Private equity promised dentists a payday. For some, what showed up instead was a pay cut with strings attached.
Greg White, DMD, the president and CEO of PepperPointe Partnerships in Lexington, Ky., recently joined Becker’s Future of Dentistry Roundtable Sept. 14-15 to discuss the benefits private equity has brought to dentistry, along with some new challenges.
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?
Dr. Greg White: I believe if private equity hadn’t gotten involved, we would not have the companies that needed to come about in order to create platform solutions that I think will ultimately lead to a more consistent diagnosis … As far as expansion, certainly some DSOs have expanded Medicaid, [but] some will not take a practice if they provide Medicaid. They don’t like running the risk of the legislative pin. So, that’s hit and miss.
The biggest issue I think we’ve run into with so many of them missing the recap is — what private equity did for so many is that they bought an entrepreneur out and they gave him a job, and the alignment of the incentives did not transfer over well. If I was making $1 million, and now all of a sudden I’m making $300,000 and then they’re going to pay me a multiple on that $700,000 difference, it doesn’t take very long to realize that I could have gone down to my local cash advance store and done the same deal with them and paid it back in five years from the cut I was imposing on myself. And then, at the end of it, I would have gotten my money and I would have gotten my high income back and I would still own my business.
Dentists are not the brightest people when it comes to finances, and they did not understand that that was the gig. Now, they’re trying to get these guys pumped up again to keep that incentive and that discretionary effort business going. It’s hard to do it with the older folks, so they’re having to figure out, how can we get these young kids out and replace the old guys and move them on out before the next equity event comes, when and if it ever does. That’s the biggest problem I think they’ve had with it. In Kentucky, we’re known for our horse races, and if you don’t get that horse in the right frame of mind, he just won’t run.
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.
