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When you run an affordable practice committed to keeping prices low, the battle against inflation is never-ending. By Kerryn Ramsey
Inflation in Australia is driving the cost of everything upwards. Whether it’s food and fuel prices, mortgage repayments or rental rises, the upward pressure is being felt across all sectors of society. As expected, dental goods and services are not immune to the effects of inflation, and price rises are not only inevitable but necessary.
While it’s never easy to explain to clients that you have no choice but to raise your fees, the problem is exacerbated when you run a low-cost dental practice as does Dr Paulo Pinho. The Affordable Dentists clinics located in Sydney CBD’s York Street and Melbourne’s Collins Street are committed to keeping the quality of the work high and the fees as low as possible.
“The demographic of our clients is definitely towards the lower end of the income spectrum,” says Dr Pinho. “When people come to see us, they’re not looking for aesthetic work. Most of them are literally in pain and don’t have any other options.”
Dr Pinho’s client base generally consists of people who have avoided dental care and treatment due to the high costs involved. As time goes by, the condition of their teeth worsens, the pain increases and the cost to fix their problems increases. Dr Pinho’s goal is to break that vicious cycle.
The lower fees initiative
One of the most effective ways he has tackled poor oral health is with lower cost dentistry. Patients can visit the practice and know exactly what service they will receive and how much it will cost. This includes teeth cleaning and fluoride, any size filling, simple extractions, tooth ache management and check up with X-rays at $99 each.
This program has been successful with many patients utilising the service and booking more appointments. Unfortunately, this wonderful initiative has been impacted by inflation and after five years, Dr Pinho had no choice but to raise prices.
“We try to keep our fees as low as possible but it’s no longer financially viable to only charge $99 for basic dental treatments,” he says. “Even with the high volume of patients we see, we need to raise fees to catch up with the much higher costs to run a dental practice.”
The two biggest issues that have affected Dr Pinho’s business model are the COVID lockdowns and the current inflation rate. Prior to the COVID lockdowns, he ran practices in multiple locations but had to change his business strategy.
“I decided to reduce the number of practices to two central locations,” he says. “It allowed us to concentrate all our services while still being accessible to most of our patients. Initially, I expected it to be temporary but found it all worked surprisingly well. It was easier to run larger clinics while keeping costs low.”
While there was a slight increase in fees at that time, Dr Pinho was also able to upgrade a lot of his equipment. The ability to work more efficiently and quickly helps keep his fees in check.
Price versus profit
With Australia’s inflation rate currently at seven per cent, Dr Pinho admits he will have to raise his prices again in the near future. While his investment in new equipment and technology certainly offers greater efficiencies, most of that equipment is on a five-year lease, without a fixed rate.
“Inflation has a huge impact on my business,” says Dr Pinho. “I want to charge clients the lowest price but there must be enough profit to keep the business viable. If our clients can’t afford our services, they will have difficulty in finding other quality clinics with similar fees. Unfortunately, we’ll have no choice but to raise our prices in the near future.”
An essential aspect of the success of The Affordable Dentists is price transparency. All services are listed with clearly stated prices on the websites and discussed openly at the surgery.
“As we have very low prices, it would be self-defeating not to advertise that fact,” says Dr Pinho. “When we started in 2007, people came to us because of our prices. Now most of our patients find us due to our reputation and word of mouth.”
When a patient sits in a chair at the The Affordable Dentists, they know exactly how much they will be paying at the end of the procedure. All of Dr Pinho’s dentists are completely up-front about the price to be charged.
“The most common complaint among new patients is that their former dentist would present them with a surprise bill at the end of the appointment,” says Dr Pinho. “I’m from Brazil and I’ve never understood why patients in Australia are embarrassed to discuss cost. Maybe it’s a cultural thing but why would anyone accept a service if they’re unsure how much they’re going to pay.”
After working in trauma and oral surgery hospital departments in Latin America and the United States, Dr Pinho moved to Melbourne to work at the Royal Dental Hospital in 2006. It was here he became aware of the demand for a more affordable private dental service to help lower income patients.
Over the past 15 years, Dr Pinho has removed more than 40,000 wisdom teeth and placed more than 4500 implants. His two practices employ 12 full-time and part-time dentists and a dozen nurses and support staff. This has all been achieved while being a low fee practice in Sydney and Melbourne.
“Our business model works because we’re able to negotiate lower prices due to the higher volume of cases we handle,” says Dr Pinho. “We’re able to share the costs with the distributors and labs we’ve partnered with for more than 15 years. We also have very reliable and happy staff. Our turnover rate is very low.”
Dr Pinho’s strategy with staff is simple; he pays well and offers flexibility. Everyone works the hours they choose and if they need to take time off for whatever reason, Dr Pinho does his best to accommodate them. He believes this is at the heart of a happy and motivated workforce.
He also believes in a clear hierarchy in his practices. “I have worked in other practices where everything was over-discussed and everyone’s opinion was given equal weight. While that’s acceptable in some situations, there are plenty of occasions when a roundtable discussion is inappropriate. The most qualified person must make the decision.”
With the demand for low-cost dentistry on the rise, Dr Pinho is contemplating expanding his locations. He believes there are great opportunities in other cities and in various regional centres.
“I would definitely need help because I’m at the limit of what I can do now,” he says. “A partnership with a like-minded dental group could make it all possible.”
Dr Pinho has created a unique business by catering to the people who can least afford dental services. While his practices need to make a profit, they’re trying to offer oral healthcare to a lot more people.
“I’ve been building this business for almost 20 years and conditions today are very different from when I began,” says Dr Pinho. “With the growth of corporates and the money made in buying and selling practices, I think it would be almost impossible to start the The Affordable Dentists today. To offer low fees, you need a large investment, a good history, an impeccable reputation, and an ethical team with a shared focus and goal. I just hope we can find the right partnership to expand to more locations where the demand for our service is strong.”