OPTIMIZING YOUR RECOVERY TIMELINE
DR. ACE GOERIG, Owner and Co-Founder
#PracticeEconomics #COVID-19 #Recovery
Every practice will experience the recession differently. Will you have a V, U or L-shaped recovery? In this article, Dr. Ace Goerig discusses where endodontics fits on the recession spectrum, and shares the most important factors behind effective recovery strategies.
The big question on everyone’s mind is how long the recovery will take. Past recessions have taken two years or more, and that was without a patient safety factor in play. There is no doubt we are going to experience at least the same—a significant portion of the population (including business owners) have had an extended interruption to their income. So, money is going to be tight for a while and the economy will reflect that, even if every business reopened and every job was restored today.
Recessions and recoveries are often described in letter shapes. V-shaped recessions have a steep initial drop to the bottom, followed by relatively quick bounce back to normal. We all know that a magical return to previous levels is not likely to happen in the general economy, given current circumstances.
More relevant to today are U- and L-shaped recessions. U-shaped recessions are characterized by a quick drop to the bottom. However, rather than a quick recovery like a V-shaped recession, the economy continues to struggle in that trough for an extended period of time before recovery finally kicks in and the economy lifts itself back to previous levels.
That sounds a lot like where we are now— down in a trough. Even as referring doctors reopen, we can anticipate a general slowdown in patient flow across the board once the initial pent-up demand is handled. It is still anyone’s guess whether the trough will last 3 months, into autumn, into next year, or beyond even that. The difficulties will be compounded if we end up with a double-dip recession as a result of a second wave of coronavirus with the possibilities of renewed closures and physical distancing.
In a worst-case situation, we end up in an L-shaped recession where there is no actual slope of recovery after the drop. The economy doesn’t bounce back and the trough becomes the new normal as if the previous peak had never occurred. If enough of the economy is lost, then an L-shaped recession can become a full-blown depression.
The Recession Spectrum
The most important thing to remember is that every business experiences a recession differently. There are some business (like UberEats or Amazon) that are accelerating beyond their wildest dreams right now. Others businesses, such as airlines, resorts, theaters and fine-dining restaurants, are on the brink of insolvency as everyone stays home and has less discretionary income for such things anyway.
In between those extremes of businesses uniquely advantaged or disadvantaged by the pandemic is everyone else on a spectrum. Some lean toward advantaged side; some toward the disadvantaged side. Advantaged businesses may experience a V-recession. Conversely, disadvantaged businesses may experience an extended U- or L-recession.
Where does dentistry in general and endodontics in particular fit in that mix? I would argue that we are right in the middle. On the pro side, we serve a public health need and we’re always going to have patients that need care. On the con side, we provide a face-to-face service (with invasive procedures) that creates a perceived risk and may limit how quickly patients seek out both needed care and discretionary care. The latter, in particular, will affect referring GPs more than endodontists, but we will encounter the secondary effect of fewer referrals as a result of reduced patient flow in GP offices.
Issues for Endodontic Practices
In the past 3 months, Endo Mastery has been closely tracking the effects of the pandemic on practices. I have held weekly webinars with clients to identify the challenges doctors are facing and share ideas to manage the shifting landscape. We have studied the economic effects on practices of all sizes across the country, tracked the number of cases being completed, and monitored the status of referring practices closures and reopening. Here is where we stand:
- Most endodontic practices suffered a 40% to 60% loss in revenues during the height of pandemic closures.
- The average practice has lost $150,000 to $200,000 in practice revenues so far, with additional losses accruing monthly.
- Most doctors who received SBA loans used it for the benefit of their team while personally incurring most losses in their own income.
- Patient perception of safety remains a high concern everywhere.
- Returning teams are uncertain and inconsistent with new procedures, and how to communicate with patients about them.
- Referring doctors are reopening to pent-up demand, but will likely turn to doing more endo themselves to recover their own revenues.
Business Recovery Priorities
No one has escaped the last 3 months completely unscathed, but what you do right now will determine how quickly you can get back up to speed and whether you can recover your revenue losses in the near future.
Because we’re right in the middle of the recession spectrum, each practice is going to feel the varying degrees of recession based on individual choices made in those practices. This will even happen in the same local market, with one endodontist achieving a quick V-recovery while another down the street struggles in a long U-trough or gets stuck in an unending L-pattern.
In the landmark article “Roaring Out of Recession” published in Harvard Business Review in March 2010 (at the tail end of the last recession), the authors studied 4700 companies over the course of 3 recession periods to determine what works and what doesn’t in recovery strategies. Here’s the gist of it:
- Improve operational efficiency, instead of just cutting costs: Cutting costs is about doing more with less, and some cost control may be necessary. However, improving operational efficiency drives revenues by doing what you do better than you’ve ever done it before.
- Invest in strategies that position you to grow: Even as revenues remain below normal, it’s vital to invest in ways your business can grow, including during the recession as well as growth beyond the recession.
If the authors had one clear message, it was this: the absolute worst strategy is to ruthlessly cut costs while curtailing investments. This batten-down-the-hatches approach led to the greatest number of businesses that never recovered from the recession at all (and resulted in the highest number of eventual bankruptcies). You need to balance economic pragmatism in these challenging times with business-savvy growth strategies.
Endo Mastery Recovery Leadership
The HBR authors also point out (and allude to in the title of their article, “ROARING Out of Recession”) that recommended recovery priorities not only help you get through a recession as strongly as possible but position you for better growth than ever as the recession ends.
Endo Mastery has always based our approach to endodontic leadership on establishing incredible operational efficiency in practices, coupled with marketing and growth strategies to drive new cases in the front door. Our practice coaching program routinely helps doctors grow by 2 to 4 (or more) cases per day. Just two more cases per day can add hundreds of thousands of dollars to your practice bottom line annually.
Is this kind of improvement possible under the current circumstances? The answer is wholeheartedly YES! I believe there has never been a better or more urgent time for practice coaching to strengthen your practice. In fact, taking steps now to do so is the only way you’re going to catch up on the deficit the pandemic has created. If you do nothing, the best you can hope for is to return under ideal conditions to your previous level of productivity. But the revenues you have lost until then will be gone forever.
To help practices get back up to speed fast (even in a recession) AND recover lost revenues AND position themselves for unprecedented future growth, we have launched the Endo Mastery Recovery Coaching Program. This is a prioritized, streamlined and accelerated program, drawing from Endo Mastery’s essential strategies for practice productivity and growth.
At half the time commitment and nearly a third the cost for first-time coaching clients compared to our regular coaching program, I believe we have never offered a more important program for endodontic practices. For more information:
If you want to talk to someone right away about how Endo Mastery can support your practice recovery, I urge you to reach out to Debra Miller, Director of Coaching:
As I have said since the beginning of this crisis, we may not be able to control the pandemic, but we can control how we respond to it. Recovery Coaching is a great solution and will lead to a fast and complete recovery in your practice, and better success than you ever thought you could achieve.
All the best,
Dr. Ace Goerig, Owner