Michael Schwartz, chair and CEO of Specialty Dental Brands, spoke with "Becker's Dental + DSO Review Podcast '' to discuss how the pandemic led to an increase in DSO consolidation.
Note: This is an edited excerpt. Listen to the full podcast episode here.
Question: What are the big trends that you're watching?
Michael Schwartz: In my years in the business, we talked to a lot of dentists in their prime who would say they understand they're gonna make less, they're gonna have less take-home income every year when they partner with the DSO, because they're now getting paid as a doctor versus the doctor share and the owner share. So, there's a lot of doctors in their prime that used to say, "I'll wait five years." "I'll make money for five more years, and then I'll sell to you," or, "Let's talk about this in four years." I think COVID really hit the dental industry hard where a lot of dentists weren't prepared. They didn't have a lot of cash on hand. The average dentist office had 30 to 45 days of cash on hand. When that pandemic started driving and places were [shut down] for two, three, four months, the consolidation picked up. [Specialty Dental Brands] is one of those stories, especially in the specialty area of dentistry. [Specialty Dental Brands saw] tremendous growth from 2020 and 2021 during the pandemic; we actually saw our patient volumes go up. Then our partnerships went up tremendously, [it finally hit doctors]. There's too much administrative stuff. How do you do a [Paycheck Protection Program] loan? How do you do an idle loan? How do I take care of these benefits? How do I comply with Colorado's emergency COVID sick pay leave act? It just overwhelmed a lot of dentists. I think that event has propelled a lot of dentists to relook at their plans and say, maybe it is good to partner with a group that has the expertise in legal and marketing and finance and all the things that they weren't trained to do in school.