Every successful business including a dental practice needs to be correctly aligned
between the owner’s goal and the environment in which it is operational. The dentist
needs to understand the various internal and external factors and accordingly plan,
implement and monitor a properly tailored business strategy for a successful
organization.
The strategic planning process helps one to understand their practice and undertake the
necessary steps in order to maximize patient care and long-term profitability with
minimal stress. Incorporating a strategic practice initially can be time-consuming but in
the future it becomes fruitful.
But why is it required? Firstly because the world is going through a pandemic the after-effects of which will take years to recover, the dental business has also been affected
reasons being the shutdown of dental offices for months, decrease patient flow for
non-emergency procedures such as scaling, veneers, and so on. Secondly, increased
competition in the market along with changing demand for dentistry has made dentists
re-think their traditional practices. Furthermore, the bargaining power of the insurance
companies has increased in the region which leads to further deduction of fees for
dental treatments.
Strategic Management isn’t just one principle it is made up of a number of processes and
in order to initiate a strategic management process Michael Porter’s Five Force Analysis is
widely used. This is a business model used to analyze the industry structure of a
company as well its corporate strategy. These five forces measure competition,
intensity, attractiveness, and profitability. The first force is the Threat of new entrants which
helps to identify to what extent is a clinic impacted by new dental clinics established.
This depends on how stringent local regulations for the establishment of new clinics are,
the initial capital required, and the psychological shifting cost for the patients.
The second force is the Threat of Substitute Service which is the availability of substitute
services or products in the market, for example, the home whitening kits available,
whitening toothbrushes and pastes, and snap on a smile which is a cheaper option for
veneers. Such services and products directly affect the cash generation services of the
clinics. Hence clinics need to increase their customer loyalty by providing an extremely
high quality of care which in turn increases the customer switching cost.
The third force is Rivalry from existing competitors which is a major threat and main
concern in today’s era. This increases when there is increase in the number of clinics
providing the same services and has the same target market. This can be tackled by
adopting a differentiation strategy that is having a niche service or product at delivering
it at its best. Along with that collaboration and patient referral systems can also help
reduce competition.
The fourth force is Bargaining Power of Buyers which are mainly the insurance
companies in case of dental clinics. Lately the insurance companies have an upper
hand in the region as dental treatments aren’t easily affordable which leads to cost
reduction. Clinics can adopt installment payment or online payment options in order to
overcome the insurance bargains.
Lastly is the Bargaining power of the suppliers which refer to the material suppliers, labs
and so on. This should always be kept low as it is leads to maximum wastage in the
clinic operations. Having multiple suppliers, long term agreements and appropriate
pricing knowledge can be helpful.
Based on this analysis a clinic can choose to adopt a differentiation strategy or cost
leadership strategy or a niche strategy. However, it must be remembered that whatever
strategy is used dental care should always focus on quality, outcomes and effectiveness
of the care provided
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