How a Dental Clinic Started Above a Bakery Has Transformed into the Most Significant DSO in Brazil

The Dental Landscape in Brazil

With an area of approximately 8.5 million square kilometers, Brazil is the fifth largest country in the world. Having one of the largest economies in the world, Brazil is populated with more than 220 million people in 26 states, a figure which continues to increase. The South American country also has tremendous social inequality.

Due to a steady increase in the life expectancy in Brazil, the average age of the population has also rapidly increased. From 1950 until 2015, the average age of the population increased by an impressive 12 years; in 2015, the average age of the population in Brazil was reported to be around 31 years. As a result of the increasing average age, the percentage of people aged between 15 and 64 years has also increased.

Brazilian people are very focused on health and well-being. They take personal care, which includes oral health care, very seriously and its importance is built into the fabric of their culture. Showering twice daily is standard. Many public bathrooms even have mouthwash and dental floss.

Even as economic recession torment some sectors of their economy, the health sector has experienced robust growth. According to ABF – Brazilian Franchising Association – the dentistry and optics sectors are doing exceptionally well, as they recorded growth variation of 9.2%, compared to last year.

Despite Brazil’s high index of social inequality, the population is increasingly consuming more dental services, mainly in top value-added services such as dental implants, orthodontic aligners, and teeth whitening. The import volume of oral hygiene products in Brazil is increasing. In January 2018, Brazilian imports of oral hygiene products amounted to nearly 1.3 thousand metric tons, up from approximately one thousand tons a year earlier.

In total, the Brazilian dental market is $10 billion (R $ 38 billion), annually. Their dental market is number three in the world after the US and China. They have almost 300 dental universities which graduate ten to 15 thousand dentists every year. According to the Federal Council of Dentistry, Brazil has the world’s largest number of dentists, with a grand total of 319,000. That is equivalent to almost 20% of the dentists in the entire world.

These numbers could be interpreted as market saturation due to the sheer number of professionals, however, 20 million Brazilians have never gone to a dentist – even for a cleaning. 75% of their dentists work in the south and southeast regions, leaving many in the other regions underserved. Geographic barriers prevent many Brazilians from accessing basic oral health care.

Breaking Down Barriers to Care

With a desire to break down barriers in access to oral care, in 1995, Dr. Carla Sarni, a new dentist from extremely humble beginnings, set up a small dental clinic atop a bakery in a poor and underserved area of ​São Paulo, Brazil. Dr. Sarni opened her first clinic to provide access to high-quality and dignified dentistry to a patient population with no experience of going to a dentist. The newly formed practice aimed to break geographic and economic barriers and was built upon the pillars of access, comfort, convenience, and quality.

In 2001, in the same neighborhood, she opened up a new dental clinic worthy of the finest neighborhoods in the city, offering the best technology, beautiful design aesthetic, and comfort for patients and dentists. The clinic, which would eventually serve as the starting point and model for the largest DSO in Brazil, was so impressive, that people in the area did not believe that it would be affordable to them.

As the clinic grew, Dr. Sarni began experiencing administrative problems which caused severe financial losses. Looking for solutions, Dr. Sarni enlisted the help of her husband, Cleber Soares, who was a sergeant in the Brazilian Army. He helped her work through the clinic’s issues. During that time, her love of dentistry inspired him. In fact, Soares decided to leave the military and became a dentist himself.

Expansion

After structuring an administrative back office and organized level of management with clear and defined processes, the pair opened another 23 clinics throughout Sao Paulo.

In Brazil, many professions, dentistry included, are regulated by councils. The Federal Council of Dentistry is the governing body with responsibility to regulate, supervise, direct and discipline the dental industry. Unfortunately, some people on the council were bothered by Sorridents’ success.

As their network of clinics expanded, the council did not look favorably on Sorridents more efficient management structure. They didn’t understand it and it was shock to the decades-old traditional dental business model. Over Sorridents’ 25-year history, however, they have proven the newer model’s credibility and it is now accepted by the council.

Nevertheless, in 2007, they were approached by several of their employed dentists who were working in their established clinics. These dentists expressed interest in starting their own practices based on Sorridents’ formula. This interest resulted in Sorridents creating a franchise model using brand standards, management, and marketing. The franchise model appealed to many dentists since the dynamic team had so much experience and learned a great deal from both their mistakes and successes. They were seen as having a ‘recipe for success’ that others wanted to be a part of. The process of back office organization and systemization of the franchising system of Sorridents took five years. They then took the franchise model to the market. Their first 58 franchises were started by dentists who had been working for them within their original 23 clinics.

