June 26, 2023
Why More Younger Dentists Are Affiliating With DSOs
It’s no secret more dental practices are choosing to affiliate with dental service organizations (DSOs). In fact, recent data from the American Dental Association (ADA) Health Policy Institute (HPI) shows 13% of U.S. dentists have transitioned to some DSO format, a steady increase over previous years thanks to the consolidation wave taking place. More specifically, newer dentists are the ones leading the trend. Here’s what you can take away from this information and expect for the future of the industry as older dentists move toward retirement and others are looking to sell at an earlier age.
How it breaks down
For dentists less than 10 years out of dental school, the rate of affiliation is as high as 23%, compared to 11% who are 11 to 25 years out of school and 7% who are more than 25 years removed. This means more dental school graduates are choosing to practice with DSOs rather than go through the process of starting up their own businesses as “practice modality continues to change,” said ADA Chief Economist and HPI Vice President Marko Vujicic, Ph.D.
What are the options
It used to be that dental school graduates only had the option to go into solo practice, associate with a private practice, enlist in military service or start a career in academia. Many dentists have yet to envision becoming a part of a DSO without an ownership benefit or management responsibility as part of their career path. This allows you to relocate or move among practices with ease and little stress since there is no real commitment on your end while being offered a full-time salary with benefits rather than hourly rate.
Here’s the reasoning
More and more, dentists are looking to relinquish their managerial responsibilities in favor of clinical care. Those looking to enter the space are faced with high student loan costs, forcing recent graduates and even establish practice owners to look at different options other than a sole proprietorship. With changing demographics and a high regulatory environment, there is a lot more at stake for dental professionals to make sure they stay on top of all that is involved in running a successful practice.
Understanding the numbers
It’s a fact that dentistry is the number one job in America for debt. This puts even more pressure on dental school graduates to pick the proper transition route when entering into a practice. Although owning your own dental practice is the ultimate dream for most, between dental school and bank loans, you have the potential to be $1 million in debt before seeing your first patient. Yes, the success rate for dental practices is high, but working for a DSO upon graduation makes sense for a fledgling dentist to get their feet on the ground.