Here are two statistics/numbers that stand out about the current state of the dental industry in the U.S.
First, there are now almost 1,000 dental service organizations (DSOs, groups ranging in size from five to more than 900 locations). That number accounts for approximately 20% of the practices in the U.S.
Second, that percentage is projected to grow into the high 30s in just a few years.
DSOs now come in all shapes, sizes, and models and are found just about everywhere in the U.S. Simply put, DSOs aren't going away and are a part of our industry's present and future.
So what do current practicing dentists really think about this? For the past 10 years, we at Dental Sales Academy have been conducting surveys to independent general dentist practice owners around the country to examine their how their feelings about DSOs have evolved.
We started by asking this simple, concise question:
"How would you describe your initial sentiment toward DSOs/groups?"
Here is the summary of responses since 2010:
- In 2010: 4% positive, 9% neutral, 87% negative
- In 2014: 6% positive, 10% neutral, 84% negative
- In 2018: 11% positive, 23% neutral, 66% negative
- In 2019: 14% positive, 27% neutral, 59% negative
As you can see, the last two years have shown a somewhat significant turn to the more neutral/less negative feelings compared with five years ago.
Next we asked:
"If you were to put your practice 'on the market' tomorrow, who would you want/prefer to sell to?"
Here are the current answers:
- Another individual dentist only: 60%
- Individual dentist or a group/DSO: 29%
- Group/DSO only: 11%
This shows that approximately 40% would be open or somewhat open to selling to a DSO, which somewhat correlates with the neutral/positive results in the previous question.
The last question provided a somewhat interesting result:
"Can you name five DSOs?"
Only 12% could name five DSOs!
Almost all respondents, regardless of where they were located, could identify two or three. These were usually, unsurprisingly, the largest, most well-known companies, such as Aspen and Heartland (which, by the way, have completely different business models).
Additional surveys have been conducted (the results of which will be revealed in upcoming articles) asking startup, emerging, and midmarket-sized DSOs to comment on what they "know" about dentists and the dynamics of dental practices.
Despite all the information out there and the presence of DSOs in our industry for some time, one thing is very clear: There is still much to learn from both sides about one another.
Anthony Stefanou, DMD, CBI, is a dentist of 32 years (nonpracticing) and a certified business intermediary. He is the managing partner and founder of Connect the Dents, a dental mergers and acquisitions and business development advisory company working with manufacturers, dealers, and DSOs/practices, and the Dental Sales Academy. He can be reached at [email protected].
