Come on down! You’re the next contestant on The Price is Right.
Orthodontic treatment: I’d like to guess $5000.00, Bob.
I’m sorry you’ve overbid!
The actual retail value of orthodontic treatment is $3000. You have five years to get your price in line.
No, we are not crazy.
Yes, this is coming.
No, it’s not a wake up one day to the apocalypse prediction and it won’t affect every practice in every area all at once. All cultural and economic shifts take time for full penetrance. Think about how long it took for eye exams to go from ophthalmologists to optometrists to Costco.
If you’re in California, Florida, Utah, New York or any metropolitan area the price of what we are selling may go lower and get there more quickly.
If you’re in a remote area where orthodontists don’t want to live then the price may be higher and it may take longer for market forces to force your fees down.
If you are truly a boutique practice (not just someone who believes they are) that offers exceptional service and results, you may never see a reduction in price. However, try and find a Maybach dealership right now or spot one of the 44 sold in the US. You won’t, Mercedes shut down the brand since it was cost prohibitive for even the wealthiest customers.
We can’t speak to the individual circumstances facing every single practice of course but we can speak with great certainty as to where the orthodontic market is headed. There has been incredible change in the orthodontic landscape in the last three years and much of it occurred without fanfare or even notice. It’s only now with the enhanced vision of hindsight that the true magnitude and scope are even recognizable. We have mistakenly blamed general dentists for the change in the past but these dentists do such little volume that they can’t account for the massive changes we’ve seen. So what IS causing the massive disruption we feel all around us? Let’s look at a few factors:
- This is the United States of America and in ‘merica the price for goods and services tends to go down over time. We know you all like the old analogy/assumption that states “…if orthodontic prices went up like car prices did; then braces would be 60,000 dollars”. This is very flawed thinking. If you look at what cars used to cost and what features and gas mileage that cars used to have vs. what a car costs now and what they can do then the price hasn’t increased much and has probably decreased when you factor in inflation. For this to be a reasonable analogy, orthodontic treatment needs to have significantly improved in technique, efficiency, and effectiveness. It hasn’t happened in the last 30 years. . The other issue is that the fixed overhead of building a car is one heck of a lot higher than it is for orthodontics and the margins car makers get are a tiny percentage of what orthodontists reap! The reality is that when you have more sellers with more capacity delivering a service and the price of the associated raw materials goes down; the price of the service delivered will go down. Period.
- DSOs are a serious force in dentistry. I’m not bashing DSOs here. Corporate dentistry is good for patients and good for dentistry. DSOs are forcing us to become more efficient and forcing us to increase access to care. This will only continue, intensify and speed up as consolidation hits orthodontics with full force over the next three years.
- Invisalign is the undisputed master of demand creation in orthodontics. They were and are the driving force in promoting orthodontics as something to be desired and attained by everyone with teeth. Align and the Invisalign brand is and will be a massive force in orthodontics and Align will continue to tighten control on the use of their brand and who which providers recieve referral of THEIR consumer leads. The result will be that those who do more Invisalign volume will have access to captive consumers. What’s the easiest way to increase Invisalign volume? LOWER FEES.
- SmileDirectClub has changed the game. Remember when digital cameras came out? They were terrible and no one thought they would ever replace film cameras. Kodak believed that they were a film seller/processor not an image provider but they totally missed the paradigm shift. How many times have we seen this same story unfold? A disruptive technology or delivery model enters an established industry and is initially dismissed or ignored but eventually dominates the landscape. We know you still haven’t read The Innovator’s Dilemma but you really, really should as it will explain exactly what will happen in orthodontics over the next five years. Think about every e-commerce vs. brick and mortar sales outlet you’ve ever read about and apply that to our industry. In less than 5 years SmileDirectClub will treat more orthodontic patients every year than ALL THE ORTHODONTISTS IN THE U.S. COMBINED. Yes, you heard us right. What will that do to orthodontic market? What will that mean to you? Just because you don’t think they can do it, doesn’t mean you are correct… even if your friends all agree with you! By the way, that’s called groupthink and it’s dangerous.
- Human nature is consistent. People want faster, easier, more convenient, and less expensive. This is nothing new or specific to orthodontics. It’s just people. Why is the fee for orthodontics 5-7 thousand dollars? Why do consumers have to make so many visits to the orthodontic office? Why does it take 2 years? Wait; think before you answer… the honest answer is that there is no basis for our fee or clinical methodology other than what others have done before us. We’ve said for at least 4 or 5 years that the price of orthodontics is headed for 3000 dollars and we’ve not seen anything to convince us otherwise. The fair price is the price the market will bear. The market has borne our unnaturally high fees for a very long time but we firmly believe that is about to change and change rapidly. Adam Smith’s concept of the invisible hand of a free market economy states that through their own self-interest the actions of individuals or businesses unintentionally benefit society. Are you still not sure how the concept of the at home aligner therapy for $1500 is benefiting orthodontics?
