DSO Discussions: Consolidation, Operational Efficiency, and the Future of Dentistry

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Mergers, acquisitions, and the consolidation of dental practices were the hot topics at the 2023 Yankee Dental Multi-Site Summit in Boston, with the biggest jaw-dropping prediction coming from Brian Colao, the Director of the DSO Industry Group for Dykema.

He predicts consolidation in dentistry will jump from 31% now to at least 75% within 15 years.

“There’s a great evolution in consolidation going on, from private dentists to small groups to DSOs, and it’s been accelerating since 2015,” Colao explains.

One of the reasons? The economy.

“The economic landscape of 2022 and 2023 presented significant challenges for many groups, largely attributable to macroeconomic variables,” says Steve Saukaitis, CEO of Select Dental Management, a group that has partnered with 37 practices across the Northeast and Mid-Atlantic regions.

“Organizations that dedicated their efforts to sustainable same-store growth and the enhancement of both patient and employee experiences have strategically positioned themselves for success,” Saukaitis continues. “These focal points are instrumental in fostering a resilient organization and driving performance in today's competitive environment.”

Operational Excellence Cited as a Must-Have for DSO Growth

“In today’s climate of rising personnel costs, shrinking margins, and costly capital, the era of growth without operational excellence is ending,” says Scott Leune, DDS, founder of Breakaway Seminars, a dental business consulting firm.

Throughout his career, Dr. Leune has opened, built, and sold numerous dental practices, and currently supports more than 20,000 dentists with purchasing, marketing, consulting, and additional services.

“Whether it be a new dentist in a single location, or an established DSO, it is vital that the owner understands how to create accountability within the team to follow best practices that maximize patient experience and healthy profits. The end result will be a practice that can easily afford today’s higher salaries while delivering a new modern level of patient care, and an owner that has excess time and financial gains without the heavy weight of staff and practice implosions,” Leune explains.

A key focus of these DSO leaders is modernizing the dental experience. This can include enhancements such as making it easier for patients to schedule and complete new patient forms online, adding artificial intelligence (AI) analysis of x-rays, implementing cloud-based dental practice management systems such as Denticon, and automating revenue cycle management through tools that streamline eligibility verification, claims processing, and auto-posting payments.

“With the economic situation we’re in now, it’s essential that we’re making it easier for people to do their jobs,” says Dee Fischer, CEO of Fischers Professional Group and a partner in two DSOs, each with three practices. “It used to be that you can hire quickly and fire quickly, but no more. Now, you have to retain people. You have to train them well. You have to create a culture where they want to stay. Companies are integrating artificial intelligence to automate what used to be very time-consuming tasks, and that’s making it easier for the dentists and team members to focus on patient care. Do that, and you’ll see the difference on your P&L [profit and loss statement].”

DSOs Investing in their Dentists and Staff

While the term DSO stands for dental support organization, it has become an umbrella term that is used for everything from small group practices owned by a single dentist, to large groups with hundreds of locations. Typically, what elevates a group of individual practices into a DSO is the consolidation of shared non-clinical services, such as human resources, marketing, credentialing, billing, IT, and real estate.

The culture and structure of each DSO can vary widely.

“A lot of dentists think that joining a DSO means they become an employee and lack the ability to invest in the business as a retirement strategy. This is sometimes the case, but more and more frequently is no longer such. Many groups are developing options such as equity incentives, equity ownership, joint ventures, profit sharing, and other models that allow for associate dentists to have ‘skin in the game.’ These structures could be individual practice-based, regionally based or even top level, company-wide. There is a variety of options out there for doctors wishing to enlist management support but still retain some form of long term financial investment and reward,” says Lorri Detrick, president and COO of Riccobene Associates Family Dentistry, a doctor-founded rapidly growing group with more than 70 locations in North Carolina, South Carolina and Virginia.

“It’s obvious that we in DSO leadership need to create value not just for our patients, but also for our providers and our teams if we hope to be successful,” says Adam Richichi, CEO of Archway Dental Partners, which has 28 practices in Connecticut and is expanding to other states in 2024.

As more private dentists and small group owners consider partnering with a larger organization, it’s important for providers to ask how the DSO will help them better care for patients.

“Scaling within the 4 walls of your practice requires the ability of your leadership team to prioritize, measure, create individual accountability, and incentivize alignment around the most impactful opportunities to improve patient care and practice growth,” says Elliot Zibel, founder of Optimus Healthcare Management and previously co-founder and CEO of Select Dental Management.

Healthy DSOs have short-term and long-term goals for implementing technology, training, and tools that will help their affiliated practices succeed.

“Understand the levers available to you to scale your dental practice, create KPIs to measure your success as you work towards your goals and create a high-performance culture by aligning the values of your team with those of your practice to ensure an environment of accountability,” says John Geary, chief strategy officer at Independence Dental Services, a partnership organization with 49 practices across 14 states.

DSOs Leveraging Specialty Care and Hygiene Programs to Propel Growth

Several of the panels at the Yankee Dental Multi-Site Summit focused on clinical quality oversight, scaling up hygiene operations, and sharing the challenges and successes different groups have had.

“There has been a strong emphasis and focus on specialty dental practices over the last few years. It was very interesting to hear from two specialty-only DSO leaders that their specialists including oral surgeons and endodontists appreciate being part of a larger community of their own specialists. A couple of the larger DSOs mentioned they are partnering with specialists who prefer to be part of a bigger team of general dentists for referrals. A big question for the future is how can we achieve more integrated dental care for patients and which model will be more successful?” asks Rashed Din, CEO of Maya Dental and a partner at Din Ventures, a private equity firm that is also an investor in Archway Dental Partners.

Many groups have leadership positions including Chief Clinical Officer, Vice President of Specialty Dentistry, and C-Suite or Director-level representation of hygienists.

“Our panel discussed the structure of hygiene leadership within our respective DSOs and the importance of implementing and maintaining hygiene representation within DSO leadership,” says Erin Kierce, RDH, MS, MPH, chief compliance/hygiene officer at Passion Dental, a group of 54 practices in New England. “We reviewed the manner in which we measure success and our respective approaches to recruiting hygienists, as well as onboarding, training, mentoring, salary and benefit considerations, and retention. Underlining it all is how we approach measuring the standard of care through quality assurance procedures.”

The Big Take-Aways from the 2024 Yankee Dental Multi-Site Summit

“The discussions on 'Same-Store Growth Through Innovation', 'Scaling Your Practice in 2024', and 'Best-in-Class Operations' directly aligned with my focus on driving operational efficiency, growth, and scalability across our footprint,” says Karla-Marie Santiago, senior director of practice optimization and growth at Oakpoint, a group with 44 locations in the Southeast region of the US.

The networking was just as important as the sessions, Santiago said. “The intimate setting enhanced my ability to forge strategic partnerships with industry leaders and vendors, crucial for our continued expansion and operational excellence.”

Whether they choose to stay in private practice, join a group purchasing organization (GPO), or explore partnering with an established DSO, dentists have more information than ever before to make an informed decision.