LOS ANGELES, U.S.: When dental clinics in the U.S. were forced to close temporarily in early 2020, some heard what they thought was the final death knell of solo dental practice. As it turns out, however, it was simply the howling winds of change in an industry that was already steadily consolidating. Dental Tribune International (DTI) spoke with one of the largest dental service organizations (DSOs) in the country and with a broker from a leading clinic acquisitions firm and combed the latest industry figures in order to ascertain how the market for DSOs may have changed since the pandemic began.
The early months of the pandemic gave dentists a chance—and a reason—to think. Many of them may have thought about joining a DSO. Dr. John Luther, chief dental officer at Western Dental, told DTI that determining their next steps and rethinking their long-term goals have been a part of dentists adapting to the new normal.
Western Dental operates 335 locations across the Southwestern U.S.—around 25 more than it operated before the SARS-CoV-2 outbreak in the country. When asked whether the health crisis had resulted in a shift in strategy for the DSO, Dr. Luther said that the group’s approach of identifying and filling geographic lacunas in dental care remained unchanged. Speaking about the group’s new offices, he explained: “Many of these are in suburban or smaller communities—such as Lemon Grove, Palmdale and Victorville—where there is a critical shortage of general dentists and orthodontists. We have always looked to expand in communities where there is an obvious need for more dental providers.”
In Victorville—a suburban community that has continued to attract new residents—the DSO’s new clinic offers general dentistry and a full range of specialist care, comprehensive orthodontic services, oral surgery, dental implants, oral hygiene services and pediatric care: dentistry for the whole family. Dr. Luther said that the pandemic had triggered shifts in patient preferences—changes that favor the broader treatment offering that many DSO-affiliated clinics offer. “There will definitely be more of an emphasis on providing comprehensive services under one roof,” he said. “DSOs that have proven clinical and operational systems in place that ensure quality care—and reduce health risks—will be in demand, especially as more patients seek to stay closer to home as much as possible.”
Wild times and the growth of alternative DSO models
COVID has created market factors that we have never seen before,” Stanton Kensinger, lead dental transition broker at mergers and acquisitions advisory firm Professional Transition Strategies (PTS), told DTI. Speaking from his office in Colorado Springs in the U.S., Kensinger said that “there is a different vibe out there compared with what we were dealing with two years ago.”
Competition has increased dramatically, Kensinger said, because DSOs are not only growing but also multiplying. PTS is now working with up to 20 DSOs that were founded shortly before or during the pandemic. “It is about market conditions and changing models and there has been an influx of private equity,” Kensinger commented. “Never again