ADA: Big dental chains are doing big business

The number of large dental practices is growing, along with their profits and the number of people they employ, according to a new research brief by the ADA Health Policy Institute.

Marko Vujicic, PhD. Image courtesy of the ADA.

The trend in recent years is toward larger, consolidated multiestablishment dental practices, the study authors noted. For example, the number of large group dental practices grew by 25% over a two-year period from 2009 to 2011, according to a 2012 ADA study.

The current study found that, from 2002 to 2012, market share increased for dental firms with 20 or more employees, while firms with fewer than five employees experienced a decline in market share.

"This represents a continuation of current trends, so it did not surprise us." Marko Vujicic, PhD, chief economist and vice president of the ADA Health Policy Institute, told DrBicuspid.com.

Bigger practices, bigger revenues

Total receipts of dental firms with 20 or more employees grew from 16% of the total market in 2002 to 20% in 2012, according to the study, which was based on data from the U.S. Census Bureau's Statistics of U.S. Businesses. In contrast, total receipts of the smallest practices with up to four employees fell from 20% to 16%.

The number of dental firms, or practices with more than one office in the same state under common ownership or control, increased 10.6% from 113,128 in 2002 to 125,151 in 2012. Meanwhile, the number of solo practices increased 13% from 117,812 in 2002 to 133,107 in 2012. The number of dental employees also rose from 750,129 to 873,172 for an increase of 16.4% in the same period.

The growth of solo practices, called business establishments in the study, and dental firms was greater than the growth rate of the U.S. population, which grew by 9% from 2002 to 2012, according to the U.S. Census Bureau.

"The trend toward larger, multiestablishment dental practices is expected to continue, driven by changes in the practice patterns of new dentists, a drive for efficiency, and increased competition for patients," wrote the authors, citing a 2014 study (Journal of the American Dental Association, February 2014, Vol. 145:2, pp. 118-121).

Big practices growing

The number of locations of the largest dental firms has more than tripled, growing rapidly from 1,172 in 2002 to 3,732 in 2012. In 2002, large practices with more than 500 employees made up 1% of the dental market and generated 2.3% of the revenue. A decade later, large practices comprised 2.8% of all dental offices, and they more than doubled their revenue, growing to 4.6% of the dental market.

However, the concentration of large dental firms varies by state, the authors noted. Large practices are mostly concentrated in the West and Southwest, the upper Midwest, Georgia, and Florida, they found.

"Large practices, although growing, still are a small portion of dental practices in the United States and generate a small percentage of dental revenue," the researchers pointed out.

And while small practices still make up the majority of the dental market, their impact appears to be declining. In 2002, small practices with zero to 19 employees comprised 94.2% of the dental establishments in the U.S. and generated 84.3% of dental revenue. But by 2012, they made up 91.9% of practices and generated 79.9% of dental revenue.

In addition, the researchers found that, as of 2009, at least 300 U.S. dental practices were dedicated to the care of children on Medicaid that were managed by the five largest dental management organizations (DMOs). At least 10 additional smaller DMOs contributed to the care of these children. More than a fifth of Medicaid children (21%) are estimated to have received dental services from these DMOs in 2009, according to the research brief.

Growing number of dentists

Surprisingly, the number of dental practices and employees continued to grow during the Great Recession from 2008 to 2010, the study found.

The per capita number of U.S. dentists increased from 2003 to 2013 and will continue to increase through 2033, according to a 2014 ADA brief.

"At the aggregate level, the United States could be entering a period of expanding supply of dentists and flattening demand for dental care," noted the authors of the new brief.