Staffing, the high cost of capital and changes in Medicaid enrollment are some of the biggest challenges DSOs and dental company executives expect to face in 2024.
Five executives recently connected with Becker's to share what roadblocks they could be facing this year.
Why Benevis will prioritize dental care accessibility and workforce training in 2024
Bryan Carey. CEO of Benevis (Atlanta): The change in Medicaid enrollment. With the end of the public health emergency, many states have dropped beneficiaries from their roles. So a challenge for us is that people who should have Medicaid coverage in many cases have been dropped and it's an administrative burden for them to get re-enrolled. That's certainly been our most significant challenge and we've worked closely with patients, families and Medicaid agencies to make sure that those who should still be enrolled are able to retroactively re-enroll. The second is there are just not enough skilled healthcare workers, so it's a challenge as we expand our hours and we hire dentists to then be able to hire the clinical staff, which is why we're investing in training programs because if we are able to get them, we want to make sure they stay with us.
MB2 Dental hopes to build on momentum in 2024: Q&A with Dr. Chris Villanueva
Chris Villanueva, DMD. Founder and CEO of MB2 Dental (Dallas): The labor market continues to be one of the most significant challenges DSOs face today. Hiring is more difficult than ever, and having the resources and support team dedicated to hiring is critical. In addition, the growing cost of capital and access to debt is a challenge for dental groups. We see competitors that once bid against us on deals beginning to slow down or halt their acquisition pace as capital runs out. Groups are beginning to run up against their debt covenants because they were too aggressive in paying higher multiples to accelerate growth. Unfortunately, many of these groups are now unable to generate the same-store growth needed to meet their leverage requirements.
Why 1 DSO leader is following the housing market
Mike Friguletto. CEO of Beacon Oral Specialists (Dallas): One of them is people. The vacancy rate and, frankly, finding people who are capable of doing the role can be a real distraction for the practices. We are a people organization, and it's all about people in the office delivering care, so you've got to have the right ones. I would also say that technological inadequacy is a big problem in our specialty. I know that all of the major vendors are making big investments to address those inadequacies, but it has been years of low investment.
Heartland Dental plans to add 130+ offices in 2024: Q&A
Mark Greenstein. Chief Growth Officer of Heartland Dental (Effingham, Ill.): One of the major challenges is recruiting doctors and hygienists in high-growth markets, particularly as the demand for services accelerates. Many DSOs face hurdles related to access to capital due to high interest costs, although we have found valuable support from KKR and our partners in this regard. While Heartland is having a record year, sustainable, profitable growth always requires a lot of effort in the face of challenging payers with limited increases [and] higher labor, supplies and lab costs.
Why service is just as important as growth for DSOs
Greg White, DMD. President and CEO of PepperPointe Partnerships (Lexington, Ky.): Our biggest challenge related to higher interest rates and inflation is going to be the limited discretionary income that the patients have to be able to take advantage of services that they need for treatment plans. Coming up with alternative financing options for those patients, keeping our cost to the consumer down, and growing same-store sales will be crucial for us.