Premise Lease Negotiations

New Approach to New Dental Clinic Locations


Ian D. Toms


April 30, 2019

April 30, 2019

Dentists considering building a new dental clinic are faced with one single important question – WHERE?

A common answer to this question is that there are no “good spots” left because the market is saturated. Additionally, most dentists contemplating a new clinic are aware of instances where clinics have opened but have been unsuccessful.

“Where?” is being answered in the wrong context. Dentists must approach this question with contemporary thinking because it’s a contemporary problem. The decade-old approach doesn’t apply any longer.

Oral health clinics used to be modest professional medical practices compared to the high-volume professional practices located in retail settings that exist nowadays. Back then, there were few competitors, real estate was plentiful and inexpensive to rent, leases and landlords were straight forward, and failure was rare. At that time, patients also had no insurance coverage, Invisalign and implants didn’t exist, hygiene programs were limited and treatment plans were modest. Successful clinics decades ago required a large patient population since not much dentistry was provided per patient. Patients spent a comparatively modest amount on oral health care.

Fast forward to today’s modern oral health care clinics that offer advanced treatment options, comfortable financing, and comprehensive treatment plans. Treatment costs are often paid for or offset by insurance plans. Advanced diagnostic equipment and treatments (including implants, for example), and sophisticated oral health care education programs have created a market for oral health care which did not exist in the past. The result is that successful contemporary clinics do not need as many patients as they did in the past.

Albert Einstein said that we can’t resolve current problems at the same thinking we were at when we created them. Over time, the dental industry has grown - the number of clinics has grown, the treatment options have grown, and the number of people being treated has grown as well as the expenditure per person on oral health care. Oral health care has transitioned from a limited professional healthcare practice to a specialized retail service. To accommodate these changes, when selecting a new location for a clinic, dentists must recognize and take advantage of the information that is available to them. The old method of “finding a good spot” is just plain wrong.

In the current environment, a desirable “where” is a high-profile retail premises in an area with a sufficient number of potential patients that require and can afford the diagnosis and treatment that the clinician wants to and is able to provide.

From one point of view, a new clinic owner wants to choose a location with many “competing” clinics because these clinics have trained and therefore, created the ideal potential patient population. What do I mean by this?

Consider that 50 years ago there were no “coffee shops”. Then, Tim Hortons saturated the market, with at times, stores at all four corners of an intersection. Now, Starbucks has entered a well-developed and trained market. It appeals to a higher-end consumer and is very successful because it knows how to define “where”. This same thinking applies to Domino’s Pizza. Domino’s entered Canada in 1982 and now, has ~400 stores across the country in “saturated” markets. Domino’s Pizza also understands how to choose its “where”.

Based on our in-house advanced demographic analysis software, a suitable location can be determined in minutes based on user-selected parameters. These should include, for example, the number of people within a certain area who would be considered appropriate patients for a new clinic. The area’s boundary can be defined in terms of drive or walk times from a specific geographic point. The number of people available for treatment during the day in an age category and their financial capacity as well as a matching cultural background can be analyzed. Then, an analysis of existing successful clinics can be compared to potential new locations to project success, and demographics of existing clinics can be reviewed to identify potential untapped opportunities to attract new patients Our demographic software provides an instant list of existing clinics including their locations and the services offered.

Consider demographics for three different potential patient markets:

1. a 5 minute walk time from 25 King Street West, Toronto (CIBC Tower),

2. a 10 minute drive time from Yonge and Lawrence, and

3. a 30 minute drive time from the centre of Hanover.

3,632 people live within a 5 minute walk of the CIBC Tower, but during the day, that number increases 37 times to 135,278 people. Since there are 9 clinics in this area, there are 15,031 people available per clinic during the day.

36,646 people live within a 30 minute drive time from the centre of Hanover, but they must commute to work leaving a pool of 25,623 people during the day when clinics are open. There are 9 competitors in the area equating to 2,847 people per clinic. On average, each household spends $287 per year on dental services which works out to $454,991 per clinic. If you were considering an orthodontic clinic, you would want to know there are 3,885 people aged 10 – 20 years old. If you want to provide implants, crowns and bridges, there are 9,207 people between the ages of 40 – 60.

314,294 people live within 10 minutes of Yonge & Lawrence increasing to 343,256 during the day. There are 867 people per competitor. On average, each household spends $707 per year on oral health care. There are 33,596 people between 10 and 20 years old which is great if you are an orthodontist. Similarly, there are 88,102 people 40 – 60 years old which is ideal for a restorative practice.

Where do you want to go?

Those who fail to plan, plan to fail. With contemporary market analysis tools, you can assess each market in advance and be certain “where” to build your new clinic. This process looks really simple, but it’s actually a very sophisticated process. Using the “good spot” selection process of the past will lead you to a bad location today.