DSOs are charting a new path forward. Here are the trends to watch.
By Dr. Roshan Parikh
After a turbulent year, it was thrilling to see so many practitioners, dental entrepreneurs, and Dental Service Organization leaders gather in-person for Dykema’s Annual Definitive Conference (over 1300 registrants in total, representing 300+ dental group from all 50 states) — the key event of the year for DSOs and others seeking to take the pulse of the fast-changing dental industry. Kudos to Brian Colao and his entire team for putting on a truly amazing conference experience and event.
Over three days, I rubbed shoulders with some of our industry’s top thought leaders, and had the chance to learn about the new trends that will define the dental space over the next 12 months and beyond. Here are four key takeaways from this year’s conference:
1) Women continue to emerge as DSO leaders
Dentistry has long been a male-dominated profession, but women now make up over a third of working dentists and more than half of new dental graduates, the industry is expected to achieve gender parity by 2040. Dr. Aman Kaur wants to see that trend play out in the DSO space, too — so she used this year’s Dykema conference to launch , a new nonprofit organization intended to empower women in the DSO space and help women become leaders of the industry.
As the CEO of a leading Midwestern DSO, Dr. Kaur has deep experience across a wide range of private and public-sector dental functions, and she’s using the WinDSO platform to help other women to find mentoring and networking opportunities, and to showcase their successes to others in the industry. Bringing women into leadership roles isn’t just about equity — it’s about making DSOs more representative, more profitable, and more effective at delivering patient care, Dr Kaur told attendees. “If we can keep advancing women, this cross-pollination of talent and skills is going to really bring all of us together,” Dr. Kaur said. “That’s how we are going to further this industry.”
WinDSO will be holding their own inaugural conference next March in Las Vegas, and I for one can’t wait.
2) DSOs need a fresh approach to accounting (tax changes → accrued accounting)
When dentists first set out their shingle and open their own practices, they often use simple cash-based accounting methods: when a customer pays, you record the payment in your books. That’s a straightforward approach — but according to Mike White of CliftonLarsonAllen, Mark Rudolph of Elliott Davis, and Brian Tortolano of The DSO Accountants, growing DSOs need a smarter approach. With tax rates and deduction rules changing, DSOs need to think like businesses and switch to accrual-based accounting, in which income is recorded every time a transaction occurs, even if the payment hasn’t yet been received.
Accrual-based accounting makes it easier to predict cash flow and maximize profitability, and DSOs that are looking to sell or to bring in investors will typically find it much easier to do so if they have a couple of years of accrual-based records, the speakers explained in an eye-opening breakout panel. Switching to accrual does require the right technology solutions to manage record-keeping across a DSO’s practices, but it also helps organizations to keep their balance sheets looking healthy during chaotic periods such as the pandemic.
Organizations used to switch to accrual when they hit around $25M in revenues, White explained, but nowadays they’re increasingly switching once they hit the $10M to $15M range. Combined with software integration and automation tools, accrual-based accounting makes it easier to secure loans, find partnership opportunities, and get visibility into a group’s financial health. “We’re doing a lot more conversions to accrual this year than we’ve ever done,” White told attendees.
3) Doctor-owned DSOs are gaining momentum
Generally, dentists like the idea of streamlining their business operations, but many are wary of giving up their independence or being bought out by large-scale DSOs. Speaking at Dykema, PepperPointe Partnerships CEO Dr. Greg White and COO David North offered a vision for a third way, promoting the concept of doctor-owned DSOs that deliver the operational benefits of DSOs while ensuring continuity of care, and keeping practice leaders firmly in the driving seat.
The Kentucky-based DSO now has 92 office locations under management, offering both a fully-owned DSO model in which existing practices come together to pool assets, and a partnership model in which PepperPointe acquires a stake in dentists’ practices. Either way, the doctor-owned DSO model can provide logistical support, long-term passive income for retiring dentists, and “We also are able to monitor all of the metrics of the practice in real time through cloud based practice management systems,” White says. “Through our BI dashboard, we’re able to make good decisions around how we can identify issues and then correct them on their behalf.”
4) AI is taking teledentistry to the next level
The days when dentists could effectively serve patients with little more than a drill and a dental scaler are long gone: today, the dental industry is going digital, and that’s opening the door to new kinds of treatment. Perhaps the most exciting is the rise of teledentistry, which allows practitioners to provide consultations and answer patients’ questions via desktop or phone-based messaging tools. During the pandemic, this has been a core capability for many DSOs as they’ve sought to conserve PPE and keep both patients and practice staff safe from harm.
Looking to the future, it’s clear that teledentistry platforms and the rise of AI tools will fundamentally change the way we acquire and treat patients. Using data warehousing solutions to streamline the use of big data, DSOs can identify and eliminate inefficiencies, share learnings across multiple offices or practices, and increase profits by leveraging proven business intelligence tools already widely used in many other enterprises and industries.
Good times lie ahead
What’s the connecting thread between these four trends? Well, for starters it underscores that dentistry is recession and pandemic proof, and that DSOs have matured and flourished during the challenges of the past year. We all know that in the next few years, we’ll see DSOs come to represent a growing swathe of the dental industry, providing more streamlined and profitable operations for practitioners, and opening the door to more advanced technological systems and data-driven decision-making. With strong leadership, smart accounting, and more involved doctors, the DSO model is clearly going from strength to strength.
But these trends show that the space isn’t just maturing — it’s evolving. We know the future of dentistry will involve DSOs, and that these organizations will make our practices smarter and more efficient in coming years. But watching the big ideas being batted around at Dykema this year, it was also clear that dentists and DSO leaders see this transition as an opportunity to reimagine our industry. Culture is critical to the value of any DSO organization, and with more diverse and representative leadership, a clear business plan for growth, and new models that treat dentists as true stakeholders and partners, the DSO model gives us a chance to envision a better future for dentistry. That’s good news for both physicians and patients.