Continued private equity and consolidation by DSOs will shape the future of the dental industry and is viewed differently by dentists, dental executives and professionals.
These 12 industry leaders give their best strategies to improve experiences and outcomes. The executives featured in this article are all speaking at Becker's The Future of Dentistry Roundtable, which will take place June 15-16 at the Swissotel in Chicago.
To learn more about this event, click here.
If you would like to join as a speaker, contact Randi Haseman at rhaseman@beckershealthcare.com.
As part of an ongoing series, Becker's is talking to healthcare leaders who will speak at our roundtable. The following are answers from our speakers at the event.
What impact will DSOs, consolidation and private equity have on dentistry over the next two to three years?
Adam Arnette. Chief Marketing Officer of Jefferson Dental and Orthodontics (Dallas): There is still significant opportunity for consolidation of private practice as well as larger regional players. The private equity model has its challenges currently with the increased cost of capital, so the DSOs or private equity firms that identify the high growth acquisition targets, such as mono-brand regional players achieving aggressive same-store scalable growth, will have an advantage. Furthermore, those practices that are successfully leveraging the latest technology, such as AI, to improve patient care will be better positioned for sustainable growth.
Jeffrey Carter, MD, DMD. Founder of US Dental Surgery Network (Nashville, Tenn.): Private equity investments in healthcare are characterized by building platforms and standardizing workflows. The early innovators in the general practice DSOs grouped dental cottages together and linked them with a common billing system. The first-generation specialty DSOs have basically followed suit. The next wave of innovation will eliminate many redundancies in the dental model. The ultimate merging of the general practice and the specialists, all using one common practice management system, will lead to fewer redundancies, lower real estate costs and fewer revenue cycle team members. The effect of this consolidation will be very efficient referral patterns between general practitioners and specialists and result in a reduction of overhead expenses. By utilizing common clinical spaces, electronic health records and 3D imaging, dental facilities will begin to mirror a hospital ecosystem. More time will then be spent delivering clinical care while minimizing the time previously spent in business development and referral base management.
Manu Chaudhry, DDS. President of Capitol Dental Care (Salem, Ore.): DSOs, private equity, and consolidation will continue to shape the narrative with redefining products for today's and tomorrow's consumers and also shift ideology towards dental providers as healers and surgeons. Further, the advent of value-based care will actionably improve total health and reverse integration both vertically and horizontally across health systems. These are exciting times as we flex the dental profession and usher in our future.
Brett Gilbert, DDS. Endodontist and Owner of King Endodontics (Niles, Ill.): The impact DSOs, consolidation and private equity will have on dentistry over the next two to three years will be profound! Dentists now have the opportunity to capture the full value of their practices while at their prime. The reality of often unimaginable debt load carried by new graduates has diminished the opportunities and candidates to buy an existing practice per the legacy model. This opens the door for doctors to utilize the private equity model to capture the value of their practice regardless of the stage in career that they are currently in. The key for younger doctors and owners is to capture equity in the larger entity with which they partner, so that the opportunity to get a return on their equity investment short and long term can support financial abundance in their lives. For new graduates, they can now enter the dental workforce, get great mentorship and future partnership opportunities without having to dig deeper into debt. As the legacy model diminishes over these next few years, so will the negative connotation of "DSO" in dentistry because it just makes sense for where we are now.
Kyle Hollis, DMD. Chief Clinical Officer of SGA Dental Partners (Richmond Hill, Ga.): Consolidation will continue to occur at a higher rate due to private practices having increased operational costs and a strained clinical workforce. This consolidation, although disrupting for many, will allow for increased investment into technological advancements and ultimately higher standardization of patient-centered care. There will also be an increased competition for clinical recruitment, which in turn will necessitate higher compensation requirements by clinicians. DSOs will continue to gain market share as more dentists see the benefits of joining larger organizations, though these continued trends may be impacted by various external factors such as regulatory changes and consumer preferences. However, as long as patient-centered care stays at the forefront of decision making, the industry will continue to advance appropriately to better the standard of clinical outcomes.
Richard Huot, DDS. CEO of Beachside Dental Consultants (Vero Beach, Fla.): Probably the greatest impact dentistry will face in the next two to three years is the dental workforce shortage, which will continue for the foreseeable future, and the competition to hire dental staff for all types of practice modes will drive labor costs up for all forms of practice ownership.
