Private equity has brought real gains to dentistry — greater access to care, more investment in technology and a deeper reach into Medicaid populations in some states. But one executive says a bigger shift may still be ahead, as consolidation puts new pressure on dentistry’s relationship with payers.
Two dental executives joined Becker’s Future of Dentistry Roundtable Sept. 14-15 to discuss how private equity has impacted dentistry.
Note: Responses were lightly edited for clarity and length.
Question: Has private equity fundamentally improved the business of dentistry, or has it created new challenges that the industry is still figuring out?
Richard Hall. Chair of the Board for U.S. Oral Surgery Management (Irving, Texas): If you look at states where the largest percentage of practices in that state are private equity backed, you’ll see greater market expansion through de novo development. You’ll see greater investment in technology, and you’ll see more investment in training, both for the doctors as well as for the staff. So, access to care and quality of care in private equity-backed healthcare has been demonstrated. Sometimes, depending upon what you read in the press, it’s categorized a different way, but when you skin it back and really look at the data — if you look at the number of Medicaid patients that are served, typically it’s more in private equity-backed dentistry, depending upon the state. Most of the Medicaid population in the state of Colorado is served by private equity-backed DSOs. It varies from market to market.
When private equity gets involved in a business, they really don’t do anything differently than what a good business entrepreneur would do. They want to watch the costs effectively. They want to make sure they’re getting new patient volume and managing the rate of fees as much as they can. They want to make sure they provide a good culture for the staff, so that they have retention and longevity and tenure. They just do it maybe more in an accelerated way than that entrepreneur would because they’re on a shorter time frame for value creation, but they’re running the same playbook for the most part as any other successful business person.
Andy Schroeder. Director of Business Development, Northern U.S. at Imagen Dental Partners (Scottsdale, Ariz.): The whole reason I’m in this industry is because I married the daughter of a dentist. I was the one who wasn’t smart enough to pass organic chemistry, so I had to come in on the business side. But you do start to feel for these doctors and wonder, is it actually leaving things better than the way we found it? I look at a couple of things. When we get our doctors together and you get maybe more skeptical doctors on a certain procedure or a product, and you start getting them to share best ideas and best practices, that’s exciting. I don’t think that would have happened if there wasn’t a group space.
The other thing I’m maybe most excited about pushing the envelope on, whether it’s private equity backed or just the group space in general, is what happens in the payer environment. Pay attention to what’s happening in Wisconsin right now with Delta acquiring the group there and having a foot in both worlds. You see groups looking for ways that they can get out of that payer environment and maybe influence what happens next in dentistry. So, when I look at what the next five years ultimately holds, whether it’s for independent dentists or for groups, I think something has to give in the payer environment, and I feel like consolidation is maybe driving some of that to a head. I think that’s going to be one of the biggest net gains, is just blowing up the old system and figuring out what comes next. Hopefully, something better.
At the Becker's 5th Annual Future of Dentistry Roundtable, taking place September 14-15 in Chicago, dental leaders and executives will gain insights into emerging technologies, practice growth strategies and the evolving landscape of dental care delivery, with a focus on innovation, patient experience and operational excellence. Apply for complimentary registration now.
