Effingham, Ill.-based Heartland Dental is rounding the corner to hitting 2,000 practices in its network after recently affiliating with Alpharetta, Ga.-based Foundation Dental Partners.
The addition of Foundation Dental Partners adds more than 30 locations to Heartland Dental’s existing network in Georgia, Tennessee, South Carolina and Kentucky. The deal builds on Heartland Dental’s vast expansion efforts from the last 13 months, during which the company added more than 110 practices through its de novo and affiliation programs.
Heartland Dental now supports more than 3,200 affiliated dentists in more than 1,960 practices in 39 states and Washington, D.C.
Heartland Dental’s Chief Growth Officer Mark Greenstein recently spoke with Becker’s to discuss how the recent deal fits into the DSO’s growth plans and the biggest lessons the company has learned through its growth journey.
Editor’s note: Responses were lightly edited for clarity and length.
Question: What motivated Heartland to affiliate with FDP, and why now? What made this group stand out?
Mark Greenstein: Really, it came down to the quality of the doctors and the care they delivered, and the locations. The markets they’re in are all existing markets for Heartland [and are] all very good markets in terms of their growth from a population perspective, and they’re in the more major areas … We already have a presence there, so that’s all good. That’s typically one of the first things we look at after the doctor. Our rubric that we’ve had for a long time is doctor, facility and market. We always start with the doctor. Are they committed? Are they engaged in their communities? Do they practice general dentistry at a high level, and are they what we call open, positive and flexible? We ask a lot of questions, and if that passes the alignment, then we’ll look at the facilities. Are they good quality facilities, easy to access for their communities? Do they have room for growth? Can we grow together? Because every doctor wants to grow. Then, we look at the marketplace. Would the marketplace support that growth? We put that equation together, and then we do a profile around that equation for every asset inside of the DSO. If it all rolls up and feels good, then we’ll continue down the process.
It is a process that is anchored in quality, and I think that’s probably one of the distinctions between Hartland and others. We start there before we ever get any numbers or look at any of the EBITDA and all the stuff that you can spend your lifetime on. If the doctor or facility and market isn’t there, then it’s not worth it. No matter how cheap it is, we still wouldn’t do it. We are a support organization. Our job is to support doctors and their teams as they do what they do. So therefore, we want to start it well and we want to help them become as great as they want to be.
Q: Which of Heartland’s support services do you expect to have the biggest immediate impact for FDP’s practices?
MG: Typically what happens, and this is true in almost any affiliation we do, is our regional teams, our support teams, helping with what we call our systems. When I say systems, I don’t mean technology. It’s systems of how a dental office can flow patients through, how a dental office can build its own skills and how they talk to each other and communicate with patients. All the things that help offices work better together, help the team work smarter together and help the team communicate with the patient. That’s always the foundation. We call it operational excellence. You can put all the technology in, you can put all the data in, you can put in all the marketing, everything else you want — those operational systems are what truly creates a platform for an office to grow and do what they want to do, which is improve the care they’re providing to their community.
This [deal] just closed last week, so we’re on the ground. We met with the doctors before we closed on this one, to check that doctor box I talked about, so that relationship was already set up, and now the teams are in the offices starting. First, we got to get everybody open to the HR systems and the medical benefits and [the] 401ks, all that stuff. But once that’s done, the operating systems are what’s next.
Q: Heartland Dental has previously affiliated with several other DSOs. How does the company approach these deals differently compared to smaller practices?
MG: We have a small separate team because these [deals] typically involve bankers, so there’s just a different process by which you have to do it. There’s more money at stake, so your diligence hurdles are higher. You’ve got third-party advisors that are reviewing things to make sure, from an accounting perspective, everything is good. You’ve got to make sure all of the records have been well maintained clinically and understand any risks because the scale is larger. So, we have a group of experts who work on that because they know how that is played … the real army, which is multiples the size of the deal team, has been engaged for over 90 days thinking about how we’re going to approach educating, supporting and making sure our capabilities around supplies and labs and all of these innovations that are core to our business can be made available. We ultimately end up with individual plans per office. That work has been going on for a long time, and those teams are actually the same people who would do a single practice.
Even though we call it Foundation, it’s still a group of individual dental practices. Foundation was formed in 2019. They didn’t build all of these practices. These are existing practices in their communities, so we treat them with that kind of respect. They are pillars of their community, and each one needs their own plan and goals. We treat it as a collection of individual dental offices … so it’s a solo deal times 33.
Q: Heartland Dental is nearing 2,000 practices in its network. What are the biggest lessons the company has learned about expansion and affiliations throughout its growth journey?
MG: Well, by far, it’s all about the doctor. Our mission is to support doctors and their teams as they deliver exceptional care and experiences to the communities they serve. That’s the biggest lesson we always come back to. All we have to do is support them. If we support the offices, the doctors, the teams in the offices, they know exactly what to do, and they will adapt to what’s best for their community and their practice and their clinical practice. We just have to be there to help them with whatever they need … That’s why we spend time with our doctors every quarter. We actually close the office for half a day every quarter to do what we call thrive, which is let’s make sure we’re all understanding the goals you want for your practice, and how are we helping you deliver on those goals? We bring them all sorts of data to help answer the question on how they’re doing against the goals they set up in the last meeting.
As long as we stay focused on the doctor and helping them be all that they choose to be and achieve their hopes and dreams, along with their teams, I think we will continue to be successful. The minute we take a center drive view, let’s push, it doesn’t work. We are what I call one big, massive inspirational pull engine. Just like the teams that work for me. My job is trying to inspire them so that they pull on all the resources of Heartland to help Heartland and its doctors do better.
Q: Does the company anticipate platform deals to become a bigger share of its pipeline?
MG: I don’t know. I sometimes call it the holy war — is it de novo or is it acquisition? The answer is it’s both. They both are great models. There’s a shortage of great dentistry in the United States. We believe that in our bones, so we want to do as much as we can of both. We don’t sit and say we want to do more of this and less of this. De novos are fantastic. There has been a large set of migration activity in this country for the last decade down to Florida, down to Tennessee, down to Texas and Arizona. The Southern states have really benefitted as people have moved. There are dental offices down there to buy if I wanted to buy them. The Villages, Fla. — the largest community in the world had no dental offices. Those folks need dental care, so you’re building there and you know you’re going to build great big practices and end up in 30-40 years with buildings that’ll take care of those communities. Then, you go into other markets that are maybe a bit more mature, and the right answer there is to affiliate, and we’ll do that. They both are absolutely necessary for their reasons.
As a DSO, we get different things from each one. These Foundation doctors are so amazing. They’re just going to help us raise our own bar and get better and be great members of the community. Where we do the de novos, it’s all about access to care in those communities. They’re dying for care. We just opened one this week — 500 patients already scheduled by the day it opened. They’re clamoring to get oral care. It’s about, how do we make sure we’re helping the community as much as we can?
