ADA: Dentists' incomes dropped 5% in 2009

Mar 10, 2010

Dentists' net incomes fell by 5% in 2009, according to a new ADA quarterly survey report. If the finding is borne out by the organization's more detailed annual survey, it would be the biggest drop since at least 2003.

Dentists have reported a decline in income for six straight quarters in the survey. In the fourth quarter of 2009, 56.7% of dentists reported that they made less money than they had in the previous quarter. Only 17% said they made more money.

"The fourth quarter of 2009 was another difficult period for dentists who participated in the American Dental Association Quarterly Survey of Economic Confidence," the authors wrote. "Although a number of indicators moved upward, the general results were quite negative."

“When patients come
in, they have to understand that they
are going to pay.”
— David Goodman, Academy of
Dental Certified Public Accountants

But a close look at the numbers shows a ray of hope shining through the gloom, said Kaiser Fung, a New York University business statistics instructor, who analyzed the report at the request of DrBicuspid.com. "While it is true that 2009Q4 was another 'difficult' period, I think [the survey authors] were excessively focused on the bad news," he wrote in an e-mail.

He noted that the numbers were an improvement over the previous year. In the fourth quarter of 2008, 58.1% of respondents reported a decline in income and 14.6% an increase. So maybe the decline is nearing the bottom.

On the other hand, the survey might be overly optimistic because it doesn't include responses from dentists who no longer practice, or make any adjustment for dentists who declined to respond. "Dentists who no longer practice in a recessionary environment are very likely to be the ones who suffered large declines in income," Fung said. And those with large drops in incomes, who may be embarrassed by their circumstances, are less likely to respond than the average dentist.

To get their results, the pollsters took a representative sample of all active practitioners who graduated from an accredited dental school. They contacted 19,651 dentists, of whom 1,608 responded.

For some questions, the response rate was lower. When asked to estimate how much their income had changed, 1,257 dentists responded. The mean estimated change was -5.77%, but the standard deviation was 15.14%, meaning that the responses ranged very widely.

Collect, collect, collect

David Goodman of the Academy of Dental Certified Public Accountants (ADCPA) said a 5% or 6% mean drop in income didn't shock him, given the difficult economic situation. "It's much more optimistic than I expected," he said.

But when he compared the ADA's result to his own survey of ADCPA members, he saw even better results. "The ADA found that 57% of dentists' income was down in the fourth quarter. We found the opposite -- that 57% was up."

Goodman said his clients were making adjustments to compensate for the difficult circumstances. "They are getting comfortable with new ways of practicing dentistry," he said. In particular, they are devoting more resources to marketing.

Because of unemployment, many patients have lost their dental insurance. That has led many to defer procedures. But some of these patients wind up paying more because their problems worsen with time. Overall, Goodman said, the dentists he advises are working harder, but doing more health-oriented dentistry and less cosmetic work.

"If you can stick to the bread and butter and only be down 5%, beautiful," he said. "You will be all ready when things turn around."

Goodman has worked hard to convince his clients they should insist on payment. "I think collections fell off as a percentage of production, whereas production remained relatively steady," he said. "There is a little bit of empathy when patients are leaving the office. They say, 'Oh, my husband lost his job,' or 'My wife has been out of work for a year,' and the front office says, 'It's OK. We'll send you a bill. Pay what you can.' "

But rather than negotiate as the patient is leaving, dental practices should set firm expectations before the treatment begins, according to Goodman. "When patients come in, they have to understand that they are going to pay," he said.