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How Dental Support Organizations (DSOs) Evaluate a Potential Affiliation

By Heartland Dental

More and more dentists are affiliating with Dental Support Organizations (DSOs), but there are various different business models for doing so. According to the 2017 report “Trends in the Development of the Dental Service Organization Model” put out by the Oral Health Workforce Research Center, dentists affiliate with DSOs in different ways, including as associates (66.7%), owners (66.7%), and employees (53.7%).

And while many dentists own their practice and contract with a DSO, there is no “industry standard” for the kinds of practices that affiliate, or what standards they must meet.

That said, there are some common features most DSOs will look for. If you are seeking to grow your practice or just get back some work-life balance, affiliation with a DSO might be the right move for you...and if so, you should seriously consider gathering the following information, and making these adjustments.

Information About Your Practice that DSOs Want to Know

Before a DSO partners in any way with a practice, they will want to know about that practice. For the DSO, affiliation is a business decision, and they will want to know they are supporting a practice that can grow successfully.

To ascertain that viability, they will want to know about a practice’s….

  • Geographic location and competition. What area is the practice located in, and does the DSO serve that area? (Or is it looking to expand into that area?) Is the area considered urban, suburban, or rural? How many other practices are in the area? Is there a population that needs to be served?
  • Locale. Is the practice in a busy section of downtown, or off the beaten path? Is it in a high-traffic retail center, a high-rise, or a stand-alone building? These details can matter for estimated walk-in traffic, customer convenience, and advertising costs.
  • Revenue. How much does the practice make in revenue each year? (And how does this break down on a per-patient basis?). Most DSOs want to see a track record of established revenues.
  • Growth projections. What has growth been like in the past, and what could it be in the future? Most DSOs want to support offices that they know they can “take to the next level.”
  • Number of operatories. This has an impact on the number of patients you can see at once. Some DSOs might have a minimum requirement on the number of operatories, to ensure the practice can sustain increased growth.
  • Do you accept HMO/Medicaid? Many practices do, but not all. A DSO will want to know what you currently accept.

Making Your Practice More Appealing to a DSO

Most of the information out there makes the argument for or against working with a DSO. Very few articles, however, seem to be aware of the DSO’s side of the equation. How does the DSO hope to make money? Why do they want to affiliate with more practices? By understanding the answers to these questions, a practice owner can understand what kind of practice a DSO is willing to pursue aggressively.

DSOs want their practices to grow; they are seen as investments by the DSO. Often, dentists who are seriously considering the support of a DSO are ones that feel their practice can grow more...but have gotten “stuck,” unable to take the practice to the next level. This means a practice will have to have existed for some time already, and have an established patient base.

The dentist must have an open mind for doing things differently, if necessary to grow the business. Those dentists who work well with a DSO have come to realize they cannot do everything on their own—and are happy to bring a little work-life balance back.

Willingness to stay on after the transition is also a factor. Most DSOs want a doctor that is willing to stay on for two years or more to ensure a smooth transition. A few will allow a doctor to “walk away,” but most are interested in growing the practice with the founding doctor.

There are other factors at play as well, but these differ from company to company. For example, a given DSO might be looking for certain specialties, or only serve certain geographic regions. Finding a good “fit” with a specific DSO will be important.

Ready to Start the Journey to Affiliation?

Heartland Dental helps support hundreds of dental practices nationwide, and we’re always looking for new opportunities. We would be happy to discuss possibilities with you and do a free practice assessment. Find out more at https://heartland.com/affiliations.

Tags: Dental Support Organization, Dental Practice Management, Heartland Dental