The DSO Path to Practice Ownership & Eliminating Student Loan Debt

September 13, 2018
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A few years ago I was sitting in a room of newly hired dentists who were going through their new employee orientation. Appearing on stage to tell his story was the founder of this well-known DSO. He started his presentation with the question: “How much debt do you all have… …$100K or more, $200K or more, $300K or more, $500K or more?” and it was shocking to see that the majority of the room had their hands up at the $300K or more range, and that some even had over $500K in debt. He talked about how when he finished dental school in the 1980’s, he came out with under $15K in debt, and that this lack of debt encumbrance is what allowed him to be able to open his own practice right away and eventually build the empire he has today. Accomplishing the same feat today is infinitely more difficult if you’re going at it on your own…but still attainable in the short termif you’ve partnered with the right company. In fact, building a mini dental empire can even be easier within the framework of select Dental Support Organizations (DSOs)

If owning a dental office or multiple dental offices is your dream, here are some things to consider:

  1. Choose a DSO with an ownership track. Many DSOs do not offer the opportunity for the dentist to be anything more than an employee, or may pitch the idea of being a shareholder as “ownership”. So if owning an actual dental office is your goal, it’s best to partner with the DSO that offers a path for you to achieve it. One must also consider the timeline to ownership and the financial requirements. The best DSOs will have a formal program and path and will clearly break down the numbers.
  2. Consider the type/quality of dentistry being done. You want to have pride in the office you own, and partnering with a DSO that aligns with your ideals in the breadth of care, the quality of care, patient populations served etc. will lead to long term fulfillment for you and everyone involved.
  3. Be flexible about going where the greatest opportunity lies. Offices in metro markets aren’t always the best locations to maximize earning potential. Consider joining offices where access to care has been limited, as this will bring a larger flow of patients in need of comprehensive care and will in turn give you greater opportunity for increased earnings. A side benefit is that some of these locations also carry incentives like sign-on dollars or student loan reimbursement…so if you’re starting out as an Associate Dentist or Lead Dentist,these incentives will allow you to accelerate debt reduction.
  4. Consider the reputation of the DSO and their track record of owner success. In a DSO practice ownership model you are partnering with the DSO to provide the non-clinical support to your office. Therefore, you will need to consider the level of support offered and any potential limitations to growth. Talk to existing owners within that DSO to find out about their experience, what the relationship with the DSO is like, how they are supported, challenges they’ve faced, any limitations or constraints, how much control they have to make decisions for their practice etc… You should try to partner with a DSO that provides you with the most support and flexibility and will allow you to own multiple offices so your growth is not hindered.

Finally, there are two important advantages of going the ownership route through a DSO as opposed to on your own. The first is the cost of entry. Large DSOs can build out new offices for considerably less than an individual doctor due toreduced construction/contracting costs as a result of the volume at which they build them. What costs a DSO $400K or $600K to build may cost the private practice owner one and a half times that amount and you’ll probably end up with a more aesthetically pleasing and technologically advanced office if you partner with the DSO then on your own.Typically one’s ownership investment through a DSO is about half or between $250K and $350K. This is a much more reasonable amount to secure financing for….even with some student loan debt.Also, many DSOs have relationships with banks to assist you with financing your purchase.

The second benefit is the operational experience and knowledge you will receive from your DSO partner. Reputable DSOs will provide you with much needed operational support so you can focus on providing great care to patients. Not having sole responsibility for day-to-day operations is a massive time saver and will afford you balance between work and personal life. The history and experience a DSO has in building and running multi-million dollar offices should provide you with added security in knowing proven and sound business decisions are being made.The greater the success of the office, the quicker you can generate the seed capital needed to buy your 2nd, 3rd and4th offices. So building your dental empire is actually more attainable through a DSO model than on your own.

You may be wondering how much money a practice owner can make within the DSO framework. The answer to this will largely depend on the success of the practice owner as a clinician and leader. I know the best DSOs will want to see a potential owner operate successfully as a Lead Dentist for a period of time (6 months or so) before they close on an office. This is for everyone’s protection as both the DSO and prospective buyer will want the peace of mind in knowing there has been a previous track record of success. In my conversations with practice owners, within a specific DSO model, I’ve determined the average annual earnings of an owner dentist with a single office to be around $450K to 500K. When you compare this to the ADA reported $188,580 annual earnings for a single office private general practitioner it’s pretty clear to see which path offers the most upside, compensation-wise. With average annual earnings close to half a million dollars, paying off student loan debt and generating seed money to buy additional offices will happen quickly.So if you’ve been discouraged by your debt load and with the prospects of owning your own dental office, don’t be. The path to ownership is at your feet…you just need to take the first step!

About Roger Smith
Roger Smith is a seasoned recruiting professional with experience in Food Manufacturing, Civil Engineering and Healthcare industries. He has worked closely with many Fortune 500 companies on talent acquisition initiatives; assisting them in identifying/evaluating talent, contract negotiations and the successful hiring of senior management & executive level talent. He has held leadership positions within 2 of the largest Dental Support Organizations in the country and is currently a Talent Acquisition Team Leader for Aspen Dental Management, Inc.