Several years of above-average inflation and below-average growth are now likely, with potentially destabilising consequences for low- and middle-income economies. It’s a phenomenon – stagflation – that the world has not seen since the 1970s.’

– David Malpass, president of the World Bank in June 2022.

Great. That’s all we need – double-digit inflation for the 85% of the UK working population who have never had the experience of paying rapidly increasing bills.

Many are looking for better work

I’ve said here before that, back in the 70s, (cue rolling eyeballs and raised eyebrows from anyone under the age of 50) we would never have dreamed of knocking on the boss’s door and asking for a mid-term pay rise to cover increased costs at home.

We either tightened our belts or looked for better paid work.

Folks nowadays aren’t used to the first of these tactics. After all, who wants to be seen dead with an out of date £1,000 communication device (what? you have an iPhone 10 – is there something wrong?), pausing their Mindful Chef subscription or canceling a streaming or sports channel?

It seems that, in dentistry, many are exercising the second of these options and looking for better paid work, either within their existing skill set or outside of the profession.

We’ve all heard of team members leaving to start dog-walking businesses, open coffee shops, move to the country and escape from the dental appendix and all it means.

Still more are now falling prey to the advertisements and approaches of those who would headhunt them by offering more pay – notably the bigger corporates who are undoubtedly even more anxious than most to have a full complement of staff and clinicians.

‘It’s not always about the money’

In the last few weeks, I’ve heard rumours of:

  • £23 UDA (that’s for the associate, not the practice)
  • A return to 50% for associate fee per item sales
  • £60 an hour dental therapist
  • The golden hello at all levels.

‘It’s not always all about the money’, I hear frequently. ‘People stay in a job because they feel appreciated, have a career pathway, work for an organisation or business that have strong core values, a great vision, an active CSR programme, lots of fun – and pay good wages.’

I 100% agree that all these characteristics have to be present when your business is going from good to great. But let’s also be realistic.

Let’s be realistic

You cannot pay for the 60% increase in your gas and electric bill, the two pound a litre for your diesel or this year’s summer staycation with vision, mission, roles, and goals.

I’ve been talking to a client over the last few days who has implemented a hugely successful dental plan conversion over the last two years. The patients in a previously full NHS practice have joined the plan in droves.

This is partly because of the ‘dental desert’ around them. And because the practice does things right.

Hygiene recruitment war

However, a significant number of the hygienists who worked at the practice have been tempted away by more money elsewhere. There is a hygiene recruitment war going on in their postcode. Demand for dentistry is up and the supply of hygienists/therapists is down.

Look at these numbers shared with me this week:

Practice A:

  • 1,689 plan patients = 3,378 hygienist appointments required per year (plus any private patients paying)
  • 1.300 available appointments per year, minus set leave (not including sick days) = 1,200 appointments per year
  • Shortfall of 2,178 appointments per year, increasing by 200 each month we sign 100 patients.

Practice B

  • 1,663 plan patients = 3,326 hygienist appointments required per year (plus any private patients paying)
  • 2,028 available appointments per year, minus set leave (not including sick days) = 1,872 appointments per year
  • Shortfall of 1,454 appointments per year increasing by 200 each month we sign 100 patients
  • Each appointment is 30 minutes
  • Next available hygiene appointment is December 2022.

Some words of advice

Now before you start, we discussed this scenario on my weekly client webinar recently.

Some of the suggestions were obvious:

  • Stop taking on new plan patients now. You cannot sell tickets for the gig if there is no band
  • Ask your low-producing associates to pick up their scalers and help with the catch up
  • Accept that the £30 an hour that you have been paying your hygienists is too low and that you need a rapid escalation in pay to attract new people. In other words, take part in the wage war that is going on in your area
  • Accept that you may have to run at breakeven or a loss for a while.

Can you think of any other advice to give this client?

I see this as a dramatic example of a phenomenon that most of you reading this post will have to face in the weeks and months ahead.

I’ve said it before, and I’ll say it again:

  • You are going to have to put the wages/fees up for your best people
  • You are going to have to pass that extra cost on to your patients very quickly
  • If you have a dental plan that can only be adjusted annually, you are going to have to increase your fee per item prices by an extra amount to compensate for the lack of plan profitability in the short term
  • You are going to have to watch your back. Head-hunters are planning to entice your best team players away
  • You are going to have to become a head-hunter.

Tough love. Sorry, but times like this haven’t been around for a very long time.

I’m going to pull the age card: I was there in the 70s and I know what it takes to survive.

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