DSO Talk from Voices of Dentistry, with Alan Mead & Brian Colao

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Bulletproof Dental Practice Podcast Episode 54

Hosts: Dr. Peter Boulden & Dr. Craig Spodak

Guests: Alan Mead, Dental Hacks Podcast / Brian Colao, Dykema Law Firm

Key Takeaways:

  • Should you have a DSO?
  • If you don’t have a DSO and you’re a doctor owned practice, who can you sell to? You can only sell to other licensed dentists in your state, and that’s a very narrow, deflated market that is getting smaller every day. If you have a DSO your market is the world.
  • A DSO deal with established DSO might pay 5-7x EBITDA and is a low-risk deal.
  • A private equity deal will require ongoing involvement, and is higher risk, so may pay very high single digits to double digits.
  • Private equity deals are performance based.
  • There’s an evolution and consolidation in the dental marketplace. The evolution is from doctor owned single practices to DSO’s. The market is being flooded with private equity funds as it allows non-dentists to make money in the marketplace.
  • The market saturation of DSO’s is about 10%. There is a lot of runway, and the industry is very fragmented. This means that saturation is a ton of value left to harness in the dental market.
  • Seek out education about how the market is changing so you can react and best position your organization.
  • Ten years from now there will be very limited opportunity for solo practitioners. If you have eyes set on being a solo practitioner, you need to understand the transition and have a plan. Only the rock star practitioners will thrive on their own.
  • Patients are becoming more and more demanding. Consumers don’t really care who owns their dental office.
  • DSO’s are in the third generation of progression.
  • The highest valuation in the DSO industry is Deca Dental. 18.2x!
  • DSO’s are trying to implement one-stop shopping. There’s a lot of upside as a practitioner in working within a one-stop shop style practice.
  • It’s not just corporate DSO’s looking to get into the dental marketplace, existing industry suppliers are finding ways to reach consumers directly.

References:

The Cleveland Clinic Way by Tony Cosgrove

Tweetables:

“Peer pressure makes dentists better.” Dr. Craig Spodak

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