DSOs are gearing up for continued growth amid a potentially tough economic environment in 2024, facing inflation, staffing challenges and increased demand.
Becker's has spoken with several DSO leaders in the last few months to gain insight into the companies' plans for growth, key strategies and trends they are following.
Here is what you can expect from the DSO field in three key areas:
Practice affiliations
Many DSOs plan to expand in 2024 through practice partnerships, acquisitions and de novo offices. However, economic challenges could put a dent in those plans.
MB2 Dental Founder and CEO Chris Villanueva, DMD, said the dental partnership organization will focus on opening de novo offices and building up market density in key geographies. Heartland Dental, the largest DSO in the U.S., plans to add more than 130 offices in 2024.
Josh Davis, Imagen Dental Partners' chief development officer, told Becker's the company also plans on continuing to build density in existing markets while looking for ways to support general dentistry practices with adding specialty services.
Mr. Davis predicted that DSOs could slow down their growth or reorganize their businesses as macroeconomic challenges continue.
"[DSOs] really have to be able to understand the levers in the business, the cost structure of the business and stick to the value proposition that they present and what they can actually deliver," Mr. Davis said. "[Some DSOs] promised a lot over the last few years with the expectation that they were going to put the services and the support in places they go. Many have had to slow down on the acquisition side and start to work on cobbling together the value proposition that they originally offered but now can't deliver on."
Despite these predictions, Phase 1 Equity CEO Kristen Cusack told Becker's that the dental industry is resilient and tends to recover quickly after economic downturns. She also said DSO consolidation could increase with more graduating dentists joining DSOs and fewer doctors available to buy practices directly.
Technology
Dental practices and DSOs continue to adopt new technologies to enhance patient care and operational efficiencies.
Barry Lyon, DDS, a chief dental officer for the division of orthodontics and pediatric dentistry at Dental Care Alliance, told Becker's he expects increased utilization of digital technology, such as teledentistry and 3D imaging, and more progress with artificial intelligence.
Both Overjet and VideaHealth shared their plans for growth in the dental industry next year, including more innovation and DSO partnerships.
"I think we are close to crossing the chasm of AI being useful to society," VideaHealth Founder and CEO Florian Hillen told Becker's. "I believe modern society has a lot of huge challenges, such as energy, education and healthcare. We need AI and innovation to navigate these challenges in the future. So I'm excited for what's to come for how we can change our outcomes. I also believe that dentistry will actually lead AI in healthcare and will not be behind."
Workforce
Recruiting staff has become a major priority for DSOs as they work to upkeep and expand their networks amid ongoing workforce challenges. Several DSOs invested in training and career advancement opportunities in 2023 to retain and attract partners and employees.
Benevis CEO Bryan Carey told Becker's the company plans to expand its newly launched training program for dental assistants in 2024. The DSO is also recruiting staff to support new patients as the company expands office hours across its network.
"The second [biggest challenge] is there are just not enough skilled healthcare workers, so it's a challenge as we expand our hours and we hire dentists to then be able to hire the clinical staff, which is why we're investing in training programs because if we are able to get them, we want to make sure they stay with us," Mr. Carey said. "There's just such a need because of the demographics and more Americans needing care. I would say priority one, two and three is how we attract and retain skilled healthcare workers and have them know they made the right decision to come to Benevis by investing in them for their future."