Supply and Demand in the Current Dental Market

By Larry M. Chatterley and Crystal Smith, RDH

Around the year 2000, an article was published in the ADA Journal projecting that an increasing number of retiring dentists from the baby boomer generation coupled with an increasing population could result in a shortage of dentists serving the public’s needs.  Since then, perhaps in response to that projection, there has been a rise in dental school enrollment and thirteen new dental schools have opened.  However, the dental market is hardly suffering from a shortage, as the increased demand for dentists does not equate to a profusion of ideal opportunities.  While the factors predicted may be accurate, additional factors in the dental market are currently affecting the demand for new dentists.  These factors include location and type of position available.  

Most dental school graduates prefer to live in cities and suburbs, not in rural America, resulting in greater competition in the more populated parts of the country.  As the demand for acquiring a practice in a preferred city has gone up, the purchase price of a practice in a preferred city has also gone up.  By contrast, in rural areas (population less than 15,000), a lack of interested purchasers is driving the prices down. Therefore, a shortage is not occurring in the more populated areas but in the rural areas. This trend is even more evident in certain states, including California, Utah, Idaho, Colorado, Arizona, and Nevada.

Beyond the location concerns, the availability of associate positions, buy-ins and buy-outs in Arizona and many other states is less than the demand for those positions. Without those traditional opportunities to join an existing practice, the number of start-ups has increased in high growth areas.  Currently, the number of new dentists exceeds the number of dentists retiring or moving away, making the dental marketplace very competitive in Arizona and certain other states. Consequently, the projected nationwide “shortage of dentists” is not likely to reach the more populated areas of Arizona any time soon, while Wyoming and rural areas of Colorado are beginning to experience a shortage.

The first task for a dentist wishing to practice in a certain area is to learn about what practice opportunities are available. Start with the opportunities listed at the web site of the Arizona Dental Association at www.azda.org and click on classified ads. Additional resources include reviewing publications, gathering information online, speaking with colleagues, contacting practice brokers, and sending letters to dentists in the area.

Often times, a dentist graduating from school or finishing a residency program wants to dive into a buy-out or start-up situation.  However, these options are often overwhelming.  In some cases, it is more advantageous for a new doctor to build clinical and business confidence in an existing practice before venturing into ownership. For these doctors, an associateship is often ideal. 

Working temporarily in an associate position allows many doctors the time to check out where they would like to eventually live, to see the different practice opportunities that are available, to learn from their associates’ techniques or behavior (be they good or bad), and to begin to form their own personal style and preferences, all without having their backs against a wall financially.  After these doctors have gotten their feet wet in this kind of a situation, ownership becomes a logical next step.

The most important part of this search is what to do when they locate an opportunity that they are interested in.  How do they know if it is right for them and if it is structured fairly for all parties concerned? When it comes to gathering the information required to make an educated decision, many doctors feel perplexed and overwhelmed. Obviously, a practice should not be purchased without first studying sufficient data. Nevertheless, enthusiasm frequently overrides objectivity, and some dentists decide to close a purchase prior to conducting the proper due diligence. This is when it might be best to hire a competent and experienced person that can help guide them through the maze of what to look for and how to analyze their opportunities.

Crystal Smith, RDH and Larry Chatterley are managing member of CTC Associates of Arizona (formerly KHOT), a practice transition consulting company. CTC Associates have collectively been involved in facilitating over 1,800 practice transitions in AZ, UT, CO, NM, ID & WY.

To reach Crystal, email [email protected], call or text message 480-229-9733.