Here are six recent updates that have led to optimism and skepticism among DSO leaders:
Good news
Dentist affiliation
Though only 16.1% of dentists in the U.S. were affiliated with a DSO in 2024, the share represents an 8.9-percentage point increase from 7.2% in 2015, according to data from the American Dental Association’s Health Policy Institute.
Nevada and Colorado are tied for the highest percentage of dentists who are DSO-affiliated, both with 27% of dentists in the state being so affiliated, as of August.
Investments
Six DSOs have gained new investments this year to help support their growth, several of which specialize in oral and maxillofacial surgery.
Robert Clark, DMD, a member of OMS360’s board of directors, told Becker’s that many investors have taken notice of advantages the OMS specialty offers after focusing on general dentistry and other specialties for several years.
Hygiene enrollment
Enrollment in dental hygiene programs has continued increasing after experiencing a drop during the early years of the pandemic, according to updated data from the ADA.
DSOs have continued to feel the impact of persistent hygiene shortages in the U.S., with the role becoming one of the most challenging to recruit for. However, data on program enrollment and graduation has led to some optimism. There were 17,717 hygiene program enrollees for the 2024-25 academic year, up from 15,799 during the 2021-22 academic year. Additionally, the number of graduates has increased by 12.8% since 2022.
Bad news
Economic challenges
Many DSO leaders agree that economic challenges and tighter consumer spending has slowed M&A activity. Although leaders were optimistic going into the year that deals would pick back up, activity was slower than expected.
“What we’re seeing so far this year is a continuation of the market being a little softer,” Richard Hall, CEO of U.S. Oral Surgery Management, told Becker’s earlier this year. “Last year, it was pretty well known that general dentistry was only slightly up and orthodontia was flat or down. We’re a 90% referral-based specialty, so we rely on patients going to general dentists and other specialists and ultimately being referred to us for the oral surgery care they need. So, we’re continuing to see some softness in the market in that regard.”
Medicaid cuts
Dental leaders have warned that looming cuts to state Medicaid programs could hurt DSOs.
Congress passed a new federal budget earlier this year, which aims to reduce Medicaid spending by $1 trillion over the next 10 years. Healthcare leaders have warned that these cuts could put dental funding on the chopping block first because these benefits are optional. Two states, California and Colorado, are already seeing this funding being challenged.
“While much of the impact of HR 1 has yet to be felt, states fearing a tariff-induced recession and inflation, have begun cutting Medicaid spending,” Barry Lyon, DDS, told Becker’s earlier this year. “DSOs that rely heavily on providing care to Medicaid recipients need to prepare now for the probable reduction in benefits and enrollees.”
Private practice interest
The percentage of dental students interested in private practice after graduation has increased by three percentage points in the last 10 years, according to data from the American Dental Education Association.
The ADEA received 3,048 responses to questions about dental students’ immediate plans after graduation for its “Trends in Dental Education” report for the 2023-24 academic year. Fifty percent of students indicated being interested in private practice after graduation in 2013, compared to 53% in 2023.
