Practice ownership is declining, but there isn't just one single cause.
Two voices from the dental industry answered the question, "Why do fewer dentists own practices?"
Editor's note: This piece was edited lightly for clarity and brevity.
Steve Kuchuris. COO of Yellowstone Family Dental (Billings, Mont.): ·
1. Heavy dental school debt. Younger dentists are leaving dental school with more in debt than in the past, sometimes as much as $500,000 dollars in student loans before they start working. This heavy debt makes it difficult for them to open their own practices. Startup costs include securing real estate and buying equipment such as a 3D imaging cone beam, digital scanner, a Cerec machine and lasers which greatly add to the debt.
2. Growth in DSOs. The ability to practice dentistry without the hassle of running a business, having access to in-office specialists and high-tech equipment that many new dentists could not afford on their own.
3. Younger dentists often want a work-life balance that today's practice ownership doesn’t provide. By joining a DSO as an employee, the dentist is free from the stress of running the business (human resources, accounting, marketing, etc.) and can just come to work, do their dentistry, and leave at the end of the day without the responsibility and stress of managing the business itself.
4. The increasing complexity and ever-changing landscape of human resources, the Occupational Safety and Health Administration, HIPAA regulations (and now add COVID to this list), and dental insurance companies, makes navigating these areas difficult for the solo practice owner-operator. DSOs can negotiate better supply costs and better insurance reimbursements, and shoulder the administrative burden with their own highly seasoned teams of human resource specialists, accountants and operations managers, to name just a few.
Robert Trager, DDS. Dentist for Airport Employees (New York City) : Ever since [COVID-19], many dentists have walked away from their practice because of the [COVID-19] restrictions and loss of business without even trying to sell their practice. Many, if not most, of the recent dental graduates owe at least $200,000 or more in student loans and can't afford to buy or open their own practice. They feel comfortable working for a DSO, in my opinion (as a dental mercenary). They can work or transfer from one DSO or another without any restrictions. Eventually they will lack the skills of administrating, finance and marketing in order to either buy or open their own practice. They will end up with a false sense of security by working for these DSOs. Even when they finally pay off their loans, they will not have built up any equity or experience by not having their own practice. At that time, most will be unprepared to seek their own practice and will become too dependent by working for a DSO. Looking to the future, there are many more dental schools opening up, and hopefully some of these graduates will learn from the results of those working for a DSO that they will have the incentive to buy or open their own practice. In the next five to seven years, if there is no change in the outlook or incentive to buy or open your own practice, there will be about 35 percent of solo practitioners left. I advise all solo practitioners that are left to avoid private equity firms attempting to buy your practice and you will lose out on any equity, goodwill and independence that have developed over the years.