The increased cost of labor combined with low reimbursements have created a difficult environment for DSOs this year.
Dan Hosler, CEO of Southlake, Texas-based Allied OMS, recently spoke with Becker's about his DSO's accomplishments in the last few years and how they are committed to growth despite a challenging economy.
Editor's note: Responses were lightly edited for clarity and length.
Question: What are your DSO's top priorities in 2024?
Dan Hosler: At Allied OMS, we will continue to focus on partnering with the nation's best oral and maxillofacial surgeons in our core geographies and intend to open three to five new locations as extensions of our existing 42 locations.
Q: What are two or three key strategies in place to expand and grow your footprint?
DH: We’ve implemented a feedback loop that ensures a continuous flow of information from our surgeons; this feedback guides our investment in additional services that will accelerate growth at our practices. We are also expanding our use of technology to automate processes like insurance benefits verification, streamline repeat orders of medical supplies and begin adding voice over internet protocol data processing to our data warehouse.
Q: What are the biggest challenges facing DSOs today?
DH: The increased cost of labor against a backdrop of reduced reimbursement for dental services (most payers are not even keeping up with inflation!) has created massive headwinds for most DSOs. And if you are a typical PE-backed DSO that has used a lot of debt over the last three to five years, that is a particularly challenging combination. Allied OMS has one of the lowest quanta of debt of any of the DSOs, meaning we can continue to aggressively invest in and partner with our surgeon practices, even in an environment where costs are rising and cash is scarce.
Q: How do you think economic challenges will impact growth among DSOs?
DH: We relish the ability to execute our growth goals. Our focus is on the things we can control, that we know spur growth across the platform regardless of market conditions:
- Hiring talented new surgeons into high-performing locations with great doctor partners
- Partnering with new practices that like our uniquely doctor-centric approach, in particular, our commitment to maintaining a doctor-majority board of directors; we specifically seek out doctors who want to invest in themselves and a partnership of like-minded peers
- We are rigorous about investing in more services for our surgeons that drive up the value of their practices
We do not focus on the factors we cannot control — like if and how soon the [Federal Reserve] will cut interest rates, and the additional uncertainty election years can create in the financial markets and regulatory landscape. Ultimately, given the acute episodic nature of care delivery in OMS, our industry is resilient against tougher economic conditions. So, our 2024 plan is to double down on our mission-based strategies that we know deliver sustainable growth.
Q: What are the top trends you are following now?
DH: We are exploring smart ways to use [artificial intelligence] in the day-to-day workflows of our practices, and how we can rapidly share innovation and best practices among our surgeons utilizing technology and AI-guided process automation. Our goal is to ensure a consistent and brisk pace of innovation at the platform level, so our doctors can progressively enhance responsiveness, sophistication and quality of care when our patients need us most.
Q: What is your proudest accomplishment of 2023?
DH: We tripled in size in 2022, and so we invested heavily in our team in 2023. Our goal was to add even more expertise and rigor around each of the critical business functions we support at our practices, and that led to better efficiency and greater satisfaction among our surgeons. We are excited to build on this in 2024 and plan to add even more support in key areas, including ongoing education and knowledge sharing, HR, finance, IT, operations, compliance and marketing services.
I would add that our success over the last several years is a direct result of our distinctive model. We are truly doctor-owned, doctor-led and doctor-governed, with a doctor-majority board of directors. Creating this alignment of interests for all parties was a founding mission for us, with our brand of board governance as just one important piece. Ultimately, the goal and the key to our success is shared governance, shared economics and shared responsibility for fixing problems and driving innovation.