A new DSO, with a twist

REV One Dental recently launched in the industry as the first DSO to have a regional footprint majority-owned by its founding dentists. 

Another unique component of REV One Dental is that the organization is funded entirely by dentists.

The DSO is minority-owned by Freedom Dental Partners and Aligned Dental Partners, according to REV One CEO Brady Frank, DDS, who is also the co-founder of Freedom Dental Partners.

The DSO recently completed its first set of acquisitions with nine practices and plans to complete its second set of acquisitions later this year. While its main focus right now is general dentistry, REV One also plans to expand into additional specialties. 

Dr. Frank recently spoke with Becker's to discuss the new DSO, its plans for growth and how the company stands out from competitors.

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

Question: What inspired the launch of this DSO?

Dr. Brady Frank: We have been working with a variety of other DSOs where the dentists were not the majority owners. Many of our dentists really want to be part of majority dentist-owned DSOs, so we formed this DSO for those dentists who really wanted to be the majority shareholders. 

Q: What can we expect from REV One Dental's second set of acquisitions?

BF: For the remainder of the year, we're going to focus mainly in the eastern U.S. with high-producing general dentistry practices and then next year [we'll] expand the footprint throughout the U.S.

Q: How do you see REV One Dental standing out from the competition?

BF: The big word is alignment. These doctors have chosen to be leaders and a lot of our acquisitions and growth will be related to recruiting new dentist partners in a DSO that is not backed by private equity but instead backed by our own fund, which is 100% funded by dentists, so the financing source is also a fund made up of dentist investors, which is probably the most unique part of the DSO. Most DSOs are private equity-backed or blue chip-backed. This is backed by a fund that is funded by actual clinical dentists. 

Q: What other goals do you have for the DSO this year?

BF: We raised an initial $5 million, [but] one goal is that we'd like to raise another $10 million in the fund by the end of the year. That fund is open to any licensed dentist in the U.S. and it provides an initial 10% to 12% return, plus actual equity in the [holding company] of the DSO itself.  

Q: Why has it become important for dentists to join a doctor-owned network?

BF: Ever since we launched the seminar series, "Become the DSO," years ago, we have trained more than 440 dentists on the techniques to form a DSO. So it kind of started with us teaching dentists how the private equity companies did it. Dentists have taken that message and, instead of selling to a DSO, they've actually chosen to become the majority owners of their own DSOs. It's not for everybody. There's still a place for dentists to sell to DSOs, but for those dentists who are more entrepreneurial and don't want a bunch of cash up front and want to play the role of more of a founder, they can acquire their own debt and funding to be that first stage of a DSO. 

What is interesting is that these DSOs that are majority dentist-owned, the goal is still the same: to be private equity-backed. So even if it's a majority dentist-owned DSO, the end game is really still the same because it ends up becoming private equity-backed but in a three- to five-year period. So the dentists on the front end formulate the DSO, create the entire business plan and culture and group of doctors, but at the end of the day, it's private equity with their financial fortitude that generally ends up owning minority or majority interest in these dentist-owned DSOs as well.

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