The dental industry, like many other sectors, has evolved to adapt to changing times and technology. One significant development in recent years has been the rise of Dental Service Organizations (DSOs).
It’s important to note, however, that DSOs may not be the best option for everyone. While DSOs can take on some of the difficulties with dental practice management, they often severely limit how much control an owner has over the business.
In this blog, we will discuss the topic of DSOs, explain what they are, how they work, their benefits, downsides, and their potential role in the future of dentistry.
What is a DSO?
Before we explore how DSOs work, let’s begin with the basics: what exactly is a DSO?
A Dental Service Organization, or DSO, is a business model in the dental industry that provides comprehensive support and services to dental practices. These organizations are responsible for managing the non-clinical aspects of a dental practice, allowing dentists to focus on patient care while the DSO handles administrative and business operations.
How DSOs Have Evolved
DSOs have a relatively recent history but have quickly gained prominence. The idea of centralized business support for dental practices began to gain traction in the 1990s, and since then, the concept has grown exponentially.
Key Features and Characteristics of DSOs
DSOs are typically characterized by their ability to offer economies of scale, centralized business functions, and support in areas such as staffing, marketing, billing, and technology. They vary in size and scope, from small regional organizations to large national chains.
Types of DSOs
DSOs come in various forms, each with their unique focus and approach.
- Corporate DSOs
- Emerging DSOs
- Specialty-Focused DSOs
In the current dental industry, the prevalence of these types of DSOs continues to grow. Corporate DSOs have established themselves as major players, while emerging DSOs are on the rise, offering a competitive alternative for dental practices looking for support. Specialty-focused DSOs are also becoming more common as they cater to the specific needs of various dental specialties. The dental service organization model is evolving and diversifying.
How DSOs Operate
Understanding the inner workings of DSOs is crucial for dentists considering partnerships.
Ownership and Management Structure
DSOs may be owned by dentists, non-dentists, private equity firms, or other investors. They often have a leadership team responsible for overseeing the operations of multiple affiliated dental practices.
Providing Administrative and Business Support
DSOs offer a wide range of services, including assistance with hiring and training staff, implementing technology solutions, handling marketing and patient acquisition, and managing billing and insurance claims.
Scalability and Growth Strategies
DSOs often have strategies for expanding their network of practices, which may include acquiring existing dental practices or partnering with dentists looking to sell their practices.
Downsides of DSOs
- Patient Care and Quality Concerns: There are concerns that DSO-affiliated practices may focus more on productivity and profitability, potentially compromising the quality of patient care. Ensuring high standards of care remains a challenge for some DSOs.
- Impact on Solo and Small Group Practices: As DSOs grow, some worry that they may threaten the viability of small, independent dental practices, potentially reducing competition and choice for patients.
- Loss of Autonomy and Lack of Transparency: When you work with a DSO, you are an employee. This means you may not have a say in the business direction and may have less control over clinical decisions.
- Lifetime Earnings: over the course of a career, the difference between owning your own dental practice and working for a DSO can amount to millions of dollars left on the table.
Benefits of DSOs
- Administrative Support
- Access to Advanced Technology and Resources
- Increased Buying Power
- Professional Development Opportunities for Dentists
The Future of DSOs
The future of DSOs is a topic of significant interest and debate in the dental industry. DSOs are likely to play a crucial role in shaping the future of dental care, influencing how services are delivered and how practices operate.
Trends and Growth Projections: DSOs are expected to grow in the coming years, with more dentists exploring partnership opportunities.
Think Twice Before Partnering with a DSO
Dental Service Organizations are an evolving part of the dental industry. Understanding what DSOs are, how they operate, and their potential benefits and challenges is crucial for dentists, patients, and anyone interested in the future of dental care. DSOs offer administrative support, opportunities for professional development, and increased buying power, but they also face concerns about patient care quality and regulatory oversight.
Are you considering a DSO? Reach out to a WPS dental broker for consulting on if it would be the right fit for you.