Are There Too Many Dentists In Your Area?

Category: Dental, Economics

The answer to this question, when we ask our Greater Toronto Area clients is “Absolutely!”

When the same question is posed to our clients in areas outside of the GTA, the answer is a resounding No, but don’t let the secret out. We love it out here and want to keep it that way.

I predict that the oversupply of dentists in the GTA will not last much longer. Within five to 10 years, according to our dentist/population statistics, there will be a significant drop in the number of equivalent full-time dentists serving the GTA population. For those of you serving the rural areas; don’t worry, your regions are very unlikely to attract a large influx of new dentists and you will continue to own the busiest dental practice in the entire province.

Some statistics that will support this theory are as follows:

1. There are over 2,000 dentists in Ontario over 50 years of age, according to the 2001 RCDSO listing. There are over 1,200 who are 55 years of age or older. That equates to roughly 150-200 retiring dentists per year over the next 10-15 years, assuming that the average age of the selling dentist is 60. This does not include death and disability rates, which will increase the number of dentists exiting the profession to an even higher rate per year.

2. Baby Boomer dentists (those being about 35 to 55 years of age today) are likely to exit the profession at much younger ages than their predecessors (witness Freedom 55, for example). Therefore, the number of dentists transiting out of dentistry in Ontario will increase to 200-250 per year within five to 10 years.

3. If other trends affecting a dentists ability to leave ownership are factored into the equation, such as inheritances and the changing regulatory landscape, the statistics indicate that a dental manpower shortage ÷ versus today’s regional manpower surplus ÷ is looming in Ontario. Linda Samek, ODA Director of Professional Affairs, and then-ODA Research/Policy Analyst Suzanne Lipson discussed this topic in “Human Resource Issues: A Comparison By Region” in the June 1999 issue of Ontario Dentist.

These trends can be further evidenced when we analyze the profile of today’s dental graduates. First, consider the large number of female dentists that have entered the profession over the past 15 years. They now represent more than half of most graduating classes, and the ratio continues to rise each year. When a female dentists behavior pattern is compared to that of a males, the female graduate is more likely to stay in or around a major urban centre. This is due to their unique social, family and cultural interests. It may also be the largest single factor that has contributed to the oversupply of dentists in greater metropolitan areas over the past years.

Add to this fact another developing trend that indicates female dentists simply do not stay in full-time practice as long as male dentists, because they more often than not perform the bulk of homemaking and child-rearing duties. Brokers have represented dozens of female dentists in the past and their average age when selling is well below 50.

Overall, these converging trends will result in a reduced number of full-time dentists treating patients, which also leads to a positive trend in the ratio of patients per full-time dentist. In other words, there will be more patients per dentist in the future, thus increasing the income level for each dentist, yet at the same time, possibly reducing the fair market value of practices.

Who will replace the dentists exiting out of practice over the next 10 years? How many new entries are there into the profession from Canadian dental schools and other countries? As some of you may know the NDEB has recently changed its examining criteria, meaning there are a limited number of spaces available through only a few programs.

However, the market as I have described it does not constitute a crisis, particularly in the GTA. The wheels are not about to fall off, so don’t be too concerned just yet. This process will take time. The beginning of this cycle of retiring Baby Boomer dentists will not begin to develop until 2002. After that, I predict the volume of retiring dentists will grow substantially each year. The resulting ratio of retiring versus graduating dentists will be most evident in 2010, when I predict that two dentists will retire for every one entering the profession.

At that time, it may become obvious that the graduation rates for the years 2002 to 2009 were too low to support the need for new dentists. The shortage of dentists is already an issue for practitioners in the remote or northern Ontario regions. It takes six to eight years to produce a dentist and I suggest that Canadian dental schools may wish to consider increasing enrollment now rather than later. Failing such a remedy, alternative forms of manpower may seek to supply the Canadian public with treatments. There are numerous predictions that hygienists may become truly independent, thus offering their services directly to the public. If there are too few dentists able to manage the ever-increasing population demand for dental services, this may become an issue sooner than dentists think.

After a lengthy analysis of these issues, a series of calculations were made that allowed us to make predictions about the future of dental practice values. The conclusions are very relevant to dentists who are beyond 50 years of age today, as they are entering their late career years of dental practice.

There will be an unprecedented number of dentists leaving full-time practice between 2002 and 2012, inclusive. This means there will be a surge in the volume of practices put on the market for sale. Assuming that the fundamental economic reality of supply and demand will follow, practice values will go down. You can bank on it!

It may seem bizarre to you for a broker to make these types of claims, and we are likely to suffer from this as much as our clients. Assuming selling prices decline, so will transaction fees for commissioned brokers. However, if we are going to offer advice, as is the intent of this column, I take it as my duty to inform you of our vision.

In conclusion – and as I have said many times before – selling is much more of a personal choice than an economic one. Follow your natural career path, regardless of the ups and downs of the dental practice marketplace. You may be happier that way, and in the long run, would your practice not be more valuable to you than to someone else?