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Dental Consolidation: The Pros and Cons You Need To Know

More Dental practices than ever are consolidating into groups or DSOs. Is this good or bad for dentists?

Ian Cooper

Senior Copywriter

Following the lead of other healthcare providers, dentists and the dental industry as a whole are moving in a clear direction: toward consolidation. Solo practices are linking up to form groups, groups are becoming DSOs, and big DSOs are absorbing smaller competitors.

But practice owners face big questions when deciding how — or if — they want to join in the trend. Not only do they have to choose whether or not to link up with a larger group, but if so, what kind and on what terms.

If you’re asking those questions, we’ll help you run through some of the key points to help you weigh the pros and cons. Let’s begin!

The Consolidation Trend: Why So Many Dentists Join DSOs or Groups

Traditionally, a DDS or DMD has also been a license to open your own business. Per the ADA, in 2005, 85 percent of dentists owned their practices — and while we don’t have access to earlier data, we’re willing to bet that number was even higher in decades past.

However, since then, this pattern has begun to shift. Rates of practice ownership have dropped to 76 percent in 2019. 

For dentists under 35, the decrease is even sharper. Data shows a roughly 40 percent dip in ownership over that same time period.

At the same time, DSOs have burst onto the scene. Although Aspen Dental has roots that date back to the 1980s, the DSO concept only began gaining traction after the turn of the century — but has since grown to the point where the ADA estimates that by 2035, roughly one-third of all practices will be part of a DSO.

What’s caused this shift? Some dentists simply appreciate being able to step back from the responsibilities of managing a practice to focus on clinical. Others are happy to sell when they’re ready to retire, especially because many DSOs or group practices have the deep pockets necessary to pay a premium price.

But the business climate is also more challenging than ever. While new practices are still largely immune to the harsh failure rates common among most small businesses, banks are less willing to back young dentists eager to hang out their shingles. 

And as competition grows, especially in larger markets, doctor-owners find themselves having to master not just the latest clinical advances, but marketing and recruiting as well.

Small wonder that teaming up is becoming so popular.

The Pros and Cons of Consolidation for Dental Practices

Let’s talk about the benefits of consolidation — and the downsides. 

We should clarify here that while we’ve been talking a lot about DSOs so far, consolidation doesn’t have to mean selling to Heartland or Pacific. Linking up with a friend who owns a practice down the road to start a two-location group can offer benefits as well, as can partnering with a 10 or 20-location group or emerging DSO. 

(From this point on, we’re going to use the terms group practice and DSO somewhat interchangeably, since there’s no clear dividing line between where one stops and the other starts.)

In other words: there’s no one size fits all answer here.

Why you might want to join a group…

Is consolidation a good option? Overall, we say yes — with a couple of clear caveats. 

First off, dentists joining forces with other dentists brings the power of scale into play. If you’re a practice owner, you’ll be able to deploy your time, energy, and resources more efficiently as part of a dental group, where you’ll benefit from a larger support infrastructure, colleagues to collaborate with, and even the ability to save money by making bulk orders on essential supplies.

You’ll also be more likely to work saner hours and spend your weekends with your loved ones or friends. And depending on the size of your group, you may not have to think about administrative, growth, or management problems at all, while also enjoying access to new technologies that may be financially out of reach for solo practitioners.

Plus, dentists who are looking for a pathway to retirement can often create a smooth transition by selling to a DSO, staying on for a year or two as an associate, and then riding off into the sunset (sometimes even while holding equity in the group).

And why you may be better off staying solo

So what are those downsides we mentioned?

First off, growing pains. Consolidation, like any other form of growth, can lead you through the seas of change faster than you or your team may be prepared to go. Some degree of organizational chaos is to be expected — and don’t be surprised if some on your team struggle emotionally as well. 

This can wreak havoc on your business, although it can also be an opportunity for personal and collective development.

Second: autonomy. Not just clinical autonomy — although that’s a big chunk of it — but the right to make decisions that steer the course of your business. 

For some dentists, freedom from a business leadership role is a huge relief. But most care about being able to make their own treatment decisions, so joining a group that limits that authority can feel like more of a significant trade-off.

And finally, consider that while joining a DSO could offer fresh growth opportunities for folks on your team, the DSO’s existing administrative structure could also make some positions in your practice redundant.

Is Consolidation Right for Your Practice?

Maybe, maybe not. Think about key factors like:

  1. Playing a leadership role versus strictly clinical.
  2. The future of your practice.
  3. How joining a dental group could affect your team.
  4. Your career or retirement goals.

If you decide to move forward, the key is to go about joining a group in a deliberate, mindful way. Take the time to develop a vision for where you want to go, a clear plan to get there, and measures to support your team along the way. 

Then, be adaptable! Your plan can’t possibly cover everything that comes up, so do your best to go with the flow while keeping a close eye on your goals.

You and your team can come through stronger, more resilient, and more successful.

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