Recently a client contacted Kai Analytics to help them better understand the market size of naturopathic medicine, a sub-sector of the integrative health industry. The typical way one obtains industry estimates is by accessing the North American Industry Classification System (NAICS) or Standard Classification System (SOC). In most cases, there are already provincial (Canada), state (US), and federal entities that provide aggregated estimates and values of a particular sector.
Integrative health (aka complementary health), was estimated to be $32 bn in 2012 (Source: CDC, 2016)
However, in the case of Naturopathic Medicine, no detailed 6-digit NAICS code exists. The closest you’ll get is 621399 — Offices of All Other Miscellaneous Health Practitioners. This was problematic because it includes not only Naturopathic offices, but also everything else: chiropractors, acupuncturists, dental hygienists, etc.). Not one to leave a single stone unturned, and knowing a little bit more about how NAICS industry estimates are calculated, we dug deeper.
Most government industry estimates are calculated based on business tax returns. This is true for almost everything with a dollar sign attached to it. And it makes sense! Tax filings contains all the information for government agencies to quickly aggregate information on gross revenue, gross expenditure, size of firm, number of employees, etc. Knowing this, there are two departments across every state that holds this information: the department of revenue and the department of labour.
The key to accessing this data is to be clear, upfront, and transparent when reaching out to the state departments to request for information. In one example, I connected with the research officer at the Washington State Department of Revenue and requested aggregated revenue and the total number of businesses with the word “naturopathy” or “naturopathic” in the registered name. That was how I was able to pull an aggregated estimate for the size of the naturopathic medicine industry for the state of Washington. It’s important to clearly request aggregated information because some state departments will not release any information to protect privacy.
Some states monetize custom market research request. In the case of California, they have a dedicated market research arm that charges variable fees for such services. Therefore, be prepared to take out your corporate credit card! Cha-ching!
Results for Washington State show that, in the last six years in the category I was researching, gross revenue grew by over 53% from $15 million to $23 million. At the same time, the number of businesses increased by over 40% from 61 to 87. While growth somewhat slowed in 2016, it still appears to be a ‘healthy’ industry (forgive the pun). Also the actual industry is more likely even larger because there are integrative health clinics which practice naturopathy but may not have it specifically in their registered name (e.g. Bastyr Center for Natural Health).
There you have it! How the department of revenue across states can be an unlikely source of valuable industry estimates. Thank you in advance for your claps and comments!