DSOs are probably better positioned to hire and retain staff, especially if their existing workforce is willing to work in more than one location to "cover" multiple offices, and are offered a better benefit and pay package than other offices for that effort.
The consolidation and increase in private equity into the dental practice environment will continue at least for another five years, as the end of the "Baby Boomer" dentists retire and look for opportunities to sell their solo or group practices.
Cyrus Lee, DMD. CEO and Executive Dental Director of Permanente Dental Associates (Portland, Ore.): The impact of consolidation, DSOs and private equity in dentistry will be significant over the next three to five years, possibly a slightly larger impact than current, primarily because of a few factors: Dental student debt is very large, and the number of people who are entering dentistry has increased significantly over the past 20 years and is expected to grow a bit more over the next couple years. Many current dental students, compared to decades past, are more likely to not have a family legacy in dentistry. Additionally, there have been some demographic shifts in the dental student and younger dentist population, so a higher interest in working fewer hours. Given these factors, newer dentists are likely to go into an employed dental career model as opposed to a single private practice ownership model than in the past.
Additionally, there is a bimodal distribution of the dentist workforce right now. As the younger Boomer and older Gen X dentists age out of the workforce, there is a lot of private equity money out there right now to acquire their practices and even offer a compelling exit strategy for dentists who may be looking to transition out over the next several years, or even looking to transition out over an even longer time horizon.
Gabriele Maycher. Dental Practice Management Consultant of GEM Dental Experts (Vancouver, British Columbia): DSOs will continue to grow through acquisition of independently owned dental practices, smaller dental groups, and consolidation with the support of private equity firms. This in turn will provide the support practices the need to focus and create the internal growth needed for continued practice and revenue growth in a very competitive market. Practice modernization, technology, and optimization of day-to-day dental services through professional development for preventive care, orthodontics and periodontics will become paramount in the impact of DSOs on the continued optimal care and outcomes for our patients.
Rodolfo Olmos, DDS. Dentist and Owner of OBT Dental and Orthodontics (Orlando, Fla.): DSOs are likely to continue growing, as they provide a range of benefits to dental practices, including economies of scale, marketing and administrative support, and access to capital. This trend may lead to increased consolidation within the industry, as smaller practices seek to join DSOs to compete. Consolidation within the industry may lead to increased competition among dental practices, which could lead to downward pressure on prices and increased marketing efforts to attract patients. Private equity firms have been investing in the dental industry, which may lead to changes in practice ownership. As more practices are acquired by private equity firms, the industry may see a shift toward more corporate ownership and management. With increased investment in the industry, there may be opportunities for dental practices to adopt new technology and offer new services to patients.
Robert Trager, DDS. Dentist at JFK Airport (New York City): Over the next three years DSOs will continue to expand, cutting down on the number of solo practitioners. With there being more and more graduates from dental school having a big amount of debt, their only alternative is to join a DSO. There are also continuing opportunities for DSOs to buy out retiring dentists. With private equity funding, DSOs could also start to take over dental supply companies and dental laboratories to further control the industry.
Thomas von Sydow. COO of Cornerstone Group (Irvine, Calif.): I believe the interest rates will slow the pace of consolidation for a few years, but in comparison to other industries, dental is still a strong bet for private equity. I believe we will see larger DSOs that have secured capital already start to roll up smaller DSOs that align with their core business. Specialty will continue to be a hot market, especially pediatric dentistry and orthodontics, where patients self-refer versus surgical DSOs that still rely on general dentists to refer.
Mark Whitefield, DDS. Founder of Implant Evolution (Hermitage, Tenn.): There are over 200 million teeth extracted every year and there are over 35 million people that have no teeth at all. How many more people will need implants in the future? Can we implant dentists meet the demand? The big takeaway is that corporate dentistry will rely heavily on dental implants and technology to meet this need, yet they aren't quite sure how to pull it off. Why is that? The coming wave of people needing dental implants is absolutely astronomical, and ClearChoice addresses less than 1 percent of implant patients. The other 99 percent typically struggle to find clinicians that are capable of actually providing implants at all, much less at an affordable cost. Access to implant care is a present day problem that is a growing tsunami across the entire U.S. The one glaring problem is, most dentists don't have adequate surgical training and the coming shortage of specialists won't be able to fill this future gap. Dental schools still to this day do not teach true implantology, only cursory implant training. It is completely left up to the dentist to go get their own training somewhere, somehow.