Episode 22 – Deeper Dive: How Independent Dentists Can Stand Out in a DSO Market

“There’s plenty of room for your particular dream to have value in the marketplace.” ~Dr. Victoria Peterson

No one likes competition, especially from big business. In fact, it’s probably something you’ve worried about more than once as a dental business owner. But I think we often let ourselves get too concerned about what the big corporations are doing. Let me give you an example. Consider car dealerships. I’m sure you’ve noticed how they’re often grouped together, one right after the other, in “dealership row.” Now, convention would say don’t set up shop right next to your competitor. But the dealerships know they offer a variety of vehicles at a variety of price points. Toyota’s customers and Porche’s customers are looking for different options and have different needs.

The dental industry is the same. There are so many ways for you to distinguish yourself! Last episode, I spoke with Dr. David Porritt about DSOs and I think his perspective was so wise: there are good DSOs, and less good DSOs, but you don’t need to fear them. As you may remember, Dr. Porritt talked about consolidation theory and how we saw in the pharmacy and medical fields the consolidation of fragmented markets. That same consolidation is now happening in dentistry. 

But what I want to encourage you with is, there is no need to “bow to the inevitable” and sell now. Here’s why. By the year 2035 they’re estimating consolidation of 45% of the market. What that means for you is there’s still plenty of room for solo practitioners and non-equity backed dentistry to play! There’s space for you to build your Investment Grade PracticeTM where you can provide the clinical care you desire and build the practice that will be an asset in your future. 

You’re listening to this podcast because you’re a savvy business owner who wants to serve your patients in the way you believe is best, but also craft a practice that grows its value. So join me today to break down the Investment Grade PracticeTM thought process by looking at these topics:

• Options for independent practice in the current dental market
• Where to seek support so you can be competitive in the job market
• Opportunities to stand out in the industry

Do you know how long you need to work to maintain your lifestyle when you retire? Use this completely free calculator to see where you stand: What’s my IgP Freedom Number?

Want to have a conversation about your Investment Grade PracticeTM? Contact Brent at brent@productivedentist.com.
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EPISODE TRANSCRIPT

Victoria Peterson
Don’t fear the DSO that was the main message from Dr. DE port on our last podcast. And I think there’s some wisdom in this. When we’re looking at the market competition. Think about it as car sales. You know, all the car dealerships seem to be on car dealer row. And they offer a variety of transportation options at a variety of price points. There’s so many ways for you to distinguish yourself in the marketplace. So don’t fear competition on that level. Also, what Dodger port pointed out was consolidation theory. When you look at markets that are fragmented, they begin to consolidate, we saw this in pharmacy, we saw this in medicine, we saw this in optical, we’re now seeing this in dentistry. It is a natural function of the business. But what consolidation theory tells us is that the market will never be 100% consolidated, even by 2035, they’re estimating that less than 40%, perhaps 45% will be consolidated. So there’s so much room for solo practitioners independent practices, privately held groups, non-equity backed dentistry, there’s so much room for you to play the game on your terms, creating an Investment Grade Practices that allows you to provide the type of clinical care that you desire. So when you think about market competition, and the theme of don’t fear the DSO, don’t fear it from a point of they’re going to take over and I might as well sell out now it’s futile.

Don’t think that way, there’s plenty of room for your particular dream to have value in the marketplace, there’s room for you to be competitive in that marketplace. Large groups and DSOs typically have a growth model of about 5% a year. Now, this is growth in revenues, that can come from the economy of scale that can come from efficiency, it could come from fee increases, but for the most part, they don’t make big moves, they don’t make bold moves, they may be a little slower to adopt technology because they have to adapt it across five to 25 to 100 locations. So you’ve got edges in the marketplace of being flexible, and capturing market share with your reputation. Now, where you should pay attention to this consolidation could come with the battle for employees, as we see the great resignation continue, and the employment market tightening where you can become aware of what’s happening in larger groups are the competitiveness with wages and benefits. So how do you combat that part, that’s what you should pay attention to? Well, number one, work with a professional benefits coordinator, you can become part of a professional employment group, you may get associated with trade associations, we help our clients with this all the time trying to get if you’re a solo doctor, it’s difficult to get really great group benefit. So reach out to someone on my team if you’re struggling with this because being competitive on a benefits level matters.

Being wage and hour plus 401. K’s health insurance, sickly PTO, all of that. And it’s quite complicated. I know. We deal with this every year at productive dentist Academy. I had it when I had my 55 employees at neighborhood smiles. It’s a really important issue. It’s difficult to deal with if you’re a solo practitioner. So please reach out to Brent, get on my schedule. I’d love to talk to you about this. The place where you can really be competitive though, is culture. When you’re reaching out to hire and you’re placing ads. They’re not like the old school classifieds that we used to place where you got charged 10 cents a letter or 10 cents a word. I’m really dating myself now. You have the freedom and the flexibility to really launch a multimedia campaign to find great team members. And it should showcase your practice as one that reflects your core values attracting people based on core values and culture creates meaning in work. And for me, I think that’s what people are craving is a life of meaning. The pandemic really highlighted that going to work to punch a clock to get a paycheck isn’t quite as fulfilling as it might sound.

So how can we create a culture that provides people with purpose with meaning with significance, an opportunity to grow in their skill sets, I’ve seen more and more that continuing education budgets for your team, helping them grow personally, helping them grow financially, and I don’t mean just in their paycheck, but also in financial education, signing them up for a Dave Ramsey course, for example, on money management, and budgeting, helping them understand how to get out of personal debt. These are more important for employers now than ever because your team’s comfort level and presenting financial options to patients is going to be a direct reflection of their comfort level of dealing with their own personal finances. Get creative your team is your team may not even know how to ask for this. But my experience as a consultant when we go in and we work with teams on this level, they appreciate having certainty in their own life. And that translates to bringing certainty to your patients. So on the topic of don’t fear the DSL don’t fear that they’re going to buy out the entire world. They’re not is it a good option to sell to a DSO? Well, that depends.

We’ve got a great IGP calculator, you can go in and do a little bit of top-level financial planning, looking at what your financial freedom number is put in what your current collections and current profits are. It’ll show you where your practice has potential and be in the next five years. If you do business, as usual, going 5% a year if you sell to a DSO and work for them for five years, or you first optimize your practice over the next one to two years and then start selling. So I invite you to click the link below and check out the IGP financial freedom calculator. That may be a great tool to help you and your seller readiness. And then in optimizing your practices, really take a page from the larger groups that have figured out how to offer benefits. And if we can help you figure that equation, give us a call. Thanks for listening to investment grade practice. I’m your host Victoria Peterson. That’s a wrap for this edition of Investment Grade Practices.

Narrator
Thank you for tuning in to this episode of the Investment Grade Practices podcast. If you find value in this episode, help us spread the word by passing it along to a dental friend subscribe and give us a Like on iTunes or Spotify. Learn more about building your Investment Grade Practice at productivedentist.com Today