Pros & Cons of Group Dental Practices

The DSO Series

1. Part 1: Should you join a DSO?

2. Part 2:  Weighing the pros & cons of an SGP 👈 You are here

Modern dental care comes with a unique variety of challenges and rewards. The market landscape is shifting with the medium and long-term social and financial fallout from the worldwide COVID epidemic. 

Many starry-eyed students of dentistry dream of one day owning their own solo practice, or alternatively, of joining a successful group. With student loans often in the range between $200,000 and $300,000, it soon becomes a very meaningful decision - which is the better choice?

With the current market trends leaning towards more dental groups and large group dental practices, and fewer private practices, students and established Dentists alike are considering moving in the same direction, rather than being left out in the cold alone.

In recent years the terminology surrounding Dental Groups has become slightly confusing, so let’s clarify the difference between a Group Practice, a Small Group Practice (SGP), and a Dental Support Organization (DSO).

The first article in this series dealt with the pros and cons of joining a Dental Support Organization (DSO). Typically a practice transitions to the DSO model when many practices, with multiple Dentists, consolidate functions such as finance, insurance, legal administration, and human resources into one central body. 

Often these “head offices” span the state lines, with up to hundreds of locations. However, even a group of five practices with a centralized structure will technically qualify as a DSO. If the same five practices are owned by one entity, but basically operate independently, then we can classify them as a Dental Group instead. There are a number of varieties of these groups.

In the rest of this article, we will focus on the SGP and Group Practice Models.

Is the (Small) Group Model Changing the Face of Dentistry?

Although private practice (or solo practice) still accounts for the majority of dental organizations in the US, the numbers are changing year by year. There is a steady move towards the group model that has been occurring for at least two decades. In fact, a number of dental industry leaders predict that the group dentistry business model may overtake solo dentistry within a couple of decades. 

According to a study from the American Dental Association, “Solo Practice ownership is especially declining among younger dentists, according to the data. The age group with the biggest drop in ownership was dentists age 35 and under.”

There are many reasons why this trend started, and why it is likely to continue into the future. For the budding generation of dentists, it often comes down to the career option that will pay off their student loan in the quickest and easiest way. For established practices, it is often a question of the economies of scale. 

Groups offer cost reductions by combining and thereby spreading the weight of monthly expenses. Just as with the DSO structure, buying premium dental supplies and equipment in bulk means significant savings. 

Along with that is the added bonus of new and varied streams of income, a wider net of specialists and support, and all the “soft” benefits of collaboration - i.e. leverage from each other’s strengths. Dentists can practice their craft, leaving the business side of things to others.

It may be hard to accept, but the solo practice may soon be an endangered species.

What Are the Benefits of the Group Dental Practice Model?

As the old saying goes: “No man is an island.” Managing a solo practice can place a huge demand on one person’s time, energy and resources. Emergency visits by patients and the unrelenting responsibilities for the practice mean little or no vacation time, and little or no backup for unplanned absence from work.

Becoming part of a group can alleviate that pressure, provide more financial security, more freedom, scope, and choice for patients, and also, allows the solo Dentist far more personal freedom.

There are good reasons why so many new young Dentists opt for joining the Large Group Model from the outset. Starting your own practice would usually mean you need yet another loan. On top of that, there is the responsibility of learning how to manage finances, reduce costs, run the books, manage staff, take care of stocks, and all the difficulties of running a successful business. 

This is where someone with a long-standing and established solo practice might think of expanding and creating their own group. After all - if they are already successful with one practice - why not run two, three, or ten of them?

There are a number of possible options here, including groups of different sizes and organizational differences, Strategic affiliate programs, Non-captive Dental Service Organizations, loosely affiliated dental organizations (LADOs), Dental franchises, and Buying Groups.

Look before you leap, though, let’s review some of the cons.

Beware of the Group Pitfalls!

Groups may offer wonderful benefits, but as always, consider both sides of the same coin.

• Bad Partnerships: While it may be true that there is strength in numbers, it is also true that not all partnerships are equal. Some of the most regrettable business decisions are based on choosing dental partners without the proper care. Differences in practice management style, ethos, and a lack of shared vision will result in ongoing disagreements and wrangling. Whether you are thinking of joining an SGP or even creating a group of your own - be sure that those details are spelled out clearly from the start.

• The Lack of Appropriate Business Savvy. Acquiring and turning around the financial future of a dental practice that is in trouble, and therefore for sale, calls for the kind of skill-set that many dentists lack. Managing several practices at the same time is never going to be child splay. Poor business leadership is a huge pitfall - so beware!

• Lack of Standardization and Harmony. Depending on the specifics of the group structure, each practice may or may not be working with the same software, or the same systems and protocols. In such cases, it may become impossible for one owner or CEO to control the entire organization, especially if he or she is still functioning as a full-time clinician.

• Retaining Skills. Successful practices depend in a big way on competent professionals who build lasting relationships with patients over the years. The downside to the group structure is that skilled Dentists, especially those who have eventually paid off their student loans,  might easily jump ship and join another group that offers better benefits.

  

Weigh the Pros and Cons Before you Decide

The future of dentistry will undoubtedly cater to both the private practice and the group model - whether a large DSO structure or a loosely affiliated Small Group Practice. Both pathways offer their own benefits and come with their own pitfalls.

The private practice will risk financial insecurity, and shoulder the responsibilities of carrying staff, navigating business, and staying legal and in line with regulations alone and without much outside help. Depending on the person - that could be a good or a bad thing.

The group model means sharing those burdens - but it also means sharing equity, as well as conforming to a group vision and ethos. Consider wisely before you make your choice.

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We trust that you enjoyed reading this - in case you’re new to Noble Dental, we help local dental practices save on quality dental supplies online. We’ve been in the business for over 43 years and serve over 1,000 happy dental professionals.