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With rising interest rates, a stagnating economy, significant tax rule changes for professional corporations and
increased revenue pressures, 2018 was another low point in a string of troublesome years for Canadian dental
practitioners. No single event more clearly echoed the growing tension than the Core Dental Partnership’s unexpected
receivership in Edmonton, Alberta on December 21.
Staff, patients and the media were all caught off guard by the shuttering of a number of clinics overnight – and many
correlated Core Dental’s fate with the introduction of a new Alberta provincial dental fee guide released in January
2018. However, with outstanding debts totaling more than $9 million and several other noted operational issues,
pricing concerns are only one sub-plot in a far more onerous story.
Practice owners are currently facing several headwinds which are eating into profitability. Real estate and equipment
financing costs keep going up. The market is largely saturated. Staff and equipment costs keep rising. And patients
– who are already navigating high unemployment and unsustainable debts of their own – are also pinching their
Now that there’s less freedom to shape service fees around other business restrictions, those other factors are
becoming more pronounced.
Like all businesses, the profitability of dental clinics depends on sound business planning, strong financial
management and impeccable customer service. But while it was previously possible to push strategic thinking to the
backburner, owners are now seeing that approach is no longer sustainable.
None of this is to say that it’s impossible to run an efficient and profitable dental business in Canada – it
certainly is. But moving forward, the focus needs to shift toward running a leaner, more efficient, more
While it seems logical that more clients will help grow dental practice revenue, owners need to consider whether the
rewards justify the investment. Promotional expenses such as marketing consultants, ad placements and incentive
programs are capital intensive and can quickly eat into potential profits.
The most obvious way to avoid this potential roadblock is to evaluate how well the practice is serving and maximizing
the return on existing patients.
Because they’re already invested in the business, current clients require less time, effort and capital to target and
engage. And because the practice already has detailed records about their dental history, there are fewer barriers
to target them with specific and value-added service offerings which will benefit both the client and the business.
Moreover, leveraging a customer relationship management system, owners can form a detailed understanding of what it
costs to retain, lose and acquire new patients while also leveraging existing and loyal clients to attract new
clients at little to no cost.
For example, by targeting the top five percent of patients who are influential in their community, show up to their
regularly scheduled appointments and pay on time, practices can nurture and further entrench these relationships and
leverage them for word-of-mouth referrals. For as little as ten hours per year – making phone calls, sending
personalized cards and emails – owners can significantly reduce their customer acquisition costs while measurably
increasing their qualified new patient leads.
There’s a saying in business that ‘what gets measured gets done’, which has never been more pertinent. But while
costs and revenues are critical, practices often over emphasize those two figures at the expense of all other
Balance sheet figures underscore how the business is performing, but they rarely explain why the business is
performing – or underperforming. Owners also need to consider what key performance indicators best contextualize the
strategic priorities of their practice.
How many appointments is the clinic booking each month? How many clients are rescheduling and how many are dropping
off altogether? What do clients like or dislike about the practice? And how likely they are to recommend it to
family, friends and colleagues?
Creating a system to capture and review this data – and it needn’t be cost intensive, either; a spreadsheet and
survey service will often suffice – will deliver a significant return on investment. Owners can uncover
opportunities to expand on initiatives that are driving patient engagement and retention. They can also use that
perspective to course correct on factors which are hindering performance.
Optimization allows owners to effectively differentiate their practice in the marketplace by emphasizing the
qualities that matter most to their clients.
Everyone understands that good dental hygiene is important. People are fully aware of the potential consequences of
not going to the dentist regularly. Yet practices still struggle to convince patients to show up for their two-plus
scheduled appointments per year. Why?
One possible explanation is that going to the dentist is inherently time consuming, costly and inconvenient. It could
mean taking several hours or an entire day off work. It’s difficult to predict other potential personal and
professional conflicts when booking appointments several months out. And there is little freedom on the patient’s
behalf to select appointment dates and times that are most convenient for them.
The wide range of available customer automation software available today may help remove many of these barriers to
entry. Through online booking and chat functions, clients can visit the practice’s website, browse a calendar of
available appointments and select multiple dates and times that are convenient for them. Moreover, these systems can
send reminder emails or text messages to clients several days ahead of the scheduled appointment. If a client does
need to re-schedule an appointment, they can easily log on to the practice’s website (or app) and quickly choose a
new timeslot that works – avoiding an awkward and time-consuming phone call.
In turn, the practice requires less administrative overhead to book appointments, make follow-up phone calls and
manage rescheduling. Further, these systems have proven to increase patient conscientiousness and follow through, as
well as grow existing client bases. The low barrier to entry and ease of service is attractive to new and
prospective patients and is a useful word-of-mouth marketing tool.
While Core Dental was perhaps the most notable dental insolvency case in Canada last year, it was not the only one –
and it certainly won’t be the last. But the fate of one business does not presage the fate of the entire industry.
Prudent owners will see it as the canary in the coal mine – cautioning against carrying too much debt, running on
too thin of margins and not taking a strategic approach to effective business practices.
Canada is a health-focused nation and Canadians will continue to care about their dental health. There are still
opportunities to thrive in the industry country-wide. But doing so will require finding ways to better engage
clients and get them in the chair more often.
Tim Dawson, CPA, CA is a Partner with MNP’s Professional Services group in Edmonton. For more information, he can
be reached at 780.451.4406 or [email protected] .
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