This year has brought several shifts in how patients approach dental care, the impact of labor shortages on DSOs and where private equity groups are looking to invest.
Four DSO executives joined Becker’s “Dental + DSO Virtual Event” to discuss what’s next for the DSO field.
Editor’s note: Responses were lightly edited for length and clarity.
Question: What have been some of the most surprising trends that have emerged among DSOs this year?
Jeremy Jonckheere. Vice President of Strategic Payer Partnerships at PDS Health (Henderson, Nev.): The first surprise has been just the resiliency of patient demand that has stayed strong all the way through. I totally expect the M&A trends to continue within the industry, but I see a little bit of the pure aggregation plays losing some favor. DSOs have to have a scalable platform to be successful long term. The only other one I’d mentioned that’s not quite a trend yet, but we’ve seen one large payer group pick up a couple of practices, and even some small groups as they’ve been expanding too. So we’re keeping an eye on that, but it’s not quite yet a trend.
Zach Cherry. Vice President of Operations at Heartland Dental (Effingham, Ill.): I think one of the surprising trends has probably been the adoption of AI tools. When you watch in a dental office how doctors and hygienists collaborate with the patient, you can truly see how AI enhances diagnostics, but it also really improves case acceptance.
It’s a little difficult to talk about dental without talking about how the labor market challenges DSOs. I’m sure you’re like, “Well, that’s not a very unexpected trend at all,” but what has been unexpected about it is how flexibility and autonomy are becoming really essential to retention. Four or five years ago, a dental office could say, “Here are our hours, take it or leave it. Come work with us.” Post Covid, that just hasn’t been the case. At Heartland, we’ve really leaned into tools like HDflex, giving our supported hygiene providers more control over their schedules. Hygienists can literally pick up a shift that better fits their lives, but at the same time, picking up that shift solves what would have been a hygiene vacancy in a whole other office. So those are probably two surprises we’ve seen.
Jeffrey DeBellis. COO at MAX Surgical Specialty Management (Hackensack, N.J.): One of the things we have definitely seen in the past year is more consumerization of oral surgery by patients. We’ve experienced more Q&A calls than ever about the cost of care. I don’t know if that’s a direct product of just economic pressure, but it’s something we’ve made note of. We’re starting to see the foot come off the pedal a little bit as we move through the summer in our traditional time of the year where we treat a lot of wisdom tooth patients. For more cosmetic procedures, we have seen a lot of consumerization, which has driven a little bit of a shift in our approach to marketing and trying to maintain market share.
Haim Haviv. Founder and CEO of Hudson Dental (New York City): One is the shortage in talent. It’s been like that for a few years, and I think that really has affected how we look at offices. It used to be that you could go in and if it’s a good deal or the terms are good, you would go and get the deal done. Now, we first look at recruitment and see the landscape there, and then we decide on the deal.
I think it’s been interesting to see how smaller platforms still get the appetite of private equity investors, whereas it used to be the aggregation, and you buy a lot and you have private equity groups coming after you. We’re seeing private equity groups going after the smaller groups that have that potential and are willing to come in earlier than to come in when you have 100 or more locations. We’re seeing private equity coming at an earlier stage, and willing to go with these smaller groups that are more nimble.
