What kind of dentists DSOs want to work with
There is an unprecedented change happening right now in the dental industry.
Understand what is behind this transition to “corporate dentistry” and what it means for you.
Dental Service Organizations (DSOs) are changing the entire landscape as they partner with and buy practices across the country.
For several reasons, the importance of DSOs is likely to grow by leaps and bounds in the coming years and this trend shows no signs of slowing down. In fact, it appears to be accelerating.
However, DSOs have a particular set of criteria when acquiring and partnering with dental practices.
As a practicing dentist / practice owner, you can position yourself to take advantage of this industry-wide trend.
In short, DSOs want to partner with strong, profitable, well-established practices.
In many cases, the organization will seek to partner with, rather than outright buy a practice.
This allows the dentist to continue practicing and earning an income chair side while continuing to earn a percentage of profits.
DSOs love to find practices that are already successful in their local market(s) and amplify and grow the existing business.
They do this by bringing an extensive amount of business know-how to a practice such as:
- Finance and Accounting
- IT
- HR, Recruiting, and Staff Development
- Compliance, Quality Assurance, & Risk Management
- Credentialing
- Marketing and Practice Growth
- Procurement
- Insurance Fee Negotiations
- Facility Management and Lease Negotiation
In exchange, the dentist can retain equity and continue to profit from their practice after gaining a lump sum of cash in the sale.
If you are a doctor, this allows you to continue practicing dentistry after the sale without dealing with the operations side of the business.
Many doctors choose this route because it allows them to build their wealth even more quickly than if they continued to run their business solo.
It should be noted, it is not necessary to continue to practice after selling to a DSO. There are many different types of DSOs and many ways they work with dentists.
Another option: Dentists may also grow their wealth by facilitating the acquisition of even more practices to the DSO.
What Motivates DSOs to Grow So Quickly?
DSOs view dental practices as investments with low risk and high yield compared to the stock market or traditional investments.
At the same time, there is more capital than ever coming online in America as an entire generation of Baby Boomers retires in the upcoming years.
Well-run dental practices are seen as highly profitable and low-risk compared to other low-yield forms of investments.
Therefore, if you own a profitable dental practice you can expect to deal with the consequences of DSOs looking to acquire the business side of your operation or of your competitors.
Of course, it’s necessary that a dentist must be willing to sell or affiliate their practices.
Understanding the opportunity and the options available is just the first step.
While it’s not a given that every dentist will choose to sell or partner with a DSO, it would be wise to understand the forces at play.
Any doctor who wishes to do well should understand the operational capabilities that DSOs have become experts at deploying.
The influence of these organizations is growing and all signs indicate that this will be a force transforming the practice of dentistry for years to come.