However, not all of their franchises are dentist owned. In Brazil, there is no requirement that the dental practice owner (franchisee) be a dentist because the owner is only handling the administrative duties. However, it is mandatory that each clinic has a dentist on-site (employee or franchisee) who is responsible for the clinically aspects of the practice.

The DSO, which was started and still has practices in very needy regions, has almost 300 clinics across 15 states in Brazil today. Now, they also have clinics in high-end areas where the target public is different because they have higher purchasing power.

The Brazilian market is expanding, and at the top of the market is Sorridents with 63% of the market. Sorridents today is the most awarded brand in the country and recognized nationally and internationally. The Brazilian Franchising Association rates it a 5-star franchise. For the past six years, Pequenas Empresas & Grandes Negócios, a leading Brazilian business magazine, named it as the best franchise in Brazil in the health and wellness sector.

They have also enjoyed unprecedented recognition as Harvard Business School published a case study on them entitled, ‘Sorridents: Making Dental Care Accessible to All in Brazil.’   The case study analyzes them as a business which offers quality services to the most underserved – or as they refer to it – the bottom of the social pyramid.

The Growth and Abundance Mindset

Sorridents has broken many paradigms. Despite what appears to be an oversaturation of dentists in Brazil, it has proven business success in an industry that many dentists thought was already saturated. They don’t believe that dentistry in Brazil is saturated, on the contrary, they believe that opportunities abound for a strong dental business model.

They have long outgrown the bakery to become the most significant dental franchise in Latin America. And they are growing fast:

• Forecast for 2019 was to grow 20%, and before the first half of 2019, they have already exceeded that target number, producing 34%.
• 39 franchises are currently being built and their expectation is to close 2019 with a total of 360 clinics.
• Invoiced $85 million (R $ 339 million) in 2018 and expect to reach $111 million (R $ 443 million) this year.
• Have more than 3,000 dentists and 3,500 additional employees.

 Sorridents’ business model is their differentiator. They have proven that it is possible to do topnotch dentistry, at a fair price, and for all people. And they continue to uphold the same essential pillars: access, comfort, convenience, and quality, which Dr. Sarni implemented when she first started above the bakery:

• accessibility to the community
• patient comfort with a superior infrastructure for socioeconomically disadvantaged patients,
• high-quality materials
• convenience of having multiple specialties in the same place which provide the customer convenience of a ‘one stop shop’. They also have all laboratory equipment in their clinics so that patients complete the entire treatment at one location.

Exceeding Expectations

Sorridents expanded beyond dental practices and created a holding company named Grupo Salus Par. The holding company also owns the brands:

• GiOlaser – a laser beauty and aesthetics network
• Look Right – a network of high-performance ophthalmology centers
• DocBiz – an IT and business consulting company for health clinics
• Sorriden – a dental health plans company.

The Future of Dentistry and Dental Groups in South America and Brazil

Market consolidation is a trend that will continue in South America.

“The Brazilian dental market will continue to grow with emerging players, but that will require more and more professionalization and maturity. This is where Sorridents has the advantage because we are the only dental group in Brazil to be studied by Harvard. This exchange has proven rich for the group. We can take advantage of the information in the study and bring innovation into our network.” – Dr. Cleber Soares, Co-Founder, Sorridents

Much still needs to be done to increase access to care. Brazil needs to balance the disparities among their geographic regions. Dentists want a profitable business and patients still need more access to quality services.

“Another important point for the future of dental groups are mergers and acquisitions by global groups. Exchange rate variations make Brazil an inexpensive country to buy companies, which deliver excellent operating results.” -Dr. Cleber Soares, Co-Founder, Sorridents

 The Future of Sorridents

Sorridents is currently priming its franchisees to implement telemedicine within a context of dentistry 4.0 — the digitalization of the dental industry with highly automated processes and digitized flows, providing the benefits of improved oral health at a much lower cost.

In 2019, they will invest about $1.7 million (R $ 7 million) in expansion and technology. They have already started an app project that will allow digital service and interaction between dentists and patients. Innovations like artificial intelligence (AI) are already in their query scheduling framework. They also have a well-honed system for business intelligence, which includes detailed and highly advanced histories of patients and franchisees.

Sources: Statista, OXFAM International, BBC, National Center for Biotechnology Information, U.S. National Library of Medicine

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