Is this the time for a solo owner dentist or small group to sell? After speaking to several executives at both small dental group practices and larger dental support organizations (DSOs), the best time could be now.
There is a growing trend in the dental support organization world to move away from affiliations (acquisitions) and towards de novo locations. As DSOs grow larger and start to penetrate markets, some are forgoing acquiring existing practices (affiliations) in favor of choosing quality locations and then building new practices from the ground up (de novo). Many DSOs are finding that it is less risky to build de novo practices than to acquire existing practices.
There are several reasons for this DSO business development strategy shift.
- Dentists who sell their practices to DSOs don’t always work well in a team environment or transition well to the new administrative protocols and procedures.
- Existing staffs can have issues adapting to the new DSO structure.
- The criteria used by DSOs is stricter and therefore less existing dental practices meet the larger DSOs’ standards.
- DSOs are building out extensive business development divisions that have the capability and capacity to easily analyze the de novo versus acquisition value proposition in specific markets.
- DSOs are specifically looking to acquire quality practices in quality locations
If you are a solo owner dentist or own a small group, you do have to be prepared. You have to operate your office or offices as a business. Whether your end game is to eventually sell to a (DSO) dental group and become a supported dentist, or just operate a highly efficient and competitive office, you need to take this business development strategy shift seriously. It may be time to engage a practice management company to help you manage your non-clinical activities. Your goal should be to operate an office that a DSO would want to acquire even if you don’t want sell to one.
If the de novo strategy of DSOs continues to grow and eventually dominate acquisition strategy, this will certainly put pressure on the value of solo owner dental practices. To stay informed on group dentistry and DSO trends and strategies, subscribe for free to Group Dentistry Now, the only digital source for DSO and Group Dentistry news and content.
Written by Camille Faye, contributing editor Group Dentistry Now