Application of a classical model of competitive business strategy to orthodontic practice

This study explored how market forces might affect the business aspects of orthodontic practices; in particular, profitability. The forces identified were (1) intensity of rivalry, (2) threat of new entrants, and (3) bargaining power of buyers and suppliers. A mail survey instrument was used to collect the data. Results showed that more than half the surveyed practices show an increase in new case starts despite weak economic conditions. Although satellite offices and marketing increase the overhead, they do not add to net profit. New entrants are a threat to existing practices, as are the substitute discretionary spending by the consumer. Interestingly, while some orthodontic practices have joined the managed care programs, a majority of them realize neither increased patient load nor profit. Our data seem to indicate that orthodontic practices have not been successful in "cost containment" with their marketing, number of employees, computerization or inventory. Collectively, the results of this study suggest that success in an orthodontic office is primarily dependent on the practitioner's personality traits, rather than rigidly applied business principles.