Why Demand for Dental Services is Rising in Perth and Across Australia
We were looking for great information to pass on to our readers and found a study from August 2013 called, “Demand for Dental Services in Australia.” The report was compiled by research firm Insight Economics under the auspices of the Australian Dental Association.
While the study is two years old, its purpose was to predict the demand for dental services in Australia through 2020 by examining the factors that drive it. For our purposes, we would like to focus on the demand side. The demand for dental services is rising, both in Perth and across Australia. We would like to examine why.
The ADA piece included research from the Australian Research Centre for Population Oral Health (ARCPOH). Insight Economics used them as a “starting point” from which to develop their own set of projections. The study is a 34-page paper which you are welcome to read by clicking the link at the bottom of this piece in the reference section.
What Drives Demand for Dental Services?
The demand for dental services in Perth and across Australia are the same. As opposed to medical services, which are financed through the Government, most dental services are paid for by the person receiving the services.
Consequently, the main drivers for demand include the number of population, the structure of population, such as elderly compared to younger generations, prices of services compared to income, educational level, societal expectations, expectations of individual consumers and the evolution of dental services and offerings.
Demand patterns for previous years were also taken into consideration. From 1994-2005, demand rose an average of 3% per year. From 2005-2007, demand fell to less than 2% per year. In 2007, the Medicare Chronic Dental Disease Scheme (CDDS) program was introduced, causing dental demand to rise to 3.5%. In 2012, CDDS ended and was replaced by a program that would spend $4 billion over 6 years, from 2013-2018. This is 33% less than the $1 billion that was spent on CDDS.
The Market Structure for Dental Services
The market structure in Australia is driven by two defining characteristics. The first characteristic: most dentists work in small, privately owned dental offices. The second characteristic: individuals pay for roughly 80% of all dental work that is done on them. Whether the money is coming out of their pockets for private dental insurance or straight out of their pockets, it is still coming from the individual patient.
The good news is that 53% of Australians do have some form of private insurance that covers dental procedures. The Australian model is very similar to those in the US and Canada. The UK, however, has a system in which more than 50% of dental services are paid for by the National Health Service.
Revealed Demand for Dental Treatments
The demand for dental services, no matter where or when, is always governed by patients trying to strike a balance between the need for dental services and the ability to pay for them. Dental expenditure statistics measuring the outcome are called “revealed demand” or “effective demand.”
As one would expect, the statistics for revealed demand are widely disparate between those with high incomes and those with low incomes. There is another term called “latent demand” which refers to those who are too poor to pay for dental work and don’t have it done. Recessions in the US and UK, for example, have created a lot of “latent demand” as those who couldn’t afford dental work wait to have it done or look for different options. In Australia, it didn’t make as much of a difference due to the CDDS program.
The Conclusions of the Dental Care Study
The most important takeaway is that demand is expected to rise at a rate of 2.51% per year through to 2020. However, if the government decides to spend more money on dental care, these numbers could rise. Since the current programs are in place through 2018, the likelihood of a drop in demand is low.
Our conclusion: find a great dentist now. To learn more or for a dental appointment, call eDental Perth today: (08) 9361 1728.
Reference: Australian Dental Association, Insight Economics: “Demand for Dental Services in Australia.” August 2013. http://www.ada.org.au/App_CmsLib/Media/Lib/1311/M709141_v1_demand_for_dental_services_australia.pdf