Trends in Dentistry: Maintaining a Successful Practice Amid Increasing Staffing Costs and Shortages

Welcome to the first installment in a series of short articles designed to unpack the financial and economic trends affecting dentistry. At the end of 2023, an economic outlook and emerging issues in dentistry poll conducted by the Health Policy Institute of the American Dental Association (ADA HPI) shared challenges dental practitioners were experiencing, including increased staffing costs and shortages. With this in mind, this article explores why this trend is happening and strategies to retain talent while maintaining a profitable practice.

It all starts with the data.

The Federal Reserve Economic Data (FRED) report shows that from 2018 to 2023, hygiene wages have grown by 26.6%, averaging 5% per year. The Dental Assisting National Board's figures provide a similar story; after a decade of relatively flat wage growth, dental assistant wages increased by 25% between 2018 and 2022. Of the respondents to the HPI survey, 60.2% identified staffing costs and shortages as a top challenge for practice owners. Additionally, 52% of practitioners indicated plans to add staff in the upcoming year. For a general dentist, staff costs typically represent 25% to 30% of collections, making them the largest expense category in a practice profit and loss.

Dentists have expressed they are having the most difficulty filling hygienist and assistant positions. Given the professional licensing requirements for these roles, this is not surprising. According to the first quarter 2024 economic report from the ADA HPI, this trend has started to decrease slightly, with 88.8% of respondents identifying it as “extremely” or “very” challenging to hire dental hygienists, down from 96% in the same period last year. Dental assistants are on a similar trend, with 77.2% reporting it is “extremely” or “very” challenging to hire, down from 86.1% in the first quarter of 2023. Even though hiring options have started to increase slightly over the year, wage pressures appear to be persistent.

According to the Dental Workforce Shortages: Data to Navigate Today’s Labor Market report, while there were structural inclinations suggesting a hygienist shortage, this trend accelerated noticeably during the COVID-19 pandemic with a significant number of hygienists not returning to the workforce after being furloughed in 2020. An additional 3.75% of dental hygienists left the workforce in 2021. As they continue to leave the workforce at an accelerated rate, they are not being replaced. There continues to be a decrease in both accredited dental hygiene programs and enrollment.

What are your options?

While increasing pay is always a viable option, this may not solve the problem. In fact, insufficient pay was surprisingly the sixth most common reason hygienists cited for leaving the profession. Before compensation, hygienists identified poor leadership and bad culture, lack of growth opportunities, inadequate benefits, feeling overworked and concerns about communication within the practice as primary reasons for leaving. It is likely that providing a supportive, transparent and team-based workplace with a focus on meaningful patient outcomes will be more effective than increasing pay alone.

To manage a profitable hygiene department, a common heuristic is the “rule of thirds”: one third of practice production should come from hygiene and a hygiene department should cost approximately one third of the department’s collections. Since hygiene schools traditionally do not provide insights on the business of dentistry, successfully implementing this practice means increasing transparency and communication with staff. This can help hygienists recognize how their compensation and production are connected to the financial health of the practice. Ultimately, we want the hygiene department to partner in practice production goals, helping them understand how their work and their compensation fit within the larger picture of the practice.

Many employees desire career growth. Where available, we have seen success in attracting and retaining licensed employees by providing an employer-sponsored education fund, often administered with a workback commitment to ensure the practice owner can capitalize on the staff’s expanded capabilities in the practice. Incorporating “expanded function” hygienists and/or dental assistants into your practice may also be beneficial.

Along with increasing communication on practice roles, fostering a team environment and supporting career growth, we have seen a continued trend of offering an employer-qualified plan. To utilize this benefit to its full extent, staff should be educated about its existence and how it can be best utilized. Employer contributions should be highlighted annually as part of an employee review and compensation review process. This benefit can also be paired with a vesting schedule to encourage long-term retention.

Some good news!

While staffing costs and shortages will be a management challenge for clinician owners, it should be noted that 60% of assistants and 54.5% of hygienists rated their job satisfaction as an eight or higher on a scale of one to ten. These satisfaction levels were higher for full-time employees compared to part-time, and greater in private practices compared to dental support organizations (DSOs). Continuing to foster a team-based environment, combining career growth and benefits tied to retention incentives and providing transparent communications can give you a profitable advantage.

A last bit of wisdom.

When I started in this profession, I asked my mentor how he knew if we would be working with a successful practice. He told me to “look at the census.” In my eagerness to impress him with my technical knowledge, I chimed in, “Sure, because the wage base can increase the efficiency of the employer contributions to a qualified plan, and we can use that to identify cost control in a benchmarking exercise.” I was quickly corrected: “No, look at the hire dates. The greater the longevity, the stronger the team and the greater the owner understands the staff’s role in the patient experience.” I hope that next time you are evaluating your practice, you keep this morsel in mind.

If you would like to explore how the opportunities and challenges of these trends may impact your practice, our team would love to help! Schedule a conversation with a Buckingham practice integration advisor today!

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