Jonesboro, Ark.-based GPS Dental is setting itself apart from competitors by focusing on adding personalized value to its partner practices, a method that has proven successful as the DSO nears 100 offices.
GPS Dental currently supports 90 offices and more than 200 dentists in 24 states.
GPS Dental Co-Founder and CEO Hunter Smith, DDS, recently spoke with Becker's about his company's growth and goals for this year, as well as the trends he is following in the industry.
Editor's note: Responses were lightly edited for clarity and length.
Question: How would you describe GPS Dental's growth over the last few years?
Dr. Hunter Smith: We've grown quite a bit, especially since our partnership with our private equity sponsor, Main Post Partners, growing from just north of 20 locations when we partnered with them at the end of 2021 to approaching 100 locations today. I would describe it as consistent because even though the speed of adding new partner locations has increased, we've still maintained our focus on the appropriate levels of integration and onboarding and making sure we can actually support those practices and be a good partner, and not simply just an aggregation of locations that we are jointly connected to but actual, true partnership. So while the growth has been rapid and probably makes us one of the faster growing DSOs in the country, our focus has never wavered from first and foremost being a great partner.
Q: What sets GPS Dental apart from other DSOs?
HS: It's obviously a crowded landscape for DSOs, and people have tried to niche down in certain ways and, honestly, in a lot of ways that's a good thing because it allows folks to partner with an organization that's going to fit their specific need as a partner. I'm not a believer in that every practice is a good fit for a DSO partnership, and I do believe solo practice will continue for dentistry and the industry as a whole. What sets GPS apart is we have created the best mousetrap for what I would describe as the more mid-career, entrepreneurial, growth-minded doctors, and we've established an equity model that allows them to reap the rewards of what they've built and allows them to maintain their brand, their philosophy, their culture but not simply join one of these aggregations of practices, and [have] a supportive partner on the infrastructure side. So I think our focus on being the perfect fit for growth-minded doctors with big practices has really set us apart. A doctor with $5 million in revenue and a $1 million EBITDA business is going to have a lot of options but not a lot that fits their specific path the best, and we've been able to nail that path for them.
Q: What are your thoughts on how the DSO field has grown over the last few years?
HS: It's good there are options that may niche down to specific goals for what the partners need. The bad part is those that are trying to aggregate practices together to get some kind of outcome from a recap event or a sale to a bigger DSO — I don't think that's been good for our space, and it's been a little bit exposed with the interest rate increases and some of the challenges that the greater macroeconomic economy has had over the last two years especially. More options is not necessarily bad. Execution of some of those options, from what I've seen in about 10 years of doing this, has gotten a little bit less directional, which I do think could be a little bit bad.
Q: What are some of the core focuses of GPS' operational model?
HS: [Phrases] like "clinical autonomy" and "doctor first" and a lot of those things have just become such buzzwords with DSOs. It's a little bit bastardized in terms of what that actually means, but GPS is first and foremost, a doctor-led organization and our core focus is making sure the folks who are driving our revenue, which are clinicians, are supported in the appropriate way. From an operational standpoint, that may be marketing campaigns to drive new patient growth for one specific practice, but that doesn't necessarily mean we run those campaigns for every single practice we support. The core focus is, what does this specific practice and partner need from us, and how do we help them execute on those things to give the best outcome to the doctor. I think that really sets us apart operationally.
Q: What else does the company have planned for this year?
HS: We'll definitely surpass 100 locations, but where we've really succeeded is not over-engineering those growth goals to hit certain targets that don't benefit the company. So what our goal is, and has always been for the 10 years I've been doing this, is to create value through partnerships with dentists. Lately, that's been two or three transactions per month, but as long as we're still adding value in the space and being something that's resonating with doctor partners in the market, then our goals are to continue to grow, grow our support team and continue to have value.
Q: What trends are you following in the dental and or DSO field?
HS: In terms of dentistry as a whole, I'm definitely following the niching of the of the DSO model and getting a little bit more specific, whether it's dentures and implants or this type of specialty only versus multispecialty, versus [joint venture] concepts, versus holding company concepts. So definitely following what the providers are valuing from their DSOs. In terms of trends, I think [doctors getting] skin in the game, getting the doctors involved on the equity side and giving them upside to continuing the partnership is a trend that's been really resonating over the last several years and I expect that to continue.
Q: What are some of the biggest challenges facing DSOs currently?
HS: From a challenge standpoint, it's been pretty consistent over the last two years. It's a little bit out of the industry's control and more macroeconomic in terms of uncertainty around interest rates and some of the political landscape this year, especially as we head into an election year. Those things, specifically the interest rates, even more than COVID, have impacted our industry. What it's really done is, frankly, brought the cream of the crop to the top. Those that could perform and could execute during those times, which I'm happy to say GPS was one of, continue to raise money, continue to raise funds and continue to do partnerships in the hardest economic times. We've proven ourselves a little bit more directly than those of us who were really flying high when the market was flying high. Hopefully, we get a little bit of reprieve on the debt side, and it does seem like that's normalizing a bit, but those challenges and then executing on a lot of the growth that some of us have had are probably the biggest ones. GPS is in a fantastic position to execute on those and I'll definitely be curious to see how it plays out for the industry as a whole.
Q: Are you looking at the economy in a more positive light lately?
HS: I think versus this time last year or in the beginning part of 2023, we were seeing rate increases quarterly. We were seeing the upward trajectory of the bell curve ... What people are seeing now is that it has 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.