Jeffrey Tomcsik, CEO of Grand Dental Group, connected with Becker's to discuss the challenges future dental leaders are up against.
Note: This response has been lightly edited for length and clarity.
Jeffrey Tomcsik: As the industry consolidates, which is going to continue to happen at a more rapid pace because the cost to run a private practice is becoming increasingly more difficult and unaffordable, the future leaders in the space will have a number of challenges. The first is the inevitable dichotomy between the desired outcome of the likely investor and the expectation of the providers and local management. Providers want to give compassionate care to their patients in a healthy, safe environment with an engaged staff that all share a common goal: to provide the best care possible while earning the trust and loyalty of the patient and their circle of influence.
Meanwhile, in the current environment, investors are pressuring non-clinical management (leaders) to find ways to cut costs more than ever in an effort to combat inflation-based profit margin slippage. They also pressure the practice management to do more in less time in many instances, which can cause patient and staff dissatisfaction. Additionally, they sometimes find ways to take benefits away from the providers and/or teams that further drive morale down.
Providers get discouraged with leadership and they become disenfranchised and either stop trying as hard or move on to other opportunities. This can cause a ripple effect throughout the company, ultimately costing the corporate entity more money to restaff and train, while losing money due to a poor patient retention and treatment acceptance rate decreases. This phenomenon has been the perfect storm for many mid-size DSOs who suddenly find themselves way out over their skis. Suddenly they are not paying their vendors, production and collections shrivel, and their investors who want to see 10 to 20 percent annual returns really apply pressure, often with little knowledge about the patient-forward business dynamics.
Buying more practices (an expensive way to drive more revenue) becomes the only way the investor-led DSO knows how to increase top line revenue. This, with a shrinking, overworked, undereducated staff, ultimately results in poorer outcomes across the board.
This is what the leaders of tomorrow are walking into. Whether they are clinical or business leaders, the challenges have converged into one. The leader of tomorrow needs to be able to set expectations with investors and employees simultaneously as everyone is screaming for more. They need to think outside the box of private equity dentistry and look for other ways to fund dentistry that don't lead to compromised care or decisions coming from sources that don't understand the industry. This needs to happen soon or it may be too late. I often look at the optometry industry as a marker for where dentistry is headed. This industry is all but buttoned up with a very few corporate groups controlling the vast majority of the practices in America. The eye business has transformed into a sales-shark industry where anyone that goes into a shop doesn't come out without being upsold above and beyond their insurance by hundreds of dollars. Why does this happen? Because we are working for the investor rather than the patient.
The leaders of tomorrow will focus on the patients' needs first, regardless of their position of leadership. They will understand the speed at which dentistry is won. And they will figure out how to set expectations for dentists and staff and find creative ways to maintain a high level of operational excellence through education, accountability and reward.