Dental Service Organizations – 5 Ways Dentists Fall Prey to Consolidation

Swimmer being attacked by sharks

A huge shift has been happening in dentistry. In the last 10-15 years, privately owned dental practices have been consolidating into larger groups called Dental Service Organizations, or DSOs. Often these groups are run by non-dental business leaders who oversee the group’s business dealing. This leaves the dentists to handle the clinical side of the organization.

A Positive Change

While for many, consolidation is a good thing (I’ve seen plenty of retiring dentists happy with selling their practices to a DSO. Even early-to-mid-career dentists successfully create their own DSO-like groups). But, there are also some potential downfalls to joining, that may not always appear on the surface.

Consolidation happens all of the time in business–even dental coaches like us are prone to consolidate. Recently Pride Institute, one of the original dental coaching companies founded by dental thought-leader Jim Pride, consolidated with Spear Education. Jim had passed away, and the company went in a different direction. Was it the right move? Probably–but Pride is no longer what it was.

Hidden Costs

Or…How the Wheels Come Off

The same can happen to you when you consolidate. Some things may be better, some others, not so much. According to a recent article in Decisions in Dentistry, here are 5 things to consider when you’re looking at selling to a DSO:

1. Nonclinical Decisions Are Out of Your Hands

Getting business decisions out of your hair may be the reason you’re looking to consolidate. However, you may not realize what giving up those responsibilities entails. For instance, the dentists in the Decisions in Dentistry article reported that some DSOs “place profits above patients.” Relinquish your business role, and you won’t have a say if the DSOs’ business practices aren’t benefitting your patients. While this may not be the case for every DSO, we suggest talking to other dentists. Learn their satisfaction level with nonclinical decisions by the organizations you’re considering.

2. You May Have to Switch to a New Reimbursement Model

You have perhaps heard of the increasingly popular reimbursement model, Accountable Care. This model describes, “a reimbursement model based on outcomes and managed by third-party payers” that replaces a “traditional fee-for-service model.” Third-party payer systems like this can be useful, but can also add a layer of confusion to your office, especially if you didn’t get to pick it yourself. Again, we suggest talking to the organizations you’re considering to see what reimbursement models they use. Also be aware that they can change it up at any time–without your input.

3. Payer Negotiation Leverage Never Materializes

According to the Decisions in Dentistry article, practice leaders sell their practices to DSOs to: “reduce administrative burdens, decrease costs through buying power, and increase revenue through superior marketing and payer negotiation leverage.” Imagine their surprise when they have to renegotiate payer structures once their business changes hands. In addition, those unfortunate enough to sell to or join a low-performing DSO may have to contend with the payer headaches that come along with that situation—damaged relationships, etc.

4. Personality Issues with Fellow Staff Members

Please do take your time and spend time with the existing DSO you are considering joining. Even though 42% of dentists are now practicing with one or more doctors on staff, many recent dental school graduates (62%) would rather lead their dental practice alone. Of course, this could happen in other environments besides the DSO and among other staff members. However, we have heard of some large DSOs “hard-selling” dentists to make a decision before they’ve had a chance to fully vet the DSO or the team.

5. High Turnover Among Dentists and Staff

Loyalty may be at a premium in some DSOs—a larger corporation seldom inspires the devotion and loyalty that a hands-on small business does. Joining a DSO and losing the personal touch may be the impetus for your best workers to jump ship, especially in this competitive market. We suggest talking to other dentists and staff members already in the DSO that you’re considering to hear about the turnover rate and how the DSO works to keep their best talent happy and well-compensated.

NextLevel Can Help

Whether you’re looking to increase the value of your practice before you sell to a DSO, you’d like to consolidate with other like-minded dentists to create a local DSO, or you’d even like to grow your practice and acquire others to run your own DSO, NextLevel Practice can help.

With experience coaching dentists in all parts of their careers, we can help you learn the business skills you need to remove the confusion and stress of running your own small business and give you important insights into joining others.

Want some help with your own unique situation? Just set up a FREE, NO PRESSURE consultation and we can talk about what you need right now—ending the chaos, getting out of debt, finding money that’s hiding in plain sight in your practice, investigating Complete Health Dentistry and more can help transform your practice and your life. Let’s talk today!