Should You Work for a DSO? The Pros and Cons of Dental Practice Consolidation

Dental practice consolidation is a growing trend in the dental industry. But is accepting a job with a practice operated by a dental support organization (DSO) a wise move for you? This is a big decision, and the truth is that there’s no single – best answer to this question. Rather, it comes down to your specific situation, preferences, and goals.

If you’ve been wrangling with the question of whether to work for a DSO, understanding the pros and cons of the DSO business model can help you make the most informed and beneficial decision.

Here we help by breaking down the pros and cons of dental practice consolidation to help you determine whether joining a DSO is right for you, your career, and your lifestyle goals.

What Is a Dental Support Organization (DSO)?

Dental support organizations “contract with dental practices to provide critical business management and support including non – clinical operations,” according to the Association of Dental Support Organizations (ADSO).

As such, they provide a number of support services for dentists, including the following:

• Centralized practice support: This comprises nonclinical services, such as facility maintenance, supply procurement, human resources, compliance, and accounting and marketing services.
• Advanced technology: Significant capital that allows for continuous R&D and purchasing leverage gives dentists access to cutting – edge products and tools.
• Professional education & training: Dentists have opportunities to continuously update their knowledge and skills on everything from the latest equipment to the newest techniques thanks to the provision of professional dental mentors.
• Economies of scale: Costs stay lower courtesy of greater buying and negotiating power.

Why Are Dentists Turning to the DSO Business Model?

The number of dentists in private practice continues to decline. While 84.7% of dentists owned their practices in 2005, the share dropped to 73% in 2021, according to the most recent data from the American Dental Association (ADA) Health Policy Institute Office Database.

Among dentists under 35, meanwhile, this figure dropped from 25.4 percent to just 9.5 percent over the same sixteen – year period.

At the same time, the number of dentists affiliated with DSO group practices has skyrocketed—especially among younger practitioners. Just over 10% of all dentists in the U.S. and 20.4% of 21- to 34-year-old dentists were affiliated with DSOs, according to the latest HPI data from 2019.

Not only has the number of dentists affiliated with DSOs continued to climb since these findings were reported, but the figure was conservative to begin with.

These shifting practice patterns indicate a clear movement away from solo, small, or family – owned dental practices and toward the DSO model.

Several factors come into play in fueling this movement, mainly centered around the fact that the DSO model allows dentists to focus more directly on providing high – quality dental care—as opposed to dealing with the business end of keeping an office up and running.

Heartland Dental Executive VP of Clinical Affairs Samson Liu, DDS, proposes that the DSO model is growing in prevalence because of the dental industry’s “new reality.”

According to Liu, this new reality comes with new challenges ranging from keeping up with rapidly changing technology to legal issues. Further, at a time when fewer small practices are able to bring on new associates, opening practices of their own is simply not an option for dentists who are just starting out—especially those with hundreds of thousands of dollars in student loans. For many, working for a DSO may feel like a financial lifeline.

Craig S. Armstrong, DDS, MAGD, who has carefully observed the evolving industry over his 30-year-career, concurs with Liu. “The obvious driver of a lot of [young dentists’] decisions is finances,” he asserts.

However, this doesn’t mean that the benefits are just for young dentists.

According to ADSO Executive Director Andrew Smith, more and more later – career dentists are also making the switch for a variety of reasons, including less paperwork, more patient time, and less financial risk when the time comes to sell.

And patients benefit, too, by having more face time with dentists, longer office hours and more flexible scheduling, access to state-of-the-art technologies that support the patient experience, and more affordable care because dentists are able to accept more insurance plans and high – value services thanks to the increased purchasing power associated with DSOs.

Pros & Cons of Working for a DSO

In the previous section, we addressed why so many dental practice owners are choosing to sell their private practices and join DSOs. We also demonstrated that many dentists—especially younger ones—are affiliated with DSOs. All of which begs the question: What does it mean to actually work as a dentist for a DSO?

Read on for a closer look at the benefits of working as a dental associate within the DSO business model, along with a roundup of things to consider before making the leap.

3 Benefits of Working for a DSO

1. You’ll get to focus on patients: A DSO allows you to spend less time putting out fires and more time providing clinical care.
2. You’ll have wide-open options: As part of a DSO chain, it’s easier to take time off and return to your role, leaving your patients in other capable hands. Want to relocate to another area? It’s easier to find another associateship than to reestablish an entirely new practice.
3. You’ll have access to the latest tools & best resources: DSOs are well financed with significant capital. As such, they invest in everything from state-of-the-art equipment to professional development—all of which you have access to. More capital also means the ability to accept more types of insurance and serve more patients.

4 Considerations About Working for a DSO

1. You’ll have less control: As a private practitioner or as part of a small office, you are in charge of your dentistry. Conversely, as a DSO associate you’re likely to be expected to do things a certain way. This can be something as basic as using a particular impression material or as significant as the amount of time you spend with each patient. You may also lose control over things like the layout of the office, who you work with, and other factors.
2. Your schedule will be out of your hands: While private practitioners determine their office hours and schedules, working for a DSO puts you at the mercy of a scheduler. So while you may have some input, you won’t have the final say.
3. You may make less over the long run: DSOs offer financial stability to dentists. However, working for one can also limit your earning potential compared to what you’d make as a dental practice owner.
4. You might not agree with business goals: Part of a business is meeting goals and making money, and sometimes that might make you feel less like a healthcare professional and more like a sales professional.

