U.S. recession impacting dentists' revenues

Privately held dentist offices have seen revenues decline about 3% so far this year after posting ongoing-though-shrinking gains in their top lines throughout the recent recession, according to an analysis by Sageworks, a firm that tracks private-company financial performance.

Sales growth rates for dentists in 2008 and 2009 were 5% and 15%, respectively, but dipped to 1% growth last year before the current year's decrease, according to the firm.

Profit growth, too, has waned, Sageworks found. Private dentist offices generated a 15% increase in net profits in 2009 but have seen profits shrink 3% so far this year, Sageworks found.

In 2010, an estimated $108 billion was spent on dental services in the U.S., according to a report from the Centers for Disease Control and Prevention (CDC). Patients throughout the recession and even today have continued to see dentists for preventive care and for repairs or restorations, Matthew Messina, DDS, a spokesperson for the ADA, told Sageworks.

It's the elective procedures such as implants and cosmetic dentistry that are responsible for the recent sales and profit declines, he said.

Throughout the 1990s and the first decade of the 21st century, the number of elective dental procedures exploded, according to Dr. Messina. But with the generally poor economic confidence level now, "everybody's sitting on their money," he said, when it comes to optional spending.

Over the years, dentists have been helped by the fact that, according to the CDC, nearly three of four people in the U.S. under age 65 have dental insurance.

But more than one in four people who didn't have dental coverage reported they'd visited the dentist once or less in the last 10 years, according to an August 2011 survey conducted by medical market research firm Empirica Research in collaboration with David Neal, an assistant professor of psychology at the University of Southern California.

The survey, funded by dental discount membership plan Brighter.com, also found that most people without dental coverage reported they didn't seek care due to the cost of dental care or because they didn't know what the cost of care would be.

In response to the economic decline in the last two years, many dentists tightened their belts, Dr. Messina said, stretching supplies, holding off on hiring, and cutting their practice hours. That has helped them maintain one of the highest net profit margins of private industries over the last 12 months, according to Sageworks.

Dentist offices had a 13.84% net profit margin in the 12 months ended October 3, when sales were up just 0.15%. That margin compares with a 12.98% net profit margin for legal services and 10.84% for physicians offices, according to Sageworks.