The Rise of the Dental Group Practice Model

In the earliest days of the dental and medical professions, many young dentists and physicians dreamed of starting their own practices or joining forces with--and eventually taking over for--and older dentist nearing retirement. Regardless, they dreamed of becoming a business owner.

Those days appear to be coming to an end with the rise of the dental group practice model. In the last two decades, a new model for practice management has evolved, where dentists join forces to minimize costs and liabilities, and maximize their earning potential while getting a faster, better return on their dental school investment.

With around 6,000 new licensed dentists emerging from dental school each year, with an average debt load of $180,000 in tow, nearly one in four are eschewing starting or buying into an existing practice and seeking employment in a dental group practice. This model, typically doubles the average annual salary of hard-working dentists to $360,000 per year.

In addition to bringing in more dollars, joining a group practice means seeing fewer dollars go wastefully out the door. While solo practices typically see seven to nine percent of their total operating overhead go to supplies, a group practice procurement process can shave 30-45 percent of this ongoing outlay.

As we know with economies of scale, the bigger the entity, the better the economic realities. We are seeing a surge in dental group practices specific to organizations with 10 to 20 locations, virtually unheard of even a generation ago. And the phenomenon certainly sees some extremes, through both de novo expansion and consolidation. Aspen Dental, with more than 600 offices across the country, has opened its 30th office in Illinois alone. North America Dental Group has acquired TF Dental, taking NADG to 125 offices in seven states. Western Dental and Orthodontics continues on the trend, expanding through opening new offices in California, leaving the organization at more than 190 locations in California, Arizona, and Nevada.

Another phenomenon of the rise of the dental group practice is specific to entity formation, as many have adopted the dental service organization (DSO) model. The DSO is typically defined as having a corporate location, where the business of running a dental practice--administrative, accounting, and purchasing--is done. An extended network of clinics house dentists and hygienists performing patient care duties. While current estimates peg the number of dental group practices at somewhere between 14 and 20 percent, nearly eight percent of all dentists have joined DSOs as of late 2017. The rate of dentists adopting the DSO model is growing at a rate three times higher than the growth rate of the entire industry. Some industry leaders predict that the DSO model may overtake dentistry within a couple of decades.

Also indicative of the rise of both the dental group practice and its sub-type, the DSO, are an increase in registrations and members of trade organizations like the American Academy of Dental Group Practices, with more than 150 attendees at its annual conference in 2018, and its DSO counterpart, the Association of Dental Support Organizations, with 700 attendees at its 2017 show.
As a decades-long trusted supplier to the industry, Richmond Dental and Medical will continue to evolve to meet the dental product needs of group practices and DSOs. Many of our products require a greater front end investment, but due to their effectiveness and precision of use, we are often able to help DSOs achieve a greater return on their supply investment.

We look forward to continuing our distributor relationships with practices of all sizes and structures, meeting the needs of both solo practitioners and their group counterparts.