The generic dentist and the generic patient
Dental practices can use differentiation and market segmentation strategies to overcome dentistry’s “busyness crisis,” according to Scott McDonald, a business location selection and demographics expert. McDonald also explains why metrics such as competition ratio can be misleading when selecting a dental practice location.
M. Scott McDonald
Dentistry has long sought a solution to its “busyness crisis,” in which an oversupply of dentists seems to be fighting over an apathetic consumer market. This is especially true today, when it seems fewer patients are willing to follow through with advised treatment. If a practice finds itself in trouble, traditional solutions prescribe maximizing case acceptance or, more drastically, moving the practice to a location with less competition. But these strategies are becoming the stuff of myth and legend. The profession now realizes that these actions have minimal impact and represent dead ends to practice development. Today, new strategies need to be employed.
There has been outstanding research by scholars to help business professionals learn how to thrive in challenging markets. Two primary strategies, as described by economists and researchers, are differentiation and market segmentation. Differentiation is the varying of services by a business in order to distinguish itself from its competition, while market segmentation is the identification of a portion of the population that would be attracted to the benefits the business offers.
Differentiation was described notably in 1956 by Wendell R. Smith in a foundational article in the Journal of Marketing.1 Wendell used an analogy in which he described the marketplace as a three-layer cake. Differentiation, as a business strategy, sought not to capture the entire cake, but a single layer. Extending the analogy, market segmentation attempts to capture a wedge of the cake, or a market segment. Put another way, a business does not try to be all things to all people. By focusing its efforts on a market segment, it will be more effective and get more cake.
If we look at today’s dental market, especially in light of the so-called busyness crisis, we see that the days of the generic dentist and the generic patient have passed. The need for differentiation and market segmentation help lay them to rest. The dental market has evolved; dentists have to decide now how to differentiate and capture market segments.
But before employing these strategies, dentists must evaluate demographics. Unfortunately, professionals oftentimes believe that they need to find the perfect location with a perfect population base where sufficient demand is available. This translates into seeking a location with little or no competition. This is a mistake. To think this way is to misunderstand the dental marketplace. To understand why, it is useful to consider dentistry in relation to other industries.
Site Selection Magazine, a publication dedicated to business-location strategies, looks at location factors that match the market needs for businesses of various industries. These include manufacturing, retail, higher education, digital security, and many others. Each month, the magazine analyzes an industry and recommends locations. Curiously, dentistry has never been a featured business category. Presumably, this is because the factors needed for a successful dental practice are simply too many, making an analysis impractical. There is no commonly accepted practice model or universally accepted market. Put another way, there is no generic dentist or generic patient.
Rather than endorse a one-size-fits-all approach for analyzing metrics for the best dental practice location, we need to think about a complex interplay of factors. This includes a more robust analysis of demographics and patient-base psychographics.
When dentists, consultants, or other advisors recommend the best place to put a practice, they rely on one metric above all others: competition ratio. In doing so, they assume that locations having the least amount of competition relative to a geographically defined population will be better off. This theory works fine if you believe there is such a thing as a generic dentist and a generic patient. However, in reality this is not the case.
For example, a formula might suggest that one general dentist is sufficient to serve a set number of patients. (Some experts use a figure of 1,000–2,000 patients, although there is a great deal of variance here.) The premise is that too many providers will limit the amount of work to go around. Furthermore, it presupposes that all patients will want all the same services, and that all dentists will offer all services at the same price, in similar settings, and with equal competence. Obviously, this is absurd.
“Competition ratio” is how public policy is set by governments and regulatory agencies worldwide. It is how dental students are taught in dental school, and it is arguably the natural end-game of socialized medicine. However, it is an overly simplified calculation that assumes a generic model for dental practices. Reality is far more complex. We have to consider metrics that illustrate the varying needs and wants of consumers of health services, as well as the relative benefits offered by providers.
This is not to discount competition ratios entirely. They are useful. However, the calculation is insufficient to help doctors respond to changing trends among the populations. In my experience, the necessary ratio for competition can vary dramatically—from 1:750 to 1:3,500—when different characteristics of patient demographics are considered.
Let’s just admit that there are some patients who will prove more profitable to serve than others. Can their wants and needs be calculated based on their demographic characteristics? If so, what the practice offers can be shaped by these patients’ preferences.
Another metric that may cloud the issue is the fee schedule, or price. To understand why, it is useful to look at foundational marketing concepts.
In the 1940s, James Culliton of Harvard University came up with the Four Ps of Marketing: product, price, place, and promotion.2,i In the 1990s, scholars such as Bob Lauterborn built on Culliton’s ideas. Lauterborn devised the Four Cs of Marketing: consumer, cost, communication, and convenience.3 These formulations are otherwise known as the “marketing mix.” The concept of the mix is that the wants and needs of consumers vary, as do the relative benefits offered by businesses.
