Canary in the Coal Mine

The R Word

Many economist are nervous to even say the word recession as mentioning it can sometimes be a contributing factor in it happening. The Fed has been carefully managing interest rates to tame inflation and the result may be a recession. Technically, a recession is defined as a fall in a country’s GDP (gross domestic product) over two consecutive quarters and since GDP is not calculated until after the quarter, recessions are defined historically.

But we are all living in the present, so we need to be aware of slowing economic indicators that give us a hint of the economic conditions around us and how we should react to those signs (the canaries). Here are some canaries that I have noticed recently:

YTD collections for 2024 are the same or lower than 2023 for most of our clients.
My uncle in Calgary, Canada emailed regarding Canada’s poor economic conditions.
Home inventory is way up in Bend but sales are way down.
The charitable giving to the local homeless shelter is down 20% over last year.

Individually, these signs do not mean a recession is coming but together, they lead me to believe that at least in my neck of the woods, we are experiencing an economic slow down. Think about some canaries in your area that may affect your practice.

Then put a plan of action into place that will keep you and your practice on a continued path to financial success.

Three Ways to Prepare Personally:

Reduce Spending, particularly spending on non-essential items, immediately. Review your spending and budget to determine those purchases and subscriptions that are not necessary.
Pay off your credit card debt now. This is should be done regardless of economic conditions but even more vital in a recession.
Ensure your emergency fund is funded. Have at least three months of living expenses in reserve in case things at the practice get tight and you need to reduce your pay.

Seven Ways to Prepare Your Practice (good ideas regardless of recession):

Focus on High-Value Services In-House. Offer essential procedures such as extractions, implants and sedation dentistry in-house. Keeping these high-value services within your practice reduces the need for referrals and ensures you capture more revenue from existing patients.
Enhance Phone Call Management. Ensure that every patient inquiry is answered timely by establishing call back protocols, using virtual assistants and closely monitoring call answer rates. Missed calls are missed opportunities for revenue.
Segment and Optimize Your Google Ads. Break down your Google ads into specific categories (e.g., wisdom teeth, hygiene, brand awareness) to track which areas are driving the most valuable traffic. Adjust your spend accordingly to maximize ROI or potentially look at ad spending outside of the Google platform.
Offer Flexible Financing Options. Introduce and emphasize monthly payment plans for treatments. This approach makes dental care more accessible to patients who might otherwise delay or forego treatment due to financial concerns.
Educate Patients on the Cost of Delay. Communicate the financial benefits of addressing dental issues early. Highlight how delaying treatment can lead to more extensive, and thus more expensive, procedures in the future.
Leverage Your Hygiene Department. Confirm your hygiene department is maximizing every patient visit. Pre-block appointments for more complex procedures like scaling and perio treatment. Focus on thorough diagnosis and treatment planning.
Optimize Your Online Scheduling System. Ensure your online scheduling system is user-friendly and shows availability for appointments, particularly emergency slots. Patients are more likely to book if they see available times, and this can also lead to an increase in call conversions.

Jeff GullicksonOctober 8, 2024