DSOs offer opportunity for dentists to serve communities in need

The financial dynamics of medical offices have changed. There are now many ways dentists can open new businesses in communities that need them most, while also building wealth. Of course, this is easier said than done, but with the right brand and model, it’s possible for young dentists to see their dreams come true.

Thirty years ago, if a dentist wanted to start their own business, it was their responsibility to own or lease their offices, market themselves to their communities, and hire and train new staff, as well as look over the financial books every day. But this was not what they learned in school and figuring out how to manage these responsibilities on the fly made starting a business much harder. What these entrepreneurs also did was take on more debt while paying off what they owed to their dental schools, putting more pressure on them to be successful. 

Reaching communities in need 

But now, through various government financial incentives and programs, it’s possible to build businesses in communities that currently lack dental offices. When the federal government realized that those living under the poverty line ($17,609 a year)¹ could not access dental services, it expanded Medicaid to help people pay for those services. This meant higher reimbursement rates for dental offices, which also made it easier for dentists to open practices in communities with high enrollment in Medicaid. Now the risk was lower. 

But there is still a problem that these incentives do not solve—creating a business model that works while managing an office. When anyone visits a medical office, they want to feel confident that they’re getting the best care possible. This ensures customers come back and leads to a successful business. But most dentists did not learn how to do this in dental school, which is why most dental offices have turnover rates of 17%,² when they want it to be closer to 3%. 

Related articles

Improving seniors’ quality of life through mobile dentistry
An introduction to alternative DSO structures

DSOs to the rescue

It should be no surprise that the dental support organization (DSO) model has become more popular. DSOs remove much of the backend office work that dentists are not trained to do nor care to spend time on. Studies have shown DSOs are able to control costs such as rent, dental supplies, and benefit packages better than small practices, which makes them more profitable.³ Not only does this help owners pay off their debts, but recently more dentists choose to work at a DSO because, since the Great Resignation, many dentists want the flexible schedule that medium to large DSOs can provide.³ 

We also know that expanding DSOs have done well in communities they enter because, in addition to not having much competition, they have excellent branding and marketing techniques.³

So the question becomes, “How do you market a new DSO?” It’s not just about paying for advertisements. It’s the atmosphere created that’s key. Making sure that children waiting to see their dentist are in an engaging environment leads to them behaving well while waiting, which reduces stress for parents. Then they’ll not only want to come back because they had a good experience, but they may use your dental services as well.⁴ 

While dentists are serving more communities in need, they’re also building equity in their businesses and enjoying the ability to pay down their debts. They can also be confident that when they’re ready to retire and sell their stake in the business, they will make a profit because the model, on both the business and marketing ends, has proven to work. 

Editor's note: This article appeared in the August 2022 print edition of Dental Economics magazine. Dentists in North America are eligible for a complimentary print subscription. Sign up here.

References

1. Garfield R, Orgera K, Damico A. The coverage gap: Uninsured poor adults in states that do not expand Medicaid. KFF. January 21, 2021. https://www.kff.org/medicaid/issue-brief/the-coverage-gap-uninsured-poor-adults-in-states-that-do-not-expand-medicaid/
2. Arulrajah N. Strategies to improve dental patient retention. Oral Health Group. March 10, 2021. https://www.oralhealthgroup.com/blogs/strategies-to-improve-dental-patient-retention/
3. Jansen JJ, van der Welle AJ, de Joode J. The evolving role of the DSO in efficiently accommodating distributed generation. Intelligent Energy. June 2007. chttps://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.490.278&rep=rep1&type=pdf
4. Creating a peaceful environment for children. Penn State Extension. https://extension.psu.edu/programs/betterkidcare/early-care/tip-pages/all/creating-a-peaceful-environment-for-young-children