Is the Dental Industry a "Declining Industry"? — The Real Reasons Behind the Record Pace of Bankruptcies and Closures, and the Path to Success

Table of Contents

1. Current Events: The Surge in Bankruptcies and Business Closures in Numbers

2. "The Real Reasons": Six Structural Pressures

3. Yet Not "Declining": The Real Picture of Demand

4. Japan's Dental System (Quick Guide for Foreign Readers)

5. Misunderstandings and Fact-Checking (Q&A)

6. Blueprint for Surviving Dental Clinics: 10 Practical Steps

7. Mid to Long-Term Outlook and Risks

8. Conclusion
   
   

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1. Current Events: The Surge in Bankruptcies and Business Closures in Numbers

• In 2024, there were 64 bankruptcies of medical institutions, the highest on record. By type, there were "31 clinics," "27 dental clinics," and "6 hospitals." Business closures and dissolutions reached 722 cases, and combined with bankruptcies, the number of medical institutions that "disappeared from the market" reached 786 cases. Dental clinic closures and dissolutions were 118 cases, the highest ever. Tenderbee
  
  
  

• In the first half of 2025 (January-June), there were 35 bankruptcies of medical institutions, surpassing the pace of the record high in 2024. The breakdown is 9 hospitals / 12 clinics / 14 dental clinics. The deterioration of medical institutions' revenues and the aging of management are analyzed as the background. Tenderbee

Point: While headlines may read "Dental Clinics at Record Pace,"it's important to distinguish between the sharp increase in the number of bankruptcies and the rise in business closures. Bankruptcies involve legal proceedings due to cash flow breakdowns, while closures often occur due to succession difficulties and aging even if profitable. Tenderbee

Additionally, according to data from the Ministry of Health, Labour and Welfare, as of June 2024, there were 66,689 dental clinics. Over the past decade, about 2,100 clinics have decreased, influenced by excessive competition in urban areas and succession difficulties. Tenderbee

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2. "The Real Reasons": Six Structural Pressures

2-1 Rising Prices, Labor Costs, Energy Costs, and Insufficient Growth in Medical Fees

Costs for medical equipment, materials, labor, food (in hospitals), and utilities are rising simultaneously. However, the growth in medical fees, which are the unit price for insured medical services, is not keeping pace, as repeatedly pointed out in bankruptcy trend reports. Tenderbee

The 2024 dental medical fee revision is widely evaluated as thin in substance, excluding wage increase measures. While there are positive elements such as the establishment of new evaluations for wage increases for medical workers, the industry's mainstream view is that the room for raising technical fees is limited. Ministry of Health, Labour and WelfareNational Federation of Health Insurance Physicians' Associations -

2-2 **Labor Shortage (Especially Dental Hygienists)** and Rising Recruitment and Retention Costs

The job-to-applicant ratio for dental hygienists was 23.3 times in 2022. This means that more than 20 clinics are competing for one person, with rising labor costs, increased recruitment costs, and turnover risks squeezing profits. jdha.or.jp
Additionally, surveys on work conditions reveal issues related to retention and work environment. Career planning, educational investment, and flexible work systems differentiate recruitment capabilities. jdha.or.jp

2-3 Vulnerability Due to Predominance of Individual Management: Succession Difficulties and Aging of Directors

Many medical institutions in Japan are small or individually managed, and dental clinics are no exception.

The aging of managers and lack of successors accelerate business closures. Among all clinics, 54.6% of managers are 70 years or older, and in dental clinics, it is **25.6%**. Tenderbee

2-4 Equipment Renewal and Infection Control Costs, Repayment of COVID Loans

The renewal cycle of expensive equipment such as units, CT, CAD/CAM coincides with rising running costs due to high electricity and material prices. The repayment phase of cash flow support during COVID also overlaps, and when cash flow dries up, it becomes critical. The main cause of bankruptcy is "revenue decline (poor sales)," but the simultaneous increase in expenses is painful. Tenderbee

2-5 Changes in Demand Structure: Establishment of Prevention and Standardization of Visit Frequency

The inclination towards check-ups and prevention is rising, with about 60% of people having had a dental check-up in the past year. Meanwhile, the shift from treatment-centered to maintenance-centered requires a review of unit prices and point design, widening the gap between clinics that can and cannot manage rotation efficiency and recall operations. Ministry of Health, Labour and Welfare

2-6 Regional Gaps: Overcrowding in Urban Areas vs. Manpower Shortages in Rural Areas

Urban areas face high clinic density and are exposed to price and advertising competition, while rural areas struggle with securing personnel for hygienists, technicians, and home dental care. Although the system is uniform nationwide, the nature of management difficulties varies by region.

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3. Yet Not "Declining": The Real Picture of Demand

• Dental national medical expenses amount to 3.23 trillion yen (FY2022), accounting for 6.9%. It increased by **+2.5% compared to the previous year. Considering demographic trends and the growing inclination towards prevention, demand itself is not shrinking into a "decline". Rather, the key is whether the supply side can catch up with structural changes in provision. Ministry of Health, Labour and Welfare
  
  

• The growth in check-up and preventive visits (58.8% in the past year) aligns well with a subscription-like model for chronic disease management (planning regular maintenance and hygiene slots). Japan Society for Lifestyle-Related Diseases Prevention
  
  

• With an aging population, there is a definite need for home dental care and denture maintenance. In younger demographics, the self-pay areas of **orthodontics and aesthetics (such as whitening)** are likely to grow.
  
  

• On the other hand, clinics in areas with oversupply or those unable to change traditional processes may find it difficult to monetize despite demand and may be forced to withdraw.
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• In summary, the market is undergoing expansion and qualitative transformation, while the supply side is experiencing elimination and reorganization, indicating a phase of **"reorganization"** rather than "decline."
  
  

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4. Japan's Dental System

• Universal Insurance (National Health Insurance / Employees’ Health Insurance): Many basic treatments (caries treatment, root canals, dentures, etc.) are covered by insurance. The self-pay portion is generally 30% (varies by age and income bracket).

• Self-Pay (self-pay / private care): Implants, aesthetic orthodontics, whitening, and some ceramics are not covered by insurance. There is significant price variation between clinics.

• Fee Schedule: Uniform nationwide point system. Revised every two years. Recently, there is a trend to add wage increase evaluations, but many voice concerns about the limits of absorbing rising prices and labor costs. Ministry of Health, Labour and Welfare

• Most entities are small clinics: The environment for succession and M