Making Room for Traditional Practices Among DSOs

The dental business landscape is changing rapidly, perhaps more quickly than many may have thought possible. If you want your practice to be successful, you must understand the current state of the dental market. To better understand what’s going on, we need to examine the facts about what we are experiencing, where we are going, and what we can do about it when we get there.

Examining the current industry landscape, we see that as of 2015, there were about 195,000 practicing dentists in the United States. While there seem to be sufficient numbers of dentists serving patients, there are actually not enough to fully serve the current need. There is an estimated shortage of 7,300 dentists nationally.

Some reports say there are more dentists retiring each year than there are dental school graduates to replace them. Others say there are enough dentists to provide care, but because most dentists take on the burden of running their own business while paying off growing student loan debt, working in an affluent area that promises profit is more appealing than working in a low-income and Medicaid-reliant area Dental Chair. This can lead to “dental deserts.” As of 2013, there were 4,595 dental desert designations with a total population of 45,086,843 people, including an estimated total underserved population of 30,605,273.

Contrarily, even with the shortage, many providers say they aren’t busy enough and are growing frustrated because earnings haven’t kept up with inflation. Additionally, there is a current and measured move away from solo practice caregiving into the group setting for many providers. Consolidation is increasingly driven by dental service organization (DSO) investment dental handpiece.

In fact, the number of large dental practices has grown more than 25% in recent years, but still represents less than 10% of the overall marketplace. However, that is changing dramatically. Also known as “corporate dentistry,” DSOs are experiencing an investment boom.

One recent study shows a proliferation of dental service organizations over the past five to 10 years, with the largest chains increasing their number of practices at an annualized rate of 13% to 14% compared with a 2% to 4% pace of broader dental spending. According to the study, DSOs own or control about 16% of all dental practices in the United States and will grow by about 15% annually over the next five years, with US penetration reaching 30% by 2021.

Why DSOs?

DSOs bring tremendous value to dentists and their patients. As a business model, they enable dentists to expand access to care, improve efficiency of office administration, reduce the procurement cost of dental care supplies, deploy technologies to improve patient care and safety, and even enable same-day dentistry.

For patients, DSOs usually mean lower cost of care. DSOs also typically participate in preferred provider organization (PPO) insurance networks, which are on the rise throughout dentistry. Because of their volume-based business operations, DSOs can take less in reimbursement from insurers because of the increased volume of patients they can provide access to care by having in-network agreements with insurers. In many cases, solo practices cannot compete on volume or afford the required discount prices certain insurers require to join their networks.

DSO growth also is fueled by their corporate planning and marketing structure. For example, these practices generally are located in convenient, highly trafficked areas to promote easy patient access and often engage heavily in community marketing to increase the number of patients seeking care. DSOs also market more aggressively to the markets they’re in, investing in media where smaller practices can’t because of cost constraints, such as television, radio, and outdoor advertising.A Visit To The General Dentist? for more information.

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