Do Dental Practices in Small Markets Face Different Challenges?

May 8, 2024

By Roger P. Levin, DDS

Dentists practice in all different types of markets, each one bringing its own set of nuances and circumstances. For instance, New York City and San Francisco are major cities where patients typically work office jobs with limited time around their lunch hour or before and after work. Since the pandemic, metropolitan practices are facing new challenges, as more people embrace remote work. Simultaneously, suburban practices face their own challenges, typically centered on high levels of competition.

But what about practices in smaller markets, often in rural areas with lower population density? How are these practices faring, and better yet, how can they succeed in today’s market? In this article, we will delve into key strategies to help small-market practice owners achieve greater success.

First: are small markets truly different?

Yes and no. As a consulting firm with clients in numerous countries, we at Levin Group know that the dental industry is essentially the same worldwide. Dentists must get up in the morning, get ready for work, get to work, set up for the day, have a staff, have patients arrive, provide diagnoses and treatments, lead their team, get paid, and manage other factors that are extremely similar in every market. But there are also differences: each state and country has its own regulations, as well as different options in terms of materials and the services they can provide versus specialists (and versus hygienists, in some circumstances).

Before examining the challenges of practicing in a small or rural market, let’s look at one of the big benefits. Rural areas are often characterized by a low supply of dentists. In business terms, dentists in small markets can find themselves in an excellent supply-and-demand situation. There is more demand by patients for dental care and a lower supply of dental practices to deliver it; this dynamic can be significant and lucrative for dentists.

But the benefits also come with challenges:

1. Fewer buyers

Take the example of a doctor we recently spoke to: he has a successful practice in a small-market city and has been able to save about three times the average for retirement. However, no one has expressed interest in buying his practice. The main reason? Not many dentists want to live there. This doctor has had a phenomenal career but has unfortunately realized that when he is ready to retire, he will need to transition patients to other practices in the area and close the practice down.

2. Lower population density

Smaller markets, by definition, have fewer people living in them, which makes it difficult for dentists in those areas to attract associates and staff members. Here in the U.S., we are dealing with a national recruiting and hiring crisis, which is even more profound in rural areas where the overall pool of applicants is smaller. Practices in these areas will need to excel in maintaining a positive culture in the practice to attract — and importantly, retain — team members.

3. Smaller talent pool

Outside of the dentists who want to work in smaller markets because they grew up or have family there, it has become increasingly difficult for practice owners to attract young dentists to job opportunities. Many of these prospective associates face high levels of student loan debt and may be hesitant to practice in cities that may not have the demographics to support the income level they require to cover their expenses and ideal lifestyle.

Strategies for succeeding in smaller markets

Smaller markets often have fewer dental specialists, which means that many general practitioners provide specialized services such as endodontics or implant placement. This can be a golden opportunity for up-and-coming associates, as they can hone their skills and knowledge and provide services typically referred out to specialists in larger markets with more access to specialty practices. When associates have more opportunities to improve and showcase their skills, they tend to stay busier with a steady flow of patients.

While there are some challenges, the following benefits of practicing in a small market can make the option extremely attractive to dentists:

Patients tend to be more loyal in smaller markets and communities. Patients become comfortable with a dental practice and tend to stay with it throughout most or all of their lives; and even when practices are sold, long-term patients tend to stay with the new buyer.

Small-market practices are often more affordable. In smaller markets, dentists are more likely to be able to purchase practices from retiring dentists and build a group of practices that are highly lucrative, efficient, and productive. While a smaller pool of buyers can be more challenging for the seller, it can actually be a major opportunity for aspiring associates.

“Supply and demand” strikes again. Practices in rural areas can generate high patient volume, especially if there are fewer practices in the area and competition is low. When patients have fewer choices, dental practices will have a greater opportunity to attract more patients, building volume and production.

The bottom line

It would be a mistake to generalize and characterize all small-market practices as being the same. Just like other markets, smaller communities offer a wide variation of practices and business models. Generally, there are fewer straight-up, fee-for-service practices in smaller markets. Most practices in smaller areas find it necessary to participate in multiple insurance plans to accommodate the needs of the widest array of patients possible. Any, or all, of these practice types can be highly successful in a smaller market if the business model is properly designed.

ROGER P. LEVIN, DDS

Roger P. Levin, DDS is the CEO and Founder of Levin Group, a leading practice management consulting firm that has worked with over 30,000 practices to increase production. A recognized expert on dental practice management and marketing, he has written 67 books and over 4,000 articles and regularly presents seminars in the U.S. and around the world. To contact Dr. Levin or to join the 40,000 dental professionals who receive his Practice Production Tip of the Day, visit www.levingroup.com or email rlevin@levingroup.com.