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Why Consider a Dental Service Org?

The career path for a dentist can seem fairly predictable. You graduate from dental school, maybe work as an associate for a while, but, ultimately, you open or buy your own office as a sole practitioner. Maybe you partner with other dentists to share administrative costs, but you essentially run your own business. That’s long been the goal. And when it’s time to retire, you’ll put your dental office for sale to another sole practitioner.

Increasingly, however, dental offices for sale are being bought by DSOs (dental service organizations). So, rather than sell to another, younger doctor, you may find yourself fielding offers from a corporate buyer. While some doctors may not relish the idea of the practice they’ve built by hand (and their patients) being consumed by what they perceive as a faceless entity, the fact is that DSOs are both increasingly common and meeting needs for both patients and doctors that aren’t provided by the traditional sole practitioner model.

What a DSO Does

A DSO is, in essence, a management system. Typically, they are organized for the benefit of investors who see buying dental practices as a good investment, but they can also be used by doctors who want to merge several practices together to operate as a single entity.

Traditionally, a sole practitioner manages every aspect of their practice, from treatment to cleaning the bathrooms. However, with growing interest from investors, a more structured business model is necessary in order to manage multiple practices. A DSO wants to ensure consistency of quality and service across all of its offices, therefore, it cannot simply rely on the on-site staff to make sure it’s done according to the right standard.

The Benefits of DSOs for Doctors

First, some doctors simply prefer to let someone else handle the business side while they put their focus on treatment. A DSO provides a qualified and knowledgeable business office to take care of the administrative matters, allowing doctors to put their time into seeing patients and not having a competing burden on their time.

Second, as an aging dentist nears retirement, they may consider bringing on an associate who will eventually buy the practice. If, however, the doctor does not have enough patients to support an associate, this will not be possible. Also, young dentists are increasingly saddled with large amounts of student loan debt and are looking for associateships before going out on their own. A DSO can solve both problems.

By selling a dental practice to a DSO, the older doctor is able to transition the practice—it can be an outright sale or the doctor can continue to work in the practice, depending on the doctor’s goals. And, by spreading costs across several locations, the DSO can afford to bring on an associate, perhaps working at more than one local office.

The younger dentist then has the option of remaining with the DSO for their career or, when the time is right, to branch out on their own with the requisite experience. Additionally, for younger dentists who were trained on more modern equipment, working in a DSO may be an easier transition into their career, as they will be more likely to have up-to-date technology than an office where a doctor has been practicing for decades.

The Benefits of DSOs for Patients

DSOs can benefit patients in a couple of ways, some more directly than others. DSOs are more likely to be a modern facility with generalists and specialists in a single office, making it easier and more appealing to get necessary care. Also, DSO offices are more likely to be open later in the afternoon or evening and on weekends, which can be critical for patients who lack flexibility in their schedules.

DSOs are also more likely to use a variety of marketing techniques, allowing them to reach more patients. And, DSOs typically make their services available through wider networks and have attractive treatment financing options. This means that people who haven’t been to a dentist for a long time may be enticed to get care, even if they previously believed it was unavailable or unaffordable. In this way, DSOs can benefit an underserved patient base.

DSOs Have Strength Through Scaling

The current trend with dental insurance companies is to either maintain or reduce their schedules of fee allowances. While your costs are going up, they payout in effectively reduced either way, it’s just a matter of by how much. A DSO with several offices will have leverage that a sole practitioner doesn’t to negotiate more favorable payouts.

Also, instead of having 20 dentists absorbing costs individually, DSOs get the benefit of purchasing in bulk, more widespread marketing, and can offer better benefits packages to employees. Some are even creating their own continuing education programs and are able to bring in well-known presenters for workshops and seminars.

Why Consider a DSO When You Put Your Dental Office for Sale

The current trend in the dental industry appears to be tracking that of the larger medical industry. MSOs (medical service organizations) have been acquiring hospitals and practices for some time, changing how medicine is practiced. Currently, hospitals own many medical practices and most physicians work for hospitals. As with most changes, there is some good and some bad. Be certain, however, the trend will continue whether you like it or not. Depending on who you ask, there are projections that DSOs will own about 30% of practices in the next 10 years, possibly growing to 50% in the decade after than.

For a dentist looking at transitioning their practice, however, this can be very good news. When you put your dental office for sale, there are a lot of things to think about, but a big one is how much can you sell for. DSOs will have the deepest pockets and, with a long term strategy, may be willing to outbid other fair offers.

In addition, though, many doctors may want to turn over the business end to someone else and spend their last year or two or more focused solely on patient care. A DSO can be a good option as you will be able to ease into retirement without having to worry about things like:

  • Bookkeeping and payroll
  • Personnel issues
  • Marketing
  • Collections and billing
  • IT concerns
  • Anything else that isn’t clinical

While laws governing corporate ownership of dental offices vary from state to state, one constant is that clinical decisions remain the doctor’s responsibility, including the ability to plan and recommend treatment, and patient records are owned by the doctor. (We acknowledge that there are rumors to the contrary, an issue beyond the scope of this article. Any DSO that is meddling in patient care should be reported to the state board of dentistry.)

ddsmatch Southwest Can Help Find the Right Buyer for Your Dental Practice

While getting a fair price for your practice is a big concern, we here at ddsmatch Southwest know its not your only concern. DSOs can be a good fit for some practice transitions, but not for everyone. Your goals are our goals. We will take the time to learn what you are looking for in a buyer—or help you figure it out if you’re not sure—so you can go into the next phase of life knowing that your practice is in good hands.

Contact us today for a free, no-obligation Practice Transition Assessment and find out how we can help you.