DSOs have experienced a challenging year filled with inflation, staffing shortages and more.
Here are three obstacles standing in the way of DSO growth in 2024:
Economic challenges
Some DSOs opted to move away from inorganic growth opportunities and focus on other initiatives while waiting out ongoing economic challenges, including inflated supply costs and higher costs of capital. Additionally, the challenging economy led to patients having less discretionary spending for certain dental treatments.
Many executives predicted these difficulties would shift the industry, leading to mergers and the potential failure of certain DSOs. GPS Dental Co-Founder and CEO Hunter Smith, DDS, also told Becker's that the economy led to more strategic DSOs coming up as leaders in the industry.
"What people are seeing now is that [rates have] at least been flat for some period of time and the conversations about it coming back down are happening now. Once you start to see that, then these deals are going to get more hyper competitive. We're going to kind of be back in the cowboy era a little bit. Those that can execute from the last year should be able to execute going forward. That's why those of us that have performed well during that are seeing positives for the latter half of this year," he said.
Staffing
The dental industry as a whole has worked through evolving employee expectations since the start of the COVID-19 pandemic, leading DSOs to get creative about workforce shortages.
In addition to enhancing compensation and benefits, one of the main investments DSOs are making is in continuing education for team members. This has proven to be successful at several organizations, including The Aspen Group.
The Aspen Group recently celebrated its first completed year of TAG University, its educational arm aimed at providing clinical, business and leadership training to providers. Chrissie Leibman, senior vice president of leadership and development at The Aspen Group and Dean of TAG University, told Becker's the program has been rewarding for the company's doctors.
"We've just had a tremendous amount of interaction and engagement with our learners," she said. "At the core of why we do what we do is to really support and enable them, and to see TAG U's impact on them has been really rewarding and is also just quite impressive to be a part of that and to have a front row seat to see their growth."
Reputation
Robert Rubino, CEO of Sharon, Mass.-based Qualitas Dental Partners, told Becker's earlier this year that the biggest challenge for DSOs today is reputation management as companies are faced with the task of fighting back against notoriety. Supporting dentists and delivering on value propositions can be a big deciding factor in DSOs' success.
"The dental community, like a lot of sectors, is very tight. So if things are not going particularly well for one dentist who joined a DSO, it gets out there fast," he said. "I think DSOs have to be thoughtful about their treatment of their teams and treatment of patients. Both patient and team members should be at the heart of everything they do. The current narrative out there suggests that this is not happening everywhere. We believe those models are flawed and underperform."