Competition – 5 Reasons Why Every Dental Practice Needs To Know Their Market Now

//Competition – 5 Reasons Why Every Dental Practice Needs To Know Their Market Now

Location Education Initiative (LEI)

Article #2:  Competition

5 Reasons Why Every Dental Practice Needs To Know Their Market Now

David James, CEO of

In our first LEI article (Demographics – 5 Reasons Why Every Dental Practice Should Review Their Demographic Data Right Now), I discussed why DentistsLendersDistributorsCPA’sConsultants and other advisors should view their Demographics as a critical component of a practice’s Location and Strategic Plan.

In this article, I want to talk about a second piece of the “Location” puzzle that is just as important than demographics – understanding a dental practice’s local competition, and how that competition affects the practice’s ability to attract new patients, regardless of whether you are a startup or an existing practice, and especially how it impacts the Strategic Plan and operational Marketing Plan.

When we work with dental clients or their advisers about Location issues, the first thing we check is the ratio of total population within the area around their practice to the number of competing practitioners in in the same area.  We have two ways of analyzing this:  A Growth Potential Score Report, which will be the subject of a future article, and our “Practitioner to Population Ratio Report” (PTP), which we will focus on in this article.  The PTP report provides a powerful snapshot and Map of market saturation in the competitive area around a practice and instantly evaluates the level of market saturation.

But what is a ratio without something to evaluate it against?  For this, we have conducted extensive studies of national and regional data and developed proprietary standards called REALratios for each practice specialty.  For example, a REALratio for a general dentist is 2,000.  To see sample REALratios, click here.

On a Map, we then display & compare the PTP to the REALratio and show all of the competing practices based on customized radius, drive time or other filter options you choose.

Ideally, we want to see the PTP be significantly higher than the REALratio for the appropriate specialty.

  • If the PTP is identical to the REALratio (i.e. 2,000 people per 1 General Dentist), then the market is saturated.
  • The more the ratio is greater than 2,000, the better.
  • The lower the ratio is below 2,000…beware.

But that also depends on the practice situation – a startup will look at the ratio differently than an existing practice or someone thinking of buying a practice.

A startup going into a ratio of 2,000 means the market is saturated and if you do start a practice there, you had better assume in your business plan and financing that your growth will be much harder to gain, your marketing spend may need to be much higher than you thought, etc.   We see dentists who want to start practices in areas with ratios under 1,000, which in most cases will be an extraordinarily difficult endeavor.

An existing, well-established practice with a 2,000 ratio also has a significant impact on your business plan and the strategies to address the competition depends on your practice goals and several other factors.

The key is that at least you know where you stand, so you’re not operating blindly and can work with your advisers on how to accomplish your desired growth, strategic, business and personal goals.

We find that dentists who are struggling almost always practice in areas with PTP ratios well below the REALratios we recommend. 

On the other hand, practices that are succeeding are often found in under saturated and underserved areas, because they don’t have the competition issues that other practices have to deal with.

There are many underserved areas across all dental specialties, and the way we find them will be a future LEI topic.

REALscore is the dental industry leader in providing practitioner, competition and market saturation data.    Whether you get competition data from REALscore or another source, I urge you to make this review an annual part of your practice startup and/or management.  Do your due diligence.  The right location with a complete understanding of your market could mean the difference of millions of dollars over the life of your practice.

Posted by David James, CEO of – Connect with him on LinkedIn here.

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