DSOs are making various strategic investments this year to boost patient care and expand their networks.
Here are three areas DSOs are focusing their attention on:
Patient care
DSOs have invested in various areas aimed at improving patient access and enhancing their experience.
Chicago-based The Aspen Group has made several of these moves in the form of leadership appointments and new technology. The company recently launched new apps that give Aspen Dental and ClearChoice patients greater visibility and control over their care, including booking appointments, completing pre-visit steps and understanding treatment plans.
“In partnership with the dentists we support, we’ve spent decades breaking down barriers because we believe healthcare should work better for patients,” Bob Fontana, founder, chairman and CEO of The Aspen Group, said in the release. “These apps are another step in that journey. If we can give patients more visibility, more convenience and more control over their care, why wouldn’t we?”
In September, Effingham, Ill.-based Heartland Dental launched Conuity Care Coordination to better connect general dentists, specialty providers and patients. The platform combines technology and care coordination services to manage specialty dental care across referral, scheduling, treatment and follow-up.
“At Heartland Dental, we are committed to investing in tools and capabilities that help supported doctors deliver an exceptional patient experience,” Rick Workman, DMD, founder and executive chairman of Heartland Dental, said in the release. “Conuity Care Coordination reflects that commitment by helping connect providers, simplify collaboration and support more seamless care journeys for patients. It is another example of how we continue to evolve our doctor-led culture and support model to better serve supported doctors and the communities they care for.”
De novos
Although practice acquisitions remain a major growth engine for DSOs, several companies have begun to invest more in de novos for the unique benefits these offices bring.
Smile Partners opened its first de novo office earlier this year as part of a new growth strategy that breaks away from its traditional approach involving practice acquisitions and partnerships. Park Dental Partners also said last year that it plans to use funds raised through its initial public offering to support various revenue-building initiatives, including opening de novo offices in existing markets.
Launching new practices is often seen as a way for DSOs to maintain consistency and growth across their brands. Additionally, de novos can be used as a cost-saving strategy for DSOs that want to continue expanding their network in a tough macroeconomic environment. They can also help DSOs build their presence in a new market.
“De novo growth, when successful, is a tremendous use of capital,” Phase 1 Equity CEO Mike Rice told Becker’s. “In today’s environment, everybody’s holding onto their checkbooks a little bit tighter compared to say, 2021. You use a lot less capital up front in opening up a location versus buying an existing, highly profitable practice.”
Smaller DSOs
Larger DSOs are increasingly acquiring or affiliating with smaller groups, a trend that has continued this year with several notable deals.
Miami-based Guardian Dentistry Partners agreed to buy Select Dental Management earlier this year, while Roseville, Minn.-based Park Dental Partners will acquire Village Family Dental DSO. Heartland Dental also affiliated with Alpharetta, Ga.-based Foundation Dental Partners, a 33-practice DSO.
Many of these groups are long-held private equity assets whose investors want to monetize, and higher interest rates have made it harder to keep growing, according to Mark Greenstein, chief growth officer at Heartland Dental.
“Many of these startups from the last decade or eight years have finally recognized they weren’t going to sell,” Mr. Greenstein said. “They recognized they had to create value to get the EBITDA to try to get enough of a return to make everybody happy, whether it’s the debtors or the equity holders, and they’re willing to monetize what they have because interest rates now are very high, so it’s very difficult for them to continue to grow the assets. They have to grow by creating value to get the pricing that would work for them, and that’s what we’re out there looking for. We’re looking for that quality at a fair price.”