Pros & Cons of Selling Your Dental Practice to a DSO

Earlier, we touched on the reasons why so many dental practice owners are selling to DSOs. Here we drill deeper into the specific pros and cons.

4 Benefits of Selling to a DSO

1. You’ll have more free time: Let’s face it: handling the administrative aspects of a dental practice is a full – time job in and of itself. In addition to office management, DSOs also oversee human resources, secure access to the best equipment at lower prices, provide legal support and ensure compliance, attend to insurance management, and much more.
2. You’ll have better technology: As covered earlier, the capital offered by DSOs translates to many upsides for practitioners, including access to the newest and best equipment.
3. Your practice will have newfound growth potential: Expanding your practice as a solo practitioner comes with many challenges that can ultimately limit growth. Joining a DSO opens up new opportunities for practice growth in the form of everything from greater capital to longer hours to more dental associates.
4. You’ll gain hiring & recruiting advantages: A DSO won’t just handle your hiring and recruiting. It’ll also allow you to provide your staff with a more desirable compensation package across factors like salary, benefits, and work – life balance.

3 Considerations Before Selling to a DSO

1. Loss of autonomy: As a dental practice owner, you maintain total control over your practice and decide how it runs. While this can be liberating, it can also force you into compromises that may be outside your comfort zone.
2. Lack of control over company culture: Not being the boss anymore doesn’t just affect you; it also affects your staff and patients. As a dental practice owner, you set the tone for your practice culture. When you sell to a DSO, this power shifts to that group. In fact, an unhealthy culture is one of the main reasons many DSOs struggle with associate retention rates, according to Dental Economics Chief Editor Chris Salierno, DDS.
3. You’ll lose the equity you built in your practice: Depending on how long you’ve been running your practice and how lucrative it’s been, you may have built up significant equity. That all goes away when you sell to a DSO. Because of this, it’s important to ensure that the compensation you receive in the sale of the practice matches or exceeds your solo practice earning potential.

Final Thoughts: Is a DSO Business Model Right For You?

America’s dental support industry is rapidly growing. Currently, it represents a staggering $136+ billion industry growing at a swift annual rate of 6%, according to investment bank Harris Willliams. Given the potential of DSOs, it’s not surprising that so many private equity firm investors are showing interest, which will continue to fuel growth.

But this doesn’t mean the DSO model is right for everyone. Before you make the leap, here are three final questions to ask:

1. What are your goals? Maybe you want to work less and have a more flexible schedule. Or maybe it’s more about the money. Or perhaps you’ve always dreamed of the legacy you’ll build while operating your own practice. From perfecting your craft to living in your dream location, the DSO model can either help you get there or stand in the way. But it all depends on what’s more important to you.
2. Does the DSO have a good reputation? All dental support organizations aren’t created equal. And there’s a reason many of them get a bad rap. Researching potential DSOs can help you land on a good one.
3. Is there an in-between? You don’t have to be part of a national DSO like Aspen Dental. A small local partnership could also be in the cards. This option means your dental group joins a local management service that runs a few local offices as a business. It might be harder to find, but could still allow for autonomy of your brand and local connections.

Types of DSOs

“The variations of DSO types come from the different structural ways dentists choose to affiliate their practice. Based on a dentist’s specific business needs or the community they serve, a dentist may favor one type over the other,” concludes Smith.

Additionally, some DSOs may offer more autonomy than others. Take the experience of Corey Inboden, DDS, for example. Amid the changes brought by the pandemic and with a new baby on the way, the 2016 dental school graduate jumped from private practice to a DSO.

In that position, Inboden enjoys the freedom to practice the way he wants. Not only is he able to choose the labs, materials, and procedures he wants to use, but he also has newfound peace of mind regarding both hours and pay.

Plus, the DSO that supports Inboden’s dental practice lets him participate in administrative decisions that interest him, such as hiring and supplies.

Researching DSOs

But Inboden’s experience isn’t the case everywhere, which is why it’s so important to practice due diligence when deciding whether to work for a DSO.

Another reason to look deeper? In a largely unregulated industry, not all DSOs operate ethically, cautions general practitioner and Santa Fe District Dental Society Peer – Review Committee Chair Michael W. Davis, DDS. His post from 2019 in Dentistry Today (mentioned above) warns dentists who are considering the DSO model of:

• Extreme burnout
• Unethical business practices
• Lack of experienced doctors in charge
• Rushed appointments with patients
• Monthly sales goals focused less on patient care and more on quotas.

So if you’re considering joining a DSO model, do your due diligence. Spend time at the practice, shadow dentists for the day, read online reviews, research lawsuits against that particular DSO, search the ADA for publications on particular practices or dental group studies.

Final Thoughts

DSOs are transforming the landscape of the dental industry. Understanding the “big picture” alongside your own goals can help you decide whether becoming affiliated with a DSO is right for you as a dental practice owner, or dental practitioner.

 

Image courtesy of istock.com/Chainarong Prasertthai

 

Last updated on Jul 24, 2024.
Originally published on Aug 18, 2022.

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