Emerging DSOs should consider tangible, intangible issues before growing too quickly: Expert -

Chris Salierno, DDS, chief editor of Dental Economics, discusses consolidation in the dental industry, and advises practices looking to add more offices to listen to dentists who have been there before. He points out that currently 8.8% of U.S. dentists are affiliated with a DSO and that there’s noticeable DSO growth on the macroeconomic level as measured by the number of dentists and locations. On a microeconomic level, he says an individual DSO or multipractice group might want to make sure that their current house is in order first. Salierno says most group practices are faced with challenges such as losing money on marketing, insufficient new patients, patient no-shows, recruitment and retention issues and low associate production. He says large DSOs have the financial footing to support a poor performing location, but small DSOs may not, adding that it’s as important to monitor intangible issues such as “esprit de corps” (e.g., patient satisfaction surveys, online reviews, decreased associate turnover, etc.) as much as metrics such as EBITA. In another piece, Salierno says multipractice owners and managers of DSOs can find themselves surrounded by a whole new set of silos, and recommends they merge their practices and get rid of such silos. He contends that those acquiring independent small businesses and merging them into the existing collective face the challenge of integrating equipment, hardware and software, and that failure to replace the practice management and imaging software inadvertently creates silos by hampering practices’ ability to share information. Salierno also shared his take on independently owned dental practices as well as DSOs and the trend toward multipractice growth. He says entrepreneurial dentists are increasingly grouping multiple practices together while DSOs are expanding through de novo offices and acquisitions. He says the trend is no cause for alarm for independent practitioners, believing the business model is alive and well. For those interested in trading chair time for executive duties, Salierno says the time is ripe, with experts and resources available to help grow from one practice to many.