Dental students choosing to go directly to DSOs after graduating dental school could increase consolidation in the dental industry.
Kristen Cusack, CEO of Phase 1 Equity, spoke with Becker's about the DSO's goals for 2024 and the trends she is following in dentistry.
Note: These responses were lightly edited for clarity and length.
Question: What are your DSO's top priorities in 2024?
Kristen Cusack: Our primary goal is to level the playing field for doctors in the world of private equity. We made it our mission to provide a better option for doctors in the face of consolidation, in which they can stay in control of their practices and retain the majority of the equity in their businesses, while benefiting from the resources generally reserved for traditional DSOs. We will continue to prioritize educating doctors on how to maximize the value of their practices while recruiting a network of other, best-in-class, like-minded orthodontists and pediatric dentists to collaborate with and learn from.
Q: What are two to three key strategies in place to expand and grow your footprint?
KC: Our key strategy is to find visionary, entrepreneurial and passionate doctors and build an infrastructure that enables them to thrive and grow. It begins and ends with great partners who want to live the "best of private practice with the best of private equity" vision with us.
Q: Many DSO execs are expecting slower growth amid a challenging economy. What are your thoughts on this? How do you think economic challenges will impact growth in the overall DSO industry?
KC: One of the things that makes the dental industry so attractive to investors is its resiliency. While we do experience short-term downturns, we tend to recover quickly. It is critical we ensure all our practices are well positioned to reach the maximum number of patients. At Phase 1, we are working with all our practices to continue improving their visibility and attract more new patients.
Q: What are the top trends you are following now?
KC: Being in the orthodontic space, we have been following the bankruptcy and closure of SmileDirectClub and the way it has impacted patients. We think that could be an inflection point for consumers. Many are, unfortunately, seeing the downside of not having a local provider.
We have also noticed that doctors are starting to think about their exit options sooner. At Phase 1, we talk to a lot of younger doctors who want to understand their options and put themselves in the best position to retire when they want. It is great because it gives us the opportunity to walk through their goals and provide data that will inform their choices.
Another notable trend is that more doctors coming out of school are choosing to go directly to work for DSOs. This is a trend that is accelerating quickly and will impact the sector more and more in the years ahead. If there are fewer doctors available to buy practices directly, it could accelerate consolidation by limiting the options available for doctors seeking to exit their practice.