Unpacking the Role of DSOs in Dental Practices: A Professional Insight
The DSO model is relatively new, and there’s a lot of information out there. DSOs offer significant benefits to practice-owning doctors and their staff. Viper Partners, the country’s leading transition consultation firm for the medical industry, talks to dentists, dental specialists, and dental office managers daily about partnering with a DSO. Here is what we tell them.
What is a DSO?
There are different kinds of DSOs. Some take over the business, change its branding, and effectively make the dentist an employee accountable to quotas and regulations. In those DSOs, all decisions are made at the corporate level, and ultimately, the practice falls under a corporate umbrella.
At Viper Partners, we only work with silent DSOs – DSOs that put the dentist first and conduct silent acquisitions. These DSOs support the administrative side of the practice, so the existing branding remains intact, the dentist retains decision-making power, and key staff stays. These DSOs are silent partners – the only way someone will know your practice has partnered with a DSO is if you tell them.
What do DSOs do for the staff of a dental practice?
Partnering with a DSO can provide security and opportunity for dentists and their staff. DSOs allow a practice to keep the feel of private ownership while providing staff with the expanded benefits offered at larger corporations.
Some of these benefits to staff include:
More Paid Time Off outside of significant holidays
Improved benefits, such as medical, dental, eye, hospital stays, life insurance, and disability, to name a few
401k matching
Training and support for new employees
Continuing education credits and training
Processes, such as billing, accounts receivable and payable, payroll, HR, marketing, and onboarding employees, streamlined for the staff with support from a corporate office
Guaranteed hours and the ability to travel to nearby affiliated offices when hours are low (for example, when the dentist goes on vacation, the DSO will either find a dentist to fill in or allow staff to travel to nearby affiliated offices, paying travel time and mileage)
Opportunities for the staff to learn different fields of interest and grow professionally with extensive training programs provided by DSOs
Insurance policies to offset unexpected stress on the practice from catastrophