At Group Dentistry Now, we are involved in many aspects of the DSO / group practice market – services. One of our main services is consulting. We consult, educate and strategize with many types of companies. Some are private equity companies that are looking to invest in the DSO space. Some are small dental groups trying to figure out what type of practices they want to affiliate with or whether they want to build DeNovo offices instead. Still others are dental companies that are trying to sell products or services into the DSO / group space.
A common assumption among many companies we work with is that the majority of DSOs have the same business model. Dr. Marc Cooper of the Mastery Group has repeatedly said, “When you’ve seen one DSO, you’ve seen one DSO.” This is very true and is a real challenge for companies trying to understand this business segment of dentistry. There are so many factors that make DSO models unique.
Practice Development – affiliation (acquisition), De Novo, or possibly a combination of both
Type of Practices – technology focused, volume focused
Location Selection – urban, rural, suburban, or a mix
Insurance acceptance – Medicaid based, fee for service or a mix
Management team – has the group scaled to the point of bringing on non-clinical business leaders?
Ownership structure – PE backed, privately held
Branding strategy – consistent branding across all offices or localized branding
Procurement strategy – employees flexible to choose products vs. strict formulary
These are only a couple of dental group business model differentiators. These differences make it a real challenge for a company trying to sell into a DSO or for investors to really understand DSOs and how they operate.
If you are a small group, or a tenured DSO, you should have both a mission statement and a brief company background (and possibly a strategic outline) on your website. This will make it much easier for investors and potential supply partners to understand your business and create programs that will be mutually beneficial. From the supply side of things, this will also shorten the learning curve of suppliers and free up your procurement or leadership team from having to explain how your group operates.
Camille Faye, contributing editor GDN