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What’s right for you? Dental service organization or private practice?

April 15, 2021
It's one of the biggest decisions dentists will make: opening their own practice, or joining a dental service organization. Both have risks and advantages. Which one is for you?

The emergence of dental service organizations and their desire to grow, combined with the hardships of the COVID-19 pandemic, has created a shift in dentists’ attitude toward “selling out.” Who wouldn’t want to capitalize on the increased security and comfort of a large organization backing them up—securing the payroll through hard times, marketing to patients, and helping to alleviate the cost of unforeseen issues? That seems like an easier decision during an age of uncertainty.

Does it make more sense for some than for others to pull the trigger? Of course, and you might be more equipped to flourish on your own. But this depends on the individual skills and preferences of the owner. For the record, I am not going to tell readers which option is better as that is completely arbitrary and depends on the person. I’ll only offer some tactical information to present a factual and complete analysis of each scenario.

I sat down with David Rice DDS, founder of Ignite DDS and a pillar of dental industry knowledge and experience and came away with several interesting considerations. Some of his insights: “They both have advantages and shortcomings depending on the person. One’s level of personal responsibility, income level, and quality of life can all be better or worse according to preference. It definitely comes down to an important choice; how much are you willing to deviate from the old adage of ‘focusing on the dentistry?’”

DSO advantages

DSO ownership can offer many advantages to a practice owner. There is essentially a corporate management system that takes over operations. This means help with payroll, supply distribution, and repair/maintenance issues. You’ll also probably enjoy perks such as drastically reduced repair bills and quicker service response. Large DSOs have the power to negotiate prices based on volume, so the larger they are the better the perks become.

Operations isn’t the only thing that gets a boost; your new affiliation will offer inclusion in nationwide marketing campaigns, with more patient visibility through multiple website channels. In a world where the pandemic literally shut down almost everything, that can be a huge boost when trying to convince your patient base (who isn’t leaving the house much) that the dentist’s office is one of the safest public places to be. Speaking of your patient base, if you’re just starting out in practice this is a big plus—you don’t have to wait to build your client base; the DSO will have been marketing for you since before day one.

Other perks will most likely include access to training and continuing education opportunities that you and your staff might not have known about or had access to otherwise. One thing about DSOs is that they prefer uniformity. This could result in the uniform decision to replace equipment that doesn’t hold up to their standard. You could suddenly be replacing dental chairs that are more than 10 years old or moving to CAD/CAM or CBCT if you haven’t already done so.

The benefits of new equipment are obvious, and hopefully your team will be excited about the new learning opportunities. Guidelines are the key to success for them, and you’ll have to keep your team in the progress loop. Because of this, you’ll also learn a lot about running a successful dental business, something that will be invaluable should you decide to open your own office someday. Large companies hire successful, experienced executives to lead their (and your) teams so that only best practices are brought into the business.

DSO disadvantages

The drawback of the disadvantages might depend only on your interest in avoiding them, but profit would be at the top. You stand to make only a portion of what you would make as an owner, but the tradeoff is everything I discussed above. Because of the standards and uniformity, you’ll have little room for negotiation at the practice level, and other doctors and team members will be paid accordingly. Profits may take priority in corporate ownership, so you would be leaning into decisions you might not normally make under alternative leadership.

You also stand to lose some decision-making power. More specifically, additional treatment could be the norm when in doubt (perhaps against your own intuition), and associates working on scale might be in competition for the high-dollar procedures. Production goals will also be in place, so if others are sending the business, you’ll be held to capitalizing on those opportunities. It’s also wise to find out everything about the contract you sign; some may include a restrictive covenant that would prohibit you from practicing within a certain distance of your current practice to prevent competition.

Advantages of private practice

On the flip side, private practice offers high-risk, high-rewards for those with dreams and perseverance. In reality, doesn’t everything worth doing carry risk? Obviously, overhead is the major discerning factor here, as all costs—from startup to maintenance—are solely your responsibility. Private practice also offers complete autonomy, with no location restrictions or restrictive covenants and complete control over capital investments, personnel, and other major decisions.

It helps if you know something about business, and there are many articles available about what they don’t teach in dental school. Small offices are more personally affected by each employee, so you’ll need to create influence by being a strong mentor and helping your team members grow. One way to do this is by exposing them to new technology and procedures and developing their skills. The investments you make in your team will pay off exponentially with less absence and turnover.

Also, human resources decisions are left up to you. If you do things right, you can minimize payroll with smart choices and multifunctional team members. You don’t have to seek approval to hire someone outside of your initial price range with exceptional skills. All major equipment investments, while seemingly pricey, will pay for themselves with a quick return on investment and will be attractive when it’s time to retire. I’ve often said that dental equipment upgrades are never a bad decision, and any dental transition broker will tell you that buyer dentists will consider offices with upgrades and good equipment a much better investment than something they must sink money into immediately. Furthermore, a private practice that is well kept is a very attractive opportunity should the owner want to take on a partner.

Private practice challenges

Some challenges a new private practice might face are the same as starting any other business. Startup costs in building or purchasing can be burdensome, and loans can put pressure on a new business. A consistent patient base can take years to develop, so a first impression is important. The current technology and a fresh, clean office are a must to lure new patients away from their current offices. Marketing is important, and while there are several programs that you can use with third parties, a good employee with a marketing background will help you manage that as well as a strong social media presence. Obviously, slow days in your practice mean less income to cover expenses, whereas working for someone else might not affect your daily rate. You’re also solely responsible for keeping up on all of your HIPPA requirements and security and failing to do so can mean consequences to you personally.

Ultimately, there are ups and downs at both ends of the ownership spectrum. My goal in this article is not to pick a winner, only to illuminate the fact that one’s ambition, desire for income potential, or need for autonomy would make one choice easier than the other. Depending on one’s abilities, means, and outlook on life, either one offers benefits and downsides, but switching between the two will take time and research.

Before you make the decision, it’s wise to consider all factors, do your due diligence, and understand the restrictions of each. There are many resources available to advise on the cost/benefit spectrum, but no one else can tell you what’s right for you. If you value work/life balance and don’t put a premium on income, you might opt for less responsibility and focusing on the dentistry. If you want the chance to build something in your own name, you might want to take more control and reach for the brass ring. Good luck!

Matthew Newman is the operations manager for the Baltimore/DC/Northern Virginia region of Patterson Dental. A 20-plus year veteran of operational management, he has spent most of his career in the fields of distribution center management and hospitality. He writes articles on operational management, office synergy, and a variety of other topics. He may be contacted by direct message on LinkedIn.

About the Author

Matthew Newman

Matthew Newman is the VP of sales operations, marketing and public relations for CAD-Ray North America. a distributor of practical CAD/CAM solutions, and home of the Medit intraoral scanner. A 20-plus year veteran of operational management, he has spent his career in the fields of dental B2B, operations management, and hospitality. Newman writes articles about operational management, office synergy, startups, and a variety of other topics. He can be reached through direct message on LinkedIn.

Updated December 15, 2024