The Doctor Demographic Blog: A Series
Let me start by apologizing to
those good folks who keep checking this page to see what the new “Hot Spot”
will be. I have received quite a number of complaints from doctors at these sites
(or near them) who claim that I am creating a “run” on their little piece of
paradise. Also, I have not updated this as often as I should. From now on, I
will post a few things I learned in the week on Fridays.
While it may look as though many
of the “best places” in Georgia have been taken, we took a look at Columbia
County, Georgia (not far from Augusta) and found great growth, a solidifying
middle-class, and a much better than average competition situation.
The lesson here is that dentists
practice in a relatively small geographic area. It is very unwise, therefore, to claim that an area is
hopeless or too filled with competition when looking at very large blocks of
population. For this reason, we still find dentists who are successfully
setting up practices in Massachusetts even though the State appears to have an
extremely large dentist-to-population ratio overall.
As an aside, we think Georgia
will continue to do well as long as it presents a favorable tax alternative to
neighboring states such as Florida.
That question appears above the
fold in the Wall Street Journal Weekend Edition for September 29-30. Rather
than deal with the issue in a few words here, we think we will create an
article for the upcoming Demographic Newsletter later in this week. To
understand the trends that have so changed the Florida Market for practices, we
have to look at some things that states have done to tell new dentists and
physicians, “We don’t REALLY want you.” At this writing, we were surprised to
see that Maryland has jumped on the bandwagon of raising taxes on small
businesses and professional practices as a means of building infra-structure.
At this moment in time, we are putting both Florida and Maryland on the “Be
Careful” list. While new practices
can certainly be created, we need to ensure that the “risk factors” are
sufficiently in the favor of the doctor before giving a green light. In other
words, when we see a region that is yelling “Caution!” we want to make sure
that the mitigating factors of putting a practice in a specific site are
sufficient to justify the move. Frankly, there are many more favorable
mitigating factors for Florida than we see for Maryland.
This week we went to all of the
Boroughs of New York City to investigate potential sites for practices. There is an area in Brooklyn that is
being developed on the River between the Manhattan and Brooklyn Bridges. While
we believe that this might be a risky place RIGHT NOW, it is certainly
promising to be a strong site for an upscale, family practice or two. As the
site continues to be developed building by building, we believe that several
offices (including a pediatric dentist and an orthodontist) will be demanded.
We will report on some of the other offices as data we have ordered can be
analyzed.
In Manhattan we were very
pleased to see several areas that appear to be improving as “gentrification”
takes root in once marginal neighborhoods. As we have said many times, the
rules that apply to most locations to determine a good site don’t quite work in
“The City.” We saw some promising locations in Queens and other places in
Brooklyn by The Bronx is not particularly attractive (and we really looked!)
We looked at several towns that
are just above our threshold of 5,000 residents. The potential sites have a
ration of 2,500 people per dentist (which is well above our base of 1,700:1 for
such areas. The population in most towns is roughly 50% Hispanic and moderately
poor-to-middle class. But we see that with moderate growth, proximity to
smaller, dependent towns that there is certainly room for the right kind of
dentist, especially one that is interested in becoming a vital part of the
community.
This week we looked at several
sites in Southern California to determine if start-up practices are still
practical. Because the average practice covers an area of 3 to 5 Zip Codes, the
reality is that there are MANY sites that will work. True, a practice in Tustin
or Beverly Hills will be hard not matter what direction or “niche” it will take
BUT because there IS net growth (particularly in San Bernardino and Riverside
Counties) and the demographic character of the population is continuing to
adjust itself, there are still many choices.
The issue, as we see it, is not
“Is there room for one more?” Instead, it should be, “Is there room for a
doctor who wants to serve the new migrants (not necessarily immigrants) or
residents in an area?” For examine, one population that is still on the
increase are Russians and Ukrainians. Their language needs are unique but so
are their cultural sensibilities.
Another example is the
significantly increased number of retirees with significant assets living in
planned communities. Geriatric dentistry may not be a recognized specialty of
the ADA but the needs (and demands) of older adults are not those of the
typical “family practice.”
Sure, we found several sites
this week in Ventura, Orange, Riverside, and San Diego Counties that are going
to work for the specific doctors we are working with. But let’s also not forget
that there are some dentists who will be selling their practices in these
regions this fall. But that is another post.
I looked at the New York City
area including Dutchess, Orange, Queens, Rockland, and Westchester Counties to
try to determine where the best start-up sites might be. Typically, when we
look for a start-up (or scratch) area, we have to look for several contiguous
Zip Codes (3) that have a dentist-to-population ratio of 1 dentist per 1,400
residents. There were actually several that met that criterion. But we also
have to look for growth. Highland Mills (10930), Monroe (10950) and Poughquag
(12570) all came up. We found Somers (12564) interesting when you take into
account the adjoining Zip Codes of North Salem (10560) and Purdys (10578).
There were two things, however,
that came up as “danger signs.” One was income (which tends to be on the very
rich or very poor extremes) and the other is relative risk. When we apply the
SAME set of demographic algorithms to New Jersey (and similar counties like
Bergen, Hudson, and Passaic) far more appropriate sites come up.
We are NOT saying that New York
cannot support a start-up in these counties. I am saying that unless there is a
specific issue on wanting to stay in the Empire State, the Garden State (and
others) look relatively easier to find good, lower risk sites.
There is something about the
Mid-West that we just love. Our mother was born in the shadow of the
Everlasting Hills (in Utah) so we have a personal affinity for the place as
well. But there are some trends we are noticing that should be considered
before buying or opening a practice in these kinds of towns. It all has to do
with “clustering.”
Because of the way the city
centers have been developed, new “TRUE SUBURBS” have opened on the outskirts of
town, usually along an Interstate Freeway. These suburbs will be preceded by a
housing development and associated shopping center. The result of this pattern
is two or three professional “ghettos” in a small space. In both cases this
week, we noted that there were close to 15 dental practices within 100 yards of
each other. Statistically, this was not a big deal because each location serves
a large geographic area (i.e., people come into town for treatment) but you
cannot swing a dead cat without hitting a doctor. The problem is that new
patients cannot figure out to whom they should go or a way to remember to whom
to refer. The answer is to put special emphasis upon some BRANDING that will
diversify the perception of the practice from those around it. It does not have
to be a clinical specialization. Rather, it can just be a theme, emphasis, or
“position” in the marketplace. But the bottom line for a successful practice is
NOT to look like the guy next door even when there seems like plenty of work to
go around.
If we can be of
service in telling you more about ANY of these areas, please contact us
directly at (800) 424-6222.
If
you'd like to see a more detailed report for your practice, please click here.