How the largest OSO plans to grow in 2023

After adding several practices and inking deals to support expansion last year, Dallas-based Smile Doctors has positioned itself to continue its growth in 2023.

The orthodontic support organization landed an investment from private equity firm Thomas H. Lee Partners in January 2022, during which it had 295 practices in its network. It continued the year adding dozens of partners and entering Utah and Arkansas. The group now sits at more than 360 practices in 27 states.

CEO J. Hedrick recently spoke with Becker's about the company's growth and plans for 2023.

Editor's note: Responses were lightly edited for clarity and length.

Question: How would you describe Smile Doctors' growth under your leadership?

J. Hedrick: We've had great growth over the last three years and it's been an interesting time with COVID-19 and other things, but the platform has really expanded. We've moved into 10 new states. We've more than doubled the number of clinics in the last three years and so we've really been able to partner with some of the best practices in the U.S. We're excited about the growth. We see it continuing. The industry's still in its early phase of consolidation and we think Smile Doctors is uniquely positioned to take advantage of that and provide a great option for doctors looking to partner with someone. 

We're already the largest in the industry by a significant amount for a specialty. We're only orthodontic, so we are set up by orthodontists for orthodontists, but we have the scale to provide best-in-class support services and we have what we call freedom within a framework. So our goal is to support the doctors and their practices where they are and help them treat patients the way they want to treat patients with the least amount of friction. We're not trying to force people into a box but at the same time, we do have some of the best practices in the U.S., some of the real key thought leaders in the orthodontic industry that help everyone kind of perform at the highest level. 

The other thing that differentiates Smile Doctors is we are the largest Invisalign provider in the United States. We have great access to Invisalign, but we also have an entire group of doctors who are key opinion leaders inside the organization just on Invisalign. So if you're a doctor outside and you're thinking about who to partner with, we can help you influence not just your practice or a couple of practices, but you can help influence 360 practices. We have the same thing for people who get excited about digital treatment, whether that's dental monitoring, remote care or virtual appointments. We have a group of doctors who are shaping the future on that. We have a group of doctors around fixed appliances and bracket and wire. We have doctors working on business development. We just created an outlet where doctors can not only continue to provide excellent patient care, but they can also go deep and be very influential in an extremely large organization around their passion.

Q: What challenges has the company had to overcome during its growth?

JH: Our biggest challenge was COVID-19. This recessionary environment and some of the challenges consumers are having right now I would say is a concern, but then just making sure that we're ready for the growth and that we can support everyone. We have a saying here that's "One size fits one." It's not one size fits all. So, therefore, you've got to be able to deliver on that promise of meeting that practice and that team exactly where they are. You have to have a very flexible, very strong support organization to do that. But COVID was challenging. I was fairly new in the business when it happened. Our doctors pulled together extremely strongly. Our sponsor was very supportive. We might be the only DSO that didn't furlough any doctors during COVID. There was a time when our sponsor was able to lean on their financial strength and show a great degree of fortitude and optimism around the future and it positioned us well coming out of it, but it was a challenging time when we were going through it.

Q: What is in the pipeline for Smile Doctors in 2023?

JH: It is all about maintaining a [patient-centric] focus. We talk a lot about meeting our patients where they are. That's leaning into the type of treatment modality that's best for them and also fits their lifestyle. Whether that's remote monitoring with dental monitoring or aligners or fixed appliances, what is the best thing to make sure we are meeting patients where they are and providing the best possible clinical care we can, which requires us to provide the best possible support to our doctors and teams. We do plan on continuing to grow. We plan on adding new states in 2023, though that's never been our focus as much as it has been to partner with the best possible doctors we come in contact with. Oftentimes, we believe we grow in concentric circles around the doctors we partner with because a doctor who comes in and loves what they do, they have friends and peers they know well and they will then introduce us to their friends, peers and people they respect in the industry. Three quarters of the practices we partner with come in as a lead from another doctor.

Q: What does Smile Doctors look for in a potential partner?

JH: We certainly try to look at culture fit and are their values, their mission aligned with our values and mission? Do they put the patient first? Are they focused on great patient experience and great patient outcomes? Do they want to continue to learn and grow [and] be influential, but have a growth mindset where they want to continue to learn and adapt and figure out new and better ways to do things? That's what we're looking for. We have a saying here, "Love people first, straighten teeth second." We want to make sure people are aligned with that. I've been in organizations with great culture and with a less great culture. Smile Doctors has an exceptional culture and we want to protect that at all costs, even if it means sometimes not partnering with as many practices to ensure alignment around what we're trying to do in our communities and with the patients and the team.

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