- The increasing supply of orthodontists is another factor that will drive our commodity to a $3000 price tag. More schools are opening but, more importantly, orthodontists are practicing longer and have greatly increased their capacity. As a result, there is a busyness problem in the marketplace. For as much as capacity has increased in any given practice, no practice is at full capacity AND they are generally dealing with a higher overhead. Combine this with the desire of most graduates to go to oversaturated areas while carrying a massive debt load and you can bet your boots that these newly minted orthodontists will do whatever it takes to get patients in the door. Guess what that means? OFFERING LOWER FEES.
- The recent Texas court ruling and the American Dental Association’s reaction to it will also have an effect on orthodontic fees. If you’ve been living in a bubble and don’t know what we’re talking about, the lawsuit in Texas challenged the State Board of Dentistry’s definition of who could and couldn’t call themselves a specialist. The Board lost the case and the decision was based on constitutional law which more or less stated that if you have taken some type of educational program (loosely defined) on practicing the specialty; then you could call yourself a specialist. The American Dental Association’s knee-jerk response was to rewrite their Principles of Ethics and Code of Professional Conduct. They now stipulate that a dentist can ethically present themselves as a specialist if they meet the educational requirements accepted by the jurisdiction in which they practice. What’s next partner?
Orthodontics is a great gig and will continue to be so for those who can get their heads right. You can’t charge more than people will pay. You can’t run a business without customers no matter how good you think you are at aligning teeth. We are not owed or entitled to anything and we must change with the times just like any other business. The future of clear aligners is clear and will have a massive impact on our specialty. The future of orthodontics is even clearer.
How will you prepare yourself and your practice to thrive in the new reality?
The best approach from where we’re sitting is to Modulate Service to Fit Price. What we mean by that is one should find a price point that is attractive to the majority of people and provide a service tailored to that price. Your practice must be consumer centered and practice profitable. It’s a tough concept for orthodontists who see decision-making as 100% dichotomous–the right way and the wrong way. From an ethics point of view this mindset sometimes works but from a practice management standpoint a glass of hemlock yields a more guaranteed result. If you cling to this common but unrealistic belief system then you’ll have to move up market. WAY UP MARKET. If you can, good for you! However, only a very few in our specialty can charge massive fees and get them in the present market. The rest of us who try to go up market will just get our feelings hurt and possibly suffer much more if our self-assessment is off and our former consumers vote with their feet. Remember you can’t have it both ways. Claiming to be the best in service and results while getting upset that others around you charge less is an untenable position but one inhabited by many orthodontists. If you can re-engineer your practice to abide the predicted reality, a fortune in fabulous prizes will still await you now that you know The Price IS Right!
Ben Burris
Marc Ackerman
Very good post. Although things here in heavily-regulated Europe may take longer, this is a world-wide tendency.
You think most changes are going to be good for patients, I disagree on that but this is irrelevant. Our category is going to be disrupted, that we like it or not.
I am just curious to hear your opinion about the process of lowering fees. Assuming that you are good enough to re-engineer your practice to keep your overhead and achieve acceptable clinical results while lowering fees, how do you manage the PR-nightmare of having to deal with patients who paid double price or so just a couple of years before?
Oh we agree that lowering fees is good for patients. We are access to care advocates! As to how to get there, Marc and I are already working on a piece to help with that.
Ben
You almost never see pundits on any topic give concrete, specific and measurable predictions like this! While the message is terrifying, this post clearly explains what’s being predicted and what should be done about it. Great post. Thanks for putting yourself out there by being so specific.
what do you think about fee transparency ? i find there are four fee tiers. tier 1 & 2 are about equivalent to express 5 & 10 which, for now, is in the sweet spot for SDC. why not post your fee for those tiers and try to explain the benefits of doctor monitored treatment ? Billy Bob
It’s heading that way for sure.
We aren’t profits and we won’t get it exactly right but we feel confident we will be close on the time and the price. We are writing a follow up piece with details on how to go from where we are to where we need to be.
Ben, I believe you are 100% correct. There will be only two ways to position an ortho practice. Either lower the fee and adjust the service to match or differentiate and brand your practice as being worth the difference. This will require significantly improving customer service and quality of care and most importantly being able to communicate the difference to prospective new patients. It will actually be easier to do that as more and more practices begin racing to the bottom. There will always be room at the top for practices that are willing to step up and as importantly be able to communicate it.