ortho - the international C.E. magazine of orthodontics

ortho1_201212 I I practice matters_ staying competitive forpurchaseoremploymentand464doctorsseeking opportunitiesforpurchaseoremploymentattheend of last year. This roughly 3:1 ratio of buyers to sellers has moved down from a ratio of 5:1 in 2009 and 4:1 in the last half of 2010, as reported by the AAO POS. Young orthodontists are necessarily seeking work where they can find it, often as an associate/ employeeofageneraldentalclinicorpediatricdental practice. We expect the supply and demand of buyers and sellers to continue to move toward levels that are more equal over the next several years, thus im- proving the prospect for buyers to find orthodontic practices for sale. _The economy and census data The recession that started in December 2007 and, according to economists, ended in May 2009, has been over for almost three years. However, the crawl out has been slow at best. Gross domestic product (GDP) posted an anemic 2.8 percent growth in 2010 and was backed up by another tepid performance of just under 3 percent in 2011. Whilewehavebeentechnicallyoutofarecession since mid 2009 and have thus far avoided a double- dip, consumers are more conservative, saving more andlookingforabargain,especiallythemiddleclass. The Wall Street Journal, in an article describing current consumer sentiment in January of this year stated: “Retailersandconsumer-goodscompaniesalike grappled with a disappearing middle class in 2011. After years of caution following the stock market’s financial crisis swoon, the wealthy returned to luxurybrands,benefitingretailerssuchasSaks,Inc. andNordstromInc. At the lower end, dollar stores and discount chains profited as prolonged unemployment and economic uncertainty spurred the middle class to tradedown. That created a barbell effect, as companies that traditionally cater to middle-class consumers suf- fered. Gap Inc.’s profit declined 27 percent….and department store chain J.C. Penny Co. flipped to a $65millionlossforthefirstninemonthsoftheyear (2011).”1 Therecent2011JCOPracticeStudyseemstoagree with the analysis above, as mean net collections for orthodonticpracticeownersreporteda$10,000drop from the 2009 study; from $960,000 to $950,000. Median case starts also decreased from 220 in 2009 to 200 in the 2011 study. Both of these drops were the first decreases in these measurements since the studies began in 1983. These drops in means reflect the middle class struggle to get back on their feet. We have seen value-positioned practices grow and high-end bou- tiquepracticesdowellinthemostrecentyearended, furthering the idea that the current economic pain for the orthodontist is hitting the middle market practitioner. Current U.S. Census Bureau data does reveal an expected increase in the population, which may provide some solace to orthodontic practice own- (Photo/Vladimir Mucibabic, www.dreamstime.com)