Now let’s consider how dental practices perceive themselves. Many dentists believe, in general, that all dentists are basically the same in the eyes of patients. They also believe that patients select practices based upon one factor—price. The logic goes like this: patients only consider price when choosing a dentist because they cannot objectively pick between practices on any other basis. Price is something they understand; everything else confuses them. But this belies the wisdom of Culliton, Lauterborn, and others. In reality, every dentist and every dental practice can be distinguished based on variables in a marketing mix. For example, what can be considered a convenient place for one consumer will not be a convenient place for another. Products and services matter, too. They vary widely in terms of benefits and features. Will some patients prefer ceramic crowns? Will some demand extended hours? Will some want alternative payment methods? The answer, of course, is yes.
This brings us back to the business strategies of differentiation and market segmentation, as well as the busyness crisis. The subject of busyness has long been considered in Dental Economics, but has largely been considered as a practice management issue rather than one regarding practice promotion. However, as described here, offering different products and services from one’s competition constitutes differentiation. Offering these products and services to various groups, including pediatric patients, geriatric patients, large-family patients, or patients of different cultures, constitutes market segmentation. By contrast, the generic patient and generic professional model places more dentists in direct competition, creating a limited professional environment. If busyness is something that is truly affecting the profession, differentiation and market segmentationmay be the answer to having more dentists successfully build practices without crippling their colleagues.
Putting away the myth of the generic dentist
Demographic data can tell the facts about people, but it is insufficient to link these demographics to a patient base. Quite simply, different things are desired within different groups. Matching these to the practice and doctor is where analysis can provide value. In a real sense, data is easy. Analysis takes time and experience.
The generic dentist is a myth. Dentists may see themselves as being just like their neighbors, but potential patients do not. There are differences that strongly influence patient decisions. Even something as simple as the gender of the doctor can matter. Age of the provider can also matter, as can language, background, culture, and clinical emphasis. Proximity to shopping, work, or even entertainment can matter, not to mention the distance of the practice from a patient’s home.
All of this applies to corporate practices and private practices, group or solo. Every dentist and practice site has advantages and disadvantages that make the dentist different from a generic standard. In this way, we have to stop looking at dentists as being doomed based upon a single metric such as competition ratio.
If we were to take identical twins who had the same upbringing, went to the same dental school, and had the same mannerisms, they would still not be identical professionals—even if they were right next door to each other. One twin would invariably care more about soft-tissue management, orthodontic procedures, or financial arrangements than the other. They would have different staffs, tastes in interior design, and Facebook posts. In short, there are differences that run deeper and more profoundly than the simple fact that they are identical in their chosen profession.
That is why the point about competition analysis is so important. If everyone in a practice area—the area in which practices compete for the same patients—is the same in clinical services alone, the variations between dentists will be of profound importance. Dentists must focus on the differences in themselves—their locations, offices, services, pricing, and much more—to show patients why they might be a better choice than the business next door.
Dentistry needs to put aside the myth of the generic dentist. It may have made sense when the profession wanted to create the impression that all licensed professionals were equally competent. But those days have passed. The public perception of the profession has moved on, and it is time that dentists move on too.
1. Smith WR. Product differentiation and market segmentation as alternative marketing strategies. J Marketing. 1956;21(1):3-8.
2. Banting PM, Ross RE. The marketing mix: A Canadian perspective. J Acad Marketing Science. 1973;(1).
3. Hanlon A. The 4Cs marketing model. Smart Insights website. https://www.smartinsights.com/marketing-planning/marketing-models/4cs-marketing-model/. Published February 2, 2015. Accessed January 11, 2018.
4. Blair C. Analysis of Dentist’s Busyness by the Numbers. Dental Economics website. http://www.dentaleconomics.com/articles/print/volume-102/issue-10/features/analysis-of-the-dentists-busyness-by-the-numbers.html. Published October 1, 2012. Accessed January 10, 2017.
i. The term “Four Ps of Marketing” was first quoted in 1953 by Neil Borden while he was serving as the president of the American Marketing Association. It was elaborated by Jerome McCarthy in Basic Marketing: A Managerial Approach in 1964.
M. Scott McDonald is owner and president of Doctor Demographics LLC, a firm that has specialized in marketing analysis services and research for practices for more than 30 years. He is the manager of Scott McDonald & Associates Inc., the speaking and consulting arm of Doctor Demographics. For more information, listen to his Perfect Place to Put a Practice podcast, or reach him at (800) 424-6222.