The number of bankruptcies and closures among dental clinics in Japan has surged, reaching alarming rates in 2024. This trend is driven by various factors, including decreased cavity treatment demand and intensified competition within the industry.
According to a report by Teikoku Databank, the total number of dental clinic bankruptcies and closures in the first half of 2024 reached 85 in Japan. This figure is nearing the all-time high annual count of 104 cases recorded in 2023, indicating a potential for surpassing previous records by year-end.
Contributing Factors
Over-Saturation and Competition
The dental industry has faced persistent issues of over-saturation, with the number of clinics often described as exceeding even the number of convenience stores. This over-supply has led to intense competition and unsustainable business environments for many practitioners.
Decline in Cavity Treatments
A significant portion of dental clinic revenue traditionally comes from cavity (caries) treatments. However, recent trends show a decrease in cavity incidence, making it challenging for clinics to maintain profitability.
Shift to Elective Treatments
To counteract the decline in routine treatments, many clinics have shifted focus to elective procedures such as orthodontics and cosmetic dentistry. These treatments, often not covered by insurance, place a financial burden on patients, potentially leading to reduced patient intake and revenue instability.
Operational Challenges
The industry is also grappling with shortages of dental hygienists and an aging workforce, with the average age of clinic owners surpassing 60. These factors contribute to difficulties in maintaining operations and finding successors, leading to increased closures.
Mergers and Acquisitions
Although mergers and acquisitions (M&A) activity has increased, older clinics with outdated equipment or poor locations struggle to attract buyers, resulting in continued high closure rates.
Current Trends and Future Outlook
Some clinics are adapting by shifting their services towards cosmetic procedures like teeth whitening, which have seen increased demand. The ability to cater to diverse patient needs and local demographics is becoming crucial for clinic survival.
As patient expectations and demands evolve, dental clinics must innovate and diversify their offerings to remain competitive and viable in the changing healthcare landscape.