Dentists: Smiling in the Face of Recession

One guy in the waiting room is 63 years old, has just lost his job at a health insurer and is afraid he’ll never find another one. The other guy has three kids–one in college–and lost his construction job before Christmas. The stress of trying to make ends meet has them grinding their canines and molars in their sleep. Which is how they both wound up in the office of Dr. Woody Oakes, a dentist in New Albany, Ind., each with a fractured tooth. “You do see that–someone lost their job, and they come in with their jaws clenched,” says Oakes, who is also editor of Profitable Dentist magazine. “You can fracture your teeth when you do that.”

Dentistry, indeed, is one profession the recession might not bite. The 17% average profit margin of dentists’ offices was higher than that of any other industry in 2008, according to Sageworks, which uses data from 9,000 CPA firms across the country to track the financial performance of private companies.

What could be keeping so many dentists strong during this recession? Sure, tooth-grinding and nervous-eating habits–“I’m going to chomp on chocolate as an escape”–may be driving traffic to the drill. But insurance issues are more likely to blame. Dentists note that patients who have limited or no insurance tend to skip cleanings and other preventive care as they try to save money. By the time their teeth are achy enough to motivate them to make an appointment, they often have no choice but to undergo an expensive procedure to alleviate the pain.

At the same time, insured patients want to hit the chair while they’re still lucky enough to have coverage. “They want to use their benefits,” says Rick Willeford, founder and president of the Academy of Dental CPAs, whose members provide accounting and tax-prep work for some 7,000 dentists across the U.S. “That has helped keep revenues strong.” Dr. Lawrence Spindel, a dentist in New York City who had his best year ever in 2008, says that last spring he saw a “boomlet” in these types of cases. “People know that if they’re going to lose their job, they damn well better use their dental insurance,” Spindel says. “They say, ‘Do as much as you can do, and you need to do it within 30 days!'”

But dentistry is not pain-free. Willeford reports a fourth-quarter slowdown among the academy’s clients. Dr. Roger Levin, CEO of the Levin Group, a dental-management consultancy, is also very cautious. “Traditionally, it takes six to 12 months for economic trends to affect dental practice,” he says. “The full impact of the downturn may be yet to come.”

Given the strain on everyone’s wallets, you would think cosmetic dentistry would completely collapse during the recession. But sales of Snap-On Smile, a device that fits over your teeth, rose 22% in the fourth quarter of ’08 compared with the third quarter. December sales were 62% higher than those in October. A full-mouth restoration costs between $2,500 and $4,000–still much cheaper than restorative veneers, which can cost $30,000 to $50,000. Snap-On Smile CEO Adam Cotumaccio says some patients buy the product for a very practical purpose: “You want to look good going into an interview.”