Financial constraints, wanting a work-life balance and mentorship are all factors that could lead younger dentists to affiliate with DSOs, according to one DSO exec.
New data from the American Dental Association shows dentists who have been out of dental school for 10 years or fewer are more likely to be affiliated with a DSO, with some states having more than 30 percent of younger dentists affiliated with a DSO. The data also showed that orthodontists have the highest rate of DSO affiliation compared to dentists in other dental specialties.
Barry Lyon, DDS, is a chief dental officer for the division of orthodontics and pediatric dentistry at Sarasota, Fla.-based DSO Dental Care Alliance. He recently spoke with Becker's about the latest DSO affiliation trends.
Editor's note: This Q&A is part of a weekly series featuring Dr. Lyon focused on topics in the dental industry and DSO field. Responses were lightly edited for clarity and length.
Question: Why do you think younger dentists are more likely to join a DSO?
Dr. Barry Lyon: I believe there are many reasons why younger dentists are joining DSOs. Dental graduates can have anywhere from $200,000 to $500,000 in debt from dental school and specialty programs, and they are motivated to pay down that debt. Since opening their own practice is financially out of the question, working for a DSO is the next logical choice. Younger dentists gravitate toward a positive work-life balance and they know DSOs can provide it along with an ability to begin paying down those school loans. Younger dentists need and want support. Dental school training only goes so far. They can receive that support and mentorship by working in an office with general dentists and specialists.
Q: Nevada, Florida, Texas, Arizona and New Mexico had some of the highest percentages of dentists affiliated with a DSO who have been out of dental school for 10 years or less. Do you have thoughts on why these states have the highest percentages?
BL: They're all warm weather states with plenty of natural recreation that support a positive work-life balance. Texas, Arizona and New Mexico will accept any of five licensing exams, while Nevada accepts three. Accepting multiple exams gives grads and new dentists multiple options for licensure.
Q: General dentistry, orthodontics, endodontics and oral surgery also had the highest percentages of dentists affiliated with DSOs. What about these fields are attractive to DSO and why might dentists from these fields be more likely to join a DSO?
BL: It's a given that DSOs are always looking to fill openings with general dentists. But oral surgeons and endodontists are in high demand as DSOs look to expand their services and keep patients within their network. I believe life-work balance is an attractive aspect for these specialists along with having a very strong income potential.
Q: What other affiliation trends have you noticed in the last two years?
BL: Dentists, both general dentists and specialists, with multiple locations are in high demand by DSOs, unlike in the past when DSOs grew by affiliating with single offices. The influx of private equity money is behind this type of growth. It is not just the number of facilities. More facilities generally mean more dentists and more infrastructure for growth. If more locations are accompanied by additional capacity for growth and the revenue spread across more dentists, it means less risk and more growth opportunities. The size of an office is more important than the number of locations. Additionally, the costs to complete a transaction are fairly similar small and large. So, on a cost to complete a transaction per dollar of acquired EBITDA, it is less expensive for a larger transaction.