Expanding your dental practice is a major step, but selecting the right location is key to long-term success. Should you open a second location in a busy urban area with a large patient base, or expand into a less saturated suburban or rural market?

This decision requires careful market analysis, strategic planning and guidance from experts who specialize in small to mid-sized practice transitions.

Why Working With Dental Industry Experts Matters

A real-world example shows why specialized advisers are critical. A dentist considering expansion consulted a general CPA, who advised against acquiring a practice just 15 minutes away, citing concerns about overlapping patient bases.

At first glance, this made sense — why risk redundancy? However, the existing practice focused on general dentistry, while the potential acquisition specialized in cardiovascular-related periodontal care. Rather than competing, the two locations would have complemented each other.

Had the dentist moved forward, they could have:

• Attracted a broader patient base in a highly populated area
• Increased patient retention by offering specialized services
• Sustained both practices through market density
• Taken advantage of tax benefits for multi-location ownership
  

A general rule is 1,200 patients per dentist in an area for sustainable expansion. In this case, the threshold was met, making it an ideal opportunity. Unfortunately, the dentist passed due to advice from a non-specialized CPA. This highlights why working with dental practice transition experts is essential for making informed growth decisions.

Market Considerations: Urban vs. Spread-Out Areas

Expanding into a new market means evaluating patient access, competition, and long-term sustainability.

Urban Markets

Pros

• Large patient pool and high visibility
• Strong demand for specialized services
• Walk-in traffic increases new patient acquisition

Challenges

• More competition requires aggressive marketing
• Higher operational costs for rent, salaries and supplies

Spread-Out Markets

Pros

• Less competition, making it easier to establish a presence
• Higher patient loyalty, as patients tend to stay with one provider
• Lower costs for rent and operations

Challenges

• Smaller patient base may slow revenue growth
• Recruiting skilled specialists can be difficult

Key Financial Considerations for Expansion

• Urban markets: High operational costs but strong revenue potential
• Rural markets: Lower costs but may require significant patient outreach
• Buying an existing practice: Acquiring an established patient base is often a better investment than a startup

Align Expansion With Your Practice’s Long-Term Goals

• Urban practices attract DSOs and private equity groups seeking high revenue potential
• Rural practices appeal to independent buyers but may take longer to sell
• A balanced approach — owning both urban and rural locations — provides revenue stability and buyer flexibility
  

Key Takeaways for Independent Dental Owners

• Set clear goals — Are you expanding to increase revenue, attract buyers or strengthen patient access?
• Work with specialists — Dental industry brokers and advisers understand market trends
• Use patient data — Demographic insights help determine the best location
• Think long-term — Expansion should support both profitability and future sale potential

Thinking About Expanding? Let’s Talk

Expanding your practice is a big decision. Headwaters Practice Transitions specializes in helping independent dental owners grow strategically while positioning their practice for long-term success. Contact us today to explore the best expansion opportunities for your unique goals.