Despite decreasing economic confidence among dentists, DSO leaders remain optimistic about what the future holds for interest rates, consumer spending and M&A activity.
A recent American Dental Association survey found that dentists’ confidence in the U.S. economy and the dental sector was significantly lower than a year ago. For the overall U.S. economy, roughly 33% of dentists said they were “somewhat” or “very” confident, down from 56.3% in 2024. About 41% of dentists said they are confident in the dental sector during the fourth quarter of 2025, compared to 62.6% in 2024.
The main driving force behind dentists’ skepticism in the U.S. economy specifically is concern about tariffs and inflation, followed by general economic uncertainty and a lack of faith in current U.S. leadership.
On the other hand, DSO leaders are largely optimistic about the economy after dealing with rough patches throughout the last couple of years.
Macroeconomic challenges have forced several DSO leaders to scrutinize investments and weigh cuts to prevent financial setbacks. Many organizations pulled back on acquisitions and opted to focus on organic growth while waiting out the storm of higher interest rates and tariffs. Now, predictions for lower rates have executives eyeing additional opportunities, according to Scotte Hudsmith, the CEO of Specialized Dental Partners and president of the Association of Dental Support Organizations.
“Many of the groups had a really good last quarter of the year, and I’ve talked to several who are having a great January so far,” Mr. Hudsmith told Becker’s. “I think there’s a little more calmness [about] the economy. Interest rate cuts certainly have helped. Some of the fear around tariffs and what the impact was going to be has calmed down. So, I think we’re returning a bit to normalization where at a period of time, I think people maybe pulled back for a little bit and came out a bit stronger.”
Fireside Dental Co. CFO John Bell also told Becker’s that federal government leaders expressing their desire to lower interest rates further is leading to additional optimism. He expects a number of large transactions this year once the market opens up more for DSOs.
“Our current administration, when there is a changing of the head of the Federal Reserve in May, has been very vocal in saying, I’d like to put somebody in place who shares the belief that we need to significantly cut interest rates generally,” he said. “That is good. It stimulates the economy, at least in the short term, so I think it’ll be a great year for consumers and certainly for people that own assets. I think the flip side of that will be, if we stimulate this economy, we’re still in a little bit of an elevated inflation rate. While [prices are] not going up the way it was, we also haven’t had deflation, so prices still remain elevated to where they were.”
Mr. Bell also said some dentists could potentially see benefits, even when faced with elevated prices.
“If you’re maybe a general dentist with a lot of discretionary purchases or treatments, then I think that helps with patient demand and their ability to afford procedures, but I expect cost will continue to go up across the board in light of that. So short term, good — long term, to be determined,” he said.
Mr. Bell said the best thing dentists can do to keep their practice stable is create a positive office environment and team culture that will keep staff in place during economic downturns. Even during a positive economic climate, dentists should do what they can to improve their financial standing.
“I think dentists need to be careful that as their net worth is increasing and it starts to feel good and like you’re getting some relief, that you keep that focus on, ‘Alright, well, I’m going to stay disciplined in my practice, and in addition to improving the culture, I’m going to adopt and drive an attitude of continuous improvement’,” he said. “I’m going to figure out, how can I get my supply costs down? If I have some debt and things are good, maybe I want to be really intentional about trying to pay down or eliminate that practice debt during a good time and not get caught up in the euphoria of a good market and get sort of fat and happy, as we like to say, and then when things do slow down, you wish you made some investments of time and resources to prepare for that.”
