Understanding Population, Families, and Households – Podcast

Understanding Population, Families, and Households – Podcast

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Show Notes:

Podcast 23: Population, Families, and Households

Hello, this is Scott McDonald and welcome to the Perfect Place to Put a Practice Podcast.  

As you are aware, our podcast is devoted to helping doctors figure out where to put a practice.  Not surprisingly, one of the first things that we are asked is “What does the competition look like?”  Sure, I understand why it is being asked.  Doctors often fear competition like vampires fear the sunrise.   Don’t worry, we are going to come back to discuss competition issues again and again.  But today I want to share with you some demographic statistics that are even more significant and yet almost always ignored.   The reason that this vital data gets ignored is because they are not understood nor are their implications appreciated.  We will call them Population, Households and Families.

Let’s talk population for a minute.  Every practice type has a threshold size of population that it needs in order to be viable.  Sometimes the threshold population is made up of the total number of residents in an area.  Sometimes it is a subset of the general population.  As an example, an orthodontist will want to have roughly 2,000 10-to-14 year olds per orthodontist in a practice area.  How we determine how large a practice area is a matter for another session.  Suffice it to say that the radius will tend to be a distanced defined by a drive-time (such as 10-minutes).  On the other hand, a general dentist does not need that many adolescents to be really viable.  The average GP practice is 1 general dentist per 1,400 residents.  When the population is affluent and well-educated, the number can actually go down to 1 to 900.  I think you get the point. The important thing I am trying to convey here is that there is a threshold that will allow a practice to survive and thrive.  If there is not sufficient population living in an area of reasonable distance from the practice, no matter how charming you are or how beautiful your front desk lady is, it won’t help the practice to grow.  This leads us to another mitigation factor when it comes to population.  If a practice area is growing, even if the threshold population isn’t spectacular or there are many competitors, the viability of the site increases.  Just remember that growth does not just mean lots of new housing.  It can also mean lots of churning.  You remember “churning,” right?  This is another way of speaking about population turn-over (people moving in and out of the community).  It became a very big deal during the 2008 housing market crash.  So many people lost value in their homes that they stopped trying to sell their homes because they were “upside down” meaning they owed more on their mortgage than the house was worth or would ever be worth.  In short, people stopped churning.  The next shoe to drop was a large number of homeowners who just walked away from their properties or tried short sales.  Rather than having young buyers step in which was traditional, corporate investors purchased homes at a fire-sale price.  These homes then were rented rather than sold.  The result was a huge increase in the number of renters for both homes and apartments.  In the last two years, the promise of home ownership lost its desirability for many reasons.  At least churning started again and accounts for new residents moving into an area.  Home sales are still sluggish.

The bottom line is that churning has become far more important as a market force than ever before.  True, home and apartment construction is coming back on a limited basis in many but not all markets in the U.S.  As an aside, much of what we do at Doctor Demographics all day is to figure out where those locations can be found. 

By now, you understand “Population” and how it is defined. But the other terms we wanted to help you understand are Households and Families.  It might be interesting for you to know that in the 1960s and 1970s, they were considered almost the same thing.  But maybe I am getting ahead of myself.   By definition a household is a front door.  It does not matter if it is a front door on an apartment, home, trailer, or lean-to. It does not matter how many people live in the household. A household is simply a place to live in any definition. By contrast, a family is defined as people who have a familial relationship.  In short, they have to be related to each other through blood or marriage. 

With the redefinition of marriage to include homosexuals, this has influenced the definition of a family.  But demographers are trying to figure out if it is going to make a difference in terms of the marketplace.  After all, will married homosexuals act any differently when they are married than they have when they were just “roommates.”  It should be noted that heterosexuals DO act differently.  Sociologists and Anthropologists who study Gay lifestyles are still waiting to see if their lifestyles will change.  They media has made up its mind that it will make a difference.  So far, the jury is still out in terms of social sciences.  But the reason demographers are dubious that it will matter is the size of the Gay population. According to the U.S. Census Bureau, only 3% of the U.S. is self-proclaimed “Gay.” While a huge percentage of this population favors gay marriage, less than 10% have actually formalized their relationship.  This works out to 10% of 3% of the US population.  Even the 10% figure may be overblown because getting married to one’s gay companion is the trendy thing to do.  It may not remain so.

With the trends toward marriage (and it surprises many people that marriage rates are increasing, especially among the well-educated and affluent), one could assume that family rates would increase as a percentage of households and population.  Actually, this does not seem to be happening.  That is because there is a serious “birth dearth” going on in the U.S.  Couples are not having children at the rate they did 10 years ago.  They are waiting for marriage until they are older.  They are renting apartments in greater percentages for their housing.  And one of the major trends for those who are under 30 is the desire to live alone in very small apartments close to urban centers.  Therefore, demographers believe that the trends toward families versus households may be going down across the country.  On the other hand, it many places, families are increasing this year relative to households.  The western states like Utah, Idaho, Arizona, Nevada, Colorado, and Texas are good examples of this.   In other words, some places are forming “families rather than just continuing as households.  In other places, the opposite is occurring.

So what should it matter to YOU?

As you probably guessed, families act differently from non-family households. They actually spend more money on “stuff.”  They will tend to choose home ownership.  They will also be more likely to commute. Non-family households will more often choose urban locations in which to live.  When it comes to healthcare, our anecdotal analysis indicates that they spend more on healthcare. A lot more!  It may not surprise you but people who are married tend to have children who need care.  But they also motivate spouses to seek care, particularly men.  Men who are married spend much more on healthcare than men who are single.  Some of them explain that their wife strongly encouraged their going to the doctor for routine check-ups.  Others said because they have dependents, they consider it to be wise to take care of themselves. 

There is another, somewhat controversial aspect of living in a “family” rather than a non-family household: They tend to earn more money.   Therefore, while we are not putting a moral judgment on these lifestyles, for most doctors considering where to practice, the number and percentage of families will tend to be an important indicator of where to put the practice.

Thanks for listing to the Perfect Place to Put a Practice Podcast.  This is Scott McDonald.