Our annual analysis of dental network trends showed overall annual growth in unique providers of ~7-8% over the last five years. By all measures, networks are growing.
Here’s the breakdown:
- The average number of unique locations grew from 58K to 77K, or 33%
- The average number of unique providers grew from 72K to 99K, or 37%
- The average number of access points grew from 163K to 309K, or 90%
Not only are there more locations and more providers, but there are also more locations per provider: up 38% (2.25 to 3.12) from March 2012 to March 2016.
And yet, when we did this same analysis in 2015, we saw 10% annual growth in unique providers over the prior five years. While the growth was higher in access points and lower in unique locations like it is this year, all of the percentages were higher:
- The average number of unique locations grew from 54K to 76K, or 41%
- The average number of unique providers grew from 67K to 100K, or 50%
- The average number of access points grew from 134K to 281K, or 110%
Interestingly, the average number of locations per provider only grew 29% (2.01 to 2.82) between March 2011 and March 2015.
So if the annual growth rate is lower, and the overall growth in each counting method is less, why did the average number of locations per provider grow 33%?
The multiplier effect we were starting to see in 2015 has blossomed. Just one of the 15 largest national dental PPO networks doesn’t have any lease partners and the other 14 have increasingly more complex network stacks. On average, the largest networks have four network partners and four networks have six partners. Connection Dental, DenteMax, Maverest, and Stratose are the most frequent network partners.
Another factor is the number of networks each dentist is joining. In our analysis, we found that the average dentist participates with 55% of the top 15 dental PPO networks, while nearly half of dentists in networks are in at least 11.
One more element of the growth is the rise of dental service organizations. We’ve seen a decade of private equity investment and that’s paying off. Becker’s Hospital Review noted that a 2014 Sageworks analysis found that DPMs generated the highest return on equity of the industries it examined. With additional cash, DSOs are growing by building and acquiring dental practice. And following the industry practice of listing each provider at each office contributes to the increase in locations per provider.
How are these trends playing out in your networks and markets? About 40% of dentists participate in 1-4 networks, so there is still room for organic growth. How well are both tactics represented in your strategic plan?