It is inevitable — consolidation and acquisition are the future of dentistry. Dentists don’t want to hear this. They’d rather live in hope that solo private practice will continue as the dominant model in dental delivery.
Here are six reasons why dentists must take their heads out of the sand before it’s too late …
1. Dentistry always follows medicine — always. Although the economic engines are somewhat different, the basic practice models are the same. With increased government oversight through regulations and mandates, with third parties squeezing harder, and with the cost of doing business going up, solo dental practice is going to have trouble managing these forces. That’s why physicians banded together.
2. Costs continue to go up. Equipment, staff, fixed costs, variable costs, supplies. Revenues are flat or declining. The only way to beat this is through economies of scale, which is only available in managed group practice (MSOs/DSOs).
3. Third parties will continue to exert downward pressure. PPOs are now 80% of the insurance landscape. More than 50% of the population has dental benefits. Of these 50%, 70% to 80% are the ones who see a dentist. You do the math.
4. The dental industry is severely fragmented with 86% of the dentists practicing solo. Corporate dental companies see a clear financial windfall in coalescing these individuals into group expressions.
5. Dentistry as an industry is recession-resistant, growing at an annualized rate of over 5%. Capital investors see tremendous opportunity as well as do entrepreneurs and professional senior executives. They all see managed group practice as a very attractive future.
6. Dental school debt can be as high as $250,000 or more. Who can afford to buy a practice on top of this burden? So the door is closing to entering dentists, which might explain why fewer than 20% of graduates are seeking practice ownership. And the door is closing on exiting dentists since there are fewer and fewer buyers. Managed group practice looks like the answer to both of these parties.
This is not going away. The question now is what are you going to do about it? I suggest you learn how you can succeed in the new game of managed group practice.
We are delivering a major conference on how to develop DSOs and MSOs in Seattle on Feb. 15 and 16, 2013. For more information or to register, go to DentalSummit2013.com.
Dr. Marc B Cooper’s professional career includes private periodontist, academician, researcher, teacher, practice-management consultant, corporate consultant, trainer, seminar director, board director, author, entrepreneur, and inventor. He has studied with masters in many disciplines, participated in formal business educational programs, and worked as an independent contractor with top-flight consulting companies. In 2011, Dr. Cooper was selected as a coach for the prestigious TED Fellows Program. The Mastery Company has been in existence since 1984. Dr. Cooper's client experience in dentistry includes solo private practice, small partnered practices, managed group practices, and retail corporate enterprises. Dr. Cooper has worked with numbers of health-care entities such as insurance companies, clearinghouses, biotechnical companies, and disease management companies, as well as the senior executives and boards of large hospitals and hospital systems and a number of their related physician groups. In addition, Dr. Cooper has worked with Silicon Valley start-ups and Fortune 500 companies. He has worked with dental clients all over the world. Dr. Cooper is author of seven books, and his e-newsletter reaches subscribers in 31 countries. Dr. Cooper has also co-developed a suite of online dental practice-management assessment tools.