Does franchise dentistry make sense in this economy?

It’s difficult to discuss dental franchises or corporately managed dental practices without inciting passionate opinions from all sides. The independent, sole practitioner model seems so ingrained in the dental industry psyche that those offering alternative models are often subject to, at worst, demonization as dental “mills” focused on profits instead of patients.

There have been articles written to air the dirty laundry of both sides. The question here is not whether franchise or corporate dentistry is a superior model, but rather, is it a more attractive option than even a year ago because of the impact - real or perceived - of the recession on the dental practice.

Cost savings
The most tangible benefit of franchised or corporately managed dental practices is cost savings realized through group buying/negotiating power.

“We are an advocate for the dentist. We have an R&D department that evaluates products to see what works best for the needs of the dental office and then, when we choose one, for example, a digital sensor, we get a deal. We know what works and we get the best pricing on a product. It can be as simple as negotiating volume pricing for dental supplies or testing and sourcing various dental laboratories,” Dr. Rick Workman, founder and CEO of Heartland Dental Care, a dental practice management company working with more than 250 dental practices in 14 states, explained. “We make sure people don’t get ripped off.”

Definitions

corporate dentistry (n) 1. a company-owned-and-operated dental care facility

franchise dentistry (n) 1. the practice of dentistry under a trade name, the rights of which have been purchased from another dentist or dental practice

Similarly, Pacific Dental Services, working with 195 dental practices in 5 states, helps practices invest in new technologies that are cost-efficient and help save valuable time over the course of the day, as well as helping new doctors with site selection and lease negotiation.

That negotiating power can go beyond products as well to include a major issue for many dentists: Insurance.

“Heartland doctors receive a fair payment for their services, often above what the solo practitioner across the street would receive,” Dr. Workman said.

“If, as a single practitioner you’re forced to accept low fees or have to turn down certain insurance, that hurts the patients. The individual dentist is at an extreme disadvantage.”

Another way this structure can help cut down costs is by centralizing administrative work such as human resources, payroll, accounts payable/receivable and marketing. Dazzle Dental, for example, is a franchise opportunity created around the idea that dentists should be dentists, focused on matching business professionals, trained in the field of practice management, with highly skilled, carefully selected dental practitioners.

“Our dentist have total say in all dental issues - we’re not there to dictate how they should diagnose or what treatments they should offer. We’re there to support the dentist and try to make treatment affordable to patients,” Steven Krolak, President of Dazzle Dental, made clear. “Our goal is to provide an environment where the dentist can see patients instead of dedicating one or two days a week to paperwork. Our marketing department goes out and delivers the patients and our dental staff can focus on providing the best possible care.”

Lastly, dental franchising and corporate-run practices can provide dentists nearing retirement age flexibility in the way they transition out of regular practice.

“Today, the reality is that even if you have a highly successful dental practice, it is extraordinarily difficult for a buyer to get financing. But bigger groups, such as Heartland, are preapproved,” Dr. Workman said. “Consider dentists of a certain age who want to sell. You can sell and walk away - the new buyer has to get in there and help pay for the mortgage. With Heartland, you can sell, take the money, and stay on to figure out over the next 3 to 5 years what you want to work on when you retire. We allow dentists to phase out while doing frontline dentistry. They get to enjoy their career without management headaches.  It is common for me to hear from our dentists that it is the most enjoyable time of their career and they wish they had done it sooner.”

Other valuable services these organizations can provide: CE and training, as well as opportunities for community outreach.

But what do you give up?
Each dental franchise or corporate management group is different. There are some that may infringe on treatment planning while others trust dentists to make the right call. In any situation, the main thing you are giving up is control.

Most of the groups we spoke with believe that while dentists may lose financial control, the financial gains they see are enough to make that up. The greater hurdle for many previously independent practitioners is making the transition from ownership to leadership - an important distinction in these types of models. It is fair to say that certain personalities are a better fit than others.

“The people who do the best at Heartland Dental Care are the dentists who are open, positive and mentally flexible. They have to be willing and able to work in a team environment and feel comfortable with what they do. An open, positive dentist is the type who would invite someone into his or her practice and ask, ‘Tell me what you see. How can I do better?’ There are a large number of dentists who would ask, ‘Who the heck are you to offer me any ideas? I’ve got this under control,’” Dr. Workman explained. “We’re not there to look over their shoulder - that’s the stereotype. We work to improve the doctor leadership because we know that’s extraordinarily important to the success of the dental practice.”

Amy Morgan, CEO of the Pride Institute, a leader in dental practice management and CE, couldn’t agree more. “Dentists who opt to be an employee versus a leader or owner have a different mindset. In the patients’ and staff’s minds, however, you are a leader - whether you want to be or not. That old ‘I didn’t go to dental school to be a manager’ line doesn’t work,” she said. “No one is going to care deeply if there is not investment from the dentists. I’ve seen good and willing staffs be ruined by less effective dentists who were refusing to lead them in a positive direction. And that doesn’t just go for staff management, but for patients as well. There needs to be a willingness to make sure the patient is committed to treatment and that he or she has a great experience that leads them to follow through and refer. Having only a ‘worker bee’ mindset can be damaging to the franchise.”

Another concern is that the dentist and staff’s personalities would be drowned out by corporate mandates. Many groups, such as the Dental Care Alliance, allow affiliated practices to have their own identity, operating under various names in an effort to retain that individualized feel. Likewise “there’s plenty of room for an office affiliated with Heartland to adapt to their personality and local conditions,” said Dr. Workman.

“There is plenty of room for the individual. As a group, there are philosophies that can arise that I would cheer on-having a real person answer the phone, trying to see someone who calls in with a toothache that day, etc.”

The important thing to remember is not all dental franchises and corporate management groups are created equal. It is up to interested dentists to do their due diligence. “If something looks to simple or sounds too easy, it’s probably not real,” Morgan said. “There are no silver bullets and there are inefficiencies in all models. You have to be willing to do the research and the work or you might be one of the people who ends up having a negative experience.”

With the things that might change in transitioning to franchise or corporate model - practice management software, technology, etc. - you’d be surprised what stays the same.

Myth busting
As someone who would describe herself as once having been “rabidly in the fight” between traditional solo practice and corporate models, working with several ‘corporate’ groups made Ms. Morgan rethink her opposition.

“I can pompously sit here in my white tower and say that the private model is best in quality, experience, staff, and what have you, but the fact of the matter is, I got my paradigm shifted pretty significantly in working with the corporations themselves as well as the staff, from the receptionist to the managing dentist,” Morgan explained. “I used to believe that you couldn’t possibly be ethical and work with a franchise, but I was surprised.” During the time that she and other Pride consultants worked with these groups, there were two main myths they saw dispelled:

1. You can’t be a franchise and be patient-centered.
“Obviously, there were staff that cared less and more, but the truth is, in any of my activities with the franchisees, patients came in loving the staff and the feeling was mutual,” Morgan said. “There wasn’t that evil, ‘Take a number, I don’t care who you are,’ feeling. Relationships were still very important.”

2. The staff isn’t invested.
“The staff really do care. That doesn’t change. Because of the franchise there was more structure, which I like. There were detailed job descriptions,” Morgan offered. “There was a tangible pride of belonging and you could tell people were focused on growth through conferences and staff meetings. Of course, in any big group there are outliers-mediocre performers and stars-but everyone was invested in the patient’s well-being. There was incredible loyalty and longevity in almost every practice I went to.”

Is this the year to go corporate?
So are the economic factors at play in 2009 enough of a motivation to reconsider a dental franchise or corporately run option? Not surprisingly, most of the companies in question think, “Yes!” but with different reasons.

“Over the next 20 or 30 years, if the assumption is that third party payment, labor laws, and the world are growing more complex, then group practice management companies are going to become much more relevant and their services will become more critical,” Dr. Workman predicted. “Group practices are growing 20% per year and we’re going to see that number continue to rise.”

“Models like this make a lot of sense,” Krolak agreed. “My background is in franchising and, statistically, when the economy gets tight like this, sales of franchises go up. People can rely on a stronger, more secure model that is safe from irregularities of the stock market. You’re buying into a proven system and don’t have to deal with the headaches of running the business end of things.”

On the other side, Ms. Morgan believes that any decision this big should be based less on current economic factors and more on long-term goals. “I would recommend they ask the same questions they would for any major transition: What do I want, not what do I need. Even in this economy, many people hear all the bad news and perceive that they are limited in opportunities, so they panic and embrace solutions that have nothing to do with what they want to be doing 2, 5, 10 years from now,” she said. “Dentistry is relatively economic proof and to look at your options with that viewpoint of scarcity is counterproductive. Think location, kind of dentistry, kind of patients that you’d like to work on and, most importantly, do I want to be a boss or an employee. This can be hard because dentists are trained to be probability thinkers, where as this requires possibility thinkers.”