Practitioners Can ‘ACT+’ to Preserve, Scale, and Grow Their Private Practice in Today’s DSO-Driven Market

Casey Gocel

Dental service organizations (DSOs), which are nonlicensed, non-clinical corporate structures that provide administrative and back-office management services to dental practices, have discovered the key to maximizing the profitability of dental practices. The existence of DSOs creates competition in the market and presents challenges for dental practitioners looking to preserve their private practices. However, there will always be a place for private practice dentistry in the United States. This is particularly true for fee-for-service practices, where the patient base is motivated by the office experience, rather than the out-of-pocket costs.

While most DSOs are focused on growing revenue and decreasing expenses, private practitioners tend to focus on clinical excellence, patient satisfaction, and employee retention. But, what if private practice owners stole a page from the DSO playbook? What if these owner-doctors also found a way to centralize as many functions as possible to leverage economies of scale and maximize fixed overhead to increase efficiency and profitability at the practice level? Would DSOs continue to thrive?

To stay competitive, private practitioners need to focus not only on patient care, but also on the business side of dentistry. If an owner-doctor can do this while staying true to their core values of providing the optimal patient experience and treating employees well, DSOs will struggle to keep up.

“ACT+” encapsulates four ways that private practitioners can continue to compete and grow in today’s DSO-driven market and comprise the backbone for long-term preservation of private practice dentistry:

A - Add Associates

C - Create Convenience

T - Embrace Technology

+ - Plus Outsource

A - ADD ASSOCIATES

In most practices, associates are paid based on a percentage of their individual collections or production, ranging from 28% to 35%. This means that when an associate works harder, both the practice and the associate make more money. On the flip side, if an associate slows down, the associate will make less money. To state in another way . . . more associates mean more money. As long as the associate’s compensation is structured correctly, the addition of associates should always result in an increase in revenue. This concept also works when paying an associate a fixed salary, or a per diem rate; however, there is an added risk that the associate will not be profitable if he or she is underperforming.

Adding associates also creates the opportunity to extend office hours to nights, early mornings, and weekends. Generally speaking, adding associates should not increase your overhead by much. You may need to add an additional assistant or hygienist, but the fixed expenses, such as rent, utilities, and taxes, remain the same.

Another great way to add doctors to your practice is to partner with specialists. If you cannot afford to bring on a full-time will undoubtedly increase your revenue, that will quickly change if the doctor is able to leave and take your patients and your staff with them.

C - CREATE CONVENIENCE

We live in an instant-gratification environment. Consumers crave convenience. They want to learn everything they need to know about your practice by simply clicking on your website. They want to schedule appointments online and confirm them via text. Patients want flexible office hours, live chat, teledentistry, and 24-hour on-call service.

Once doctors have been added to your staff, it will be easier to create this level of convenience for your patients. With a multi-specialty practice, every possible treatment option can be offered, including clear aligners, root canals, implants, oral endodontist, oral surgeon, or orthodontist, hire someone to work at the office one or two days per month. By building a group practice, where several dentists with different specialties work together, you will eliminate the need to refer out specialty work and keep that revenue in the practice. Hours for these specialists can be increased as needed.

The addition of specialists, like the addition of associates, should not increase your fixed costs. Specialists expect to be paid based on a percentage of their personal collections, ranging from 40% to 50%, and expect to bear the cost of their own malpractice coverage. Most specialists can be hired as independent contractors, providing further advantages to both the practice and the specialist.

When adding associates and specialists be sure to enter into a proper employment or independent contractor agreement, which includes termination rights and adequate restrictive covenants, including a non-compete and a non-solicitation of patients and employees. While adding doctors to your practice surgery, endodontics, sleep apnea, pediatrics, and anything else a patient may require.

When you combine the latest technology with specialists working under one roof, a patient can complete almost any treatment in a single visit. Some multi-specialty practices even have an on-site lab to accelerate case completion.

Typically, the efficiency of offering multiple specialties maximizes economies of scale by making it possible to offer treatment at a lower cost and still have greater profitability. Lowering the cost of treatments such as implants, veneers, and clear aligners can attract even more patients and increase case volume.

Accepting a wide range of insurance is also a form of convenience for patients. While not every doctor may be credentialed with every plan, offering a variety of insurance and fee-for-service options is ideal.

T - EMBRACE TECHNOLOGY

Regardless of your personal opinion of technology, there is no denying its appeal to consumers. Our daily dependence on smartphones to accomplish every task illustrates our inherent trust in technology. Patients want to trust their doctors. If you are using dated equipment and technology, you risk losing their trust.

Unfortunately, while CAD/CAM, CBCT, and lasers are now expected by a younger population of patients, the cost is significant for a solo practitioner. It is often hard to justify investing in large technology purchases, but there is no denying the impact.

For most new patients, their first impression will be your website. If your website is clunky and dated, it is unlikely that you will engage that patient. For the remainder of patients, their first impression will be your office. Society has been trained to instill their trust in spaces that look more like an Apple Store and less like a traditional medical office. So, if the first thing a patient sees when they walk into your office is wood paneling and paper charts, it is probably time to invest in technology (and some fresh office design).

PLUS - OUTSOURCE

There is a growing number of vendors servicing the dental industry today, which allows practices to outsource the nonclinical elements of the business, such as marketing, SEO, generating patient reviews, insurance processing, billing, scheduling, after-hours call centers, and staff recruiting. These days, you can hire someone to handle almost every aspect of your dental practice.

As a business owner, it is natural to want to maintain control over every facet of your business. However, scattering your focus among all the demands of your practice will not grow your business and likely result in a decrease in productivity, followed by eventual burnout. Instead of focusing on everything, you should pick the one area where you have the biggest impact and outsource the rest. For most practice owners, clinical care is their primary area of focus because it increases revenue, and it is what they were trained to do. But, if you already have several associates, your focus may be better aimed on other areas of growth, such as revenue cycle management, training, or retention.

Regardless of your personal unique ability, the bottom line is – you should outsource the rest. Ideally, hire vendors to assist with functions you deem important but recognize are not your area of expertise. For example, marketing is generally a good task to outsource because it is a potentially lucrative tool that many business owners do not have the time or expertise to focus on. If you are feeling overwhelmed and unsure where to begin, consider hiring a practice management consultant who can help you focus your energy on the things that matter most.

These strategies are big steps, and you do not need to implement all of them at once. However, if your goal is to preserve your private practice in today’s DSO market, you must embrace change . . . you must ACT+.

Casey Gocel is a partner and co-chair of the National Dental Law Group at Mandelbaum Barrett PC, in Roseland, NJ. She is the co-author of Pain Free Dental Deals, a go-to resource for entrepreneurial dentists, and The DSO Decision, which provides an overview of how to partner with a DSO or compete with them. Gocel has executed thousands of successful dental practice transitions across the country, in addition to advising doctors on the critical business elements of their practices. Contact her at cgocel@mblawfirm.com.