In the business world, the proper operational set-up leads to long term financial success. This is particularly true in a service-based industry such as the DSO business. The challenge is that the industry is still new, performance indicators continue to evolve, processes are improvised and experimental, and talented leadership to design and implement comprehensive operational plans is often scarce, inexperienced, and underdeveloped, especially at the larger scales. In this article, we will explore a basic outline to design and implement a basic operational set up that will support financial success and the company’s growth.
First and foremost, one has to understand that operations and clinical go hand-in-hand. While this is stated at many DSOs, it is rarely practiced. The danger here is that operations and clinical become “siloed”. This happens because too many COOs have a “stay in your lane” mentality. The problem is compounded since most operations people do not understand the clinical side and vise-versa. This creates an ‘us versus them’ mentality that tends to be disruptive and destructive in the long run.
Clinical needs to understand the goals and objectives of the operations and buy into it. The key to a successful operational setup is the integration of the clinical and operational team—at all levels. It’s what I call the Clinical-Operational Bridge. This is the space where the operational and clinical team share their goals and objectives and design and implement processes that promote and support performance success. At the office level, the office manager, dentist, and hygienist must all be aligned and work toward clear goals, and objectives.
At the C-suite level, clinicians are welcomed, listened to, and active participants in goal setting and decision making. Clinical representation at the C-suite level translates into clear communication lines between the operational team and the clinicians who are the key to the company’s productivity and performance. Moreover, strong, experienced clinical leadership working in tandem with the operational team will ensure that management decisions reflect the clinical needs, goals and experiences of the clinical team.
When the Clinical-Operational Bridge is working as a team, the company’s main revenue generators will have a high level of trust in the organization’s leadership, buy into the company’s goals and objectives, and perform at high capacity. After 20+ of years working in the DSO industry, the biggest and most common mistake I see when emerging DSOs begin to consolidate their holdings is the tyrannical imposition of unexplained and opaque “orders” that make no sense to clinicians in the field, disrupt production models, ruin office morale, and result in high rates of turnover.
This is a catastrophic failure that immediately affects the company’s ability to meet its financial goals, creates chaos, and establishes a circular pattern of crisis within the emerging DSO. Invariably, the company begins to experience cash flow shortages, which bring about crisis, not to mention the critical eye of investors and boards of directors. The absence of a competent Clinical-Operational Bridge in the DSO industry accounts for most if not all of the industry’s failures.
The second key to success is constant training, follow up and evaluation of the operational team. Training should be ongoing, sustained, and basic to every operational aspect. The COO needs to ensure that the regionals are properly trained. The regionals have to ensure that their office managers are properly trained. Formal training, follow up training, and spot training must be established, implemented, and evaluated on an ongoing basis, both at the practice and corporate level.
Before that training can be designed however, consistent Standard Operating Procedures (SOPs) must be created. SOPs are the most effective way of identifying, summarizing, and promoting the implementation of best business practices and clinical excellence across the entire organization. A good set of SOPs translates into less liabilities, higher performance at all levels, and much better chances to hit the profit target.
SOPs are also key to the successful integration of newly acquired practices into the DSO. The existence of competent SOPs at the operational level is the hallmark of a high performing DSO. It is also the difference between a high functioning organization and a sloppy assembly of individual practices hastily consolidated under a common name or organization.
Many emerging DSOs make the mistake of allowing different dental practices to work outside of the company’s SOPs. This is particularly problematic with those organizations that grew by purchasing solo practices. This fragmentation makes consistent training across the platform impossible, and in the long term, hurts financial performance.
Communication is the third key to operational success and frankly, this is an area where the majority of emerging DSOs fail miserably. The C-suite must develop tools and procedures to convey its strategic vision. It all comes down to this: People want to know who the new concern is and what the changes mean for them.
Sharing the big picture is a must and should include visions, goals, and performance targets. Efforts must be made to reach out to members of the incoming concern, especially those who are key to transitional and long-term success. Introducing and building a positive corporate culture is key. The reality is that people work better and are happier when they understand the nature and scope of change and when they have a clear idea of where they are going and what’s the plan to get there. Communicating up front will net the C-suite a greater buy-in, a smoother transition, and invaluable goodwill to support future development.
Many CEOs believe that they are doing a decent job of communicating these ideas across the organization. In practice, the reality is quite different. Few CEOS, COOs, and corporate leaders have the time or willingness to do the hard work. Simple ways to achieve this is through company newsletters, site visits, and relationship building. A company’s executive showing up at a practice should not be a cause for concern or a rarity, but a performance expectation from a capable and trustworthy leadership.
Establishing a record of operational success requires support and commitment from the C-suite. It also requires planning, and a systematic implementation, as well as constant follow up. It requires a marriage between the operations and clinical teams, continuous training and feedback, and honest and clear communication based on well-defined objectives and achievable milestones. The operational team is the bread and butter of any successful DSO and the company’s workhorse. A competent operations team makes the difference between failure upfront and a shot at long-term profitability. It also builds in the necessary flexibility that allows the DSO to scale up with minimal problems and to grow into a profitable future.
Written by Bryan Tim Marshall, DDS, MBA. Dr. Marshall has been a DSO entrepreneur for over 20 years. His extensive professional experience comprises an extraordinary journey that has given him a rare and privileged insider’s perspective into the evolution of the business of dentistry. From working as an associate, to opening his own office, to building his first DSO into the largest fee for service multi-location group practice in Florida, he’s intimately familiar with all aspects of practice development. After he sold his first DSO to Heartland Dental Care, he founded a new group practice and merged as a founding partner with Dynamic Dental. At Dynamic, he became part of the executive team as Director of Business Development, responsible for acquisitional and operational assessments, underwriting, and due diligence. He then joined Blackford Dental as Director of Business Development and Chief Dental Officer, a role that he recently reprised at Birner Dental Management where he reduced doctor turnover from 70% to 35%. Mean DSOs, wobbly DSOs, successful DSOs, wannabe DSOs, he’s seen them all. Moreover, he’s survived the highs and lows associated with the life cycles of DSOs all over the country. So, go ahead, ask him. He’ll tell you. He can be reached at firstname.lastname@example.org