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Dental Service Organizations: They’re Not all the Same

Posted Dec 11th, 2019 in 2019, the wire, thought leadership

Nate Tchaplia, Chief Development Officer, dentalcorp

The dental industry in Canada is evolving. With over 24,000 dentists and 14,000 practices across the country, today’s market is highly saturated and fragmented. The fragmentation, along with increased expectations of consumers, has given rise to a new business model: Dental Service Organizations (DSOs). DSOs can be thought of as independent business support centers that contract with dental practices to facilitate further growth and success.

While there are many benefits to joining a DSO, it is important to note that not all DSOs are alike. A number of very diverse models exist in the industry, and it is necessary to do your research when evaluating potential opportunities. The following are useful questions to consider as you weigh your options.

Will you maintain your clinical autonomy and professional independence?

By removing the administrative burden that comes with running a business, a DSO should allow you the freedom to focus entirely on delivering exceptional patient care.  The DSO’s involvement should be limited to the business side of things while the clinical decision-making is left to the clinicians. You should have complete autonomy to practice dentistry the way you always have, while leveraging the resources and knowledge of the DSO to remain competitive and successful.

Will you have access to a supportive and expansive infrastructure?

A DSO should have a robust infrastructure in place to support practice optimization and future growth. To understand the true scale of the infrastructure, enquire about the different resources available, as well as the size and background of the teams. Along with the essential administrative functions, understand what strategic tools and resources are available to you to support your ambitions and your practice’s success.

Can you diversify and de-risk your wealth?

Different DSOs afford varying degrees of financial growth. The ideal opportunity should include a 100% sale of your practice, allowing you to extract the full value of your practice and the freedom to invest more money elsewhere, today. You should also be provided with opportunities to become a true shareholder in the organization and benefit from its overall success. When evaluating shareholder opportunities, ensure you have a good understanding of the stability of the shares and past liquidity events to shareholders.

Will your legacy be secured?

Your years of hard work building your practice should not be undone upon joining a DSO. The legacy of your business should be secured while you continue to practice dentistry. It is essential to find a DSO that will allow you to remain the leader of your practice, while maintaining your practice’s brand name and culture.

What is the reputation of the DSO and its affiliates?

Taking into account the reputation and history of the DSO, its affiliated partners and private equity investors can help to gauge credibility. A DSO should be home to a network of highly successful, reputable practices. Valuable insights can be gained from looking at the investor’s history of success, the number of years it has been in business, as well as the nature and timing of historical investments made. Ideally, a prospective DSO would have strong financial backing by established investors with a proven track record of success.
What are your growth ambitions? Will partnership enable you to achieve your goals?

A strategic DSO should be poised to enable your continuous growth through multi-clinic ownership opportunities, if that is your goal.  An ideal partnership further provides you and your team with opportunities for mentorship, continuing education and training, in addition to access to leading-edge technology and equipment to stay ahead of the curve. The truly strategic DSO recognizes the value of its partners and leverages their knowledge and experience to achieve shared growth and success.  

Is it a true partnership?

Prospective partners should take the time and effort to understand your unique practice and situation, and subsequently customize a partnership deal that will meet your needs. True partnership is mutually beneficial and should ultimately serve to support the success of both your practice and the broader organization.

The decision to partner with a DSO is much more than a financial transaction. Among other factors, your autonomy, reputation, and potential for continued growth and development should be considered when determining what’s right for you. To help you make an educated decision, actively seek further information and guidance from experienced peers, and ask the tough questions – your legacy depends on it.

As originally published in Oral Health.

About the Author  

As dentalcorp’s Chief Development Officer, Nate is responsible for leading the acquisition process, including deal evaluation, due diligence and operational integration for new Partnerships. He also supports the company’s acquisitive growth by identifying new Partner opportunities and building relationships with industry stakeholders. Nate is an experienced financial professional having previously worked for an international advisory and consulting firm specializing in valuations, mergers & acquisitions and capital advisory. He is a Chartered Professional Accountant and holds a Bachelor of Commerce degree from McGill University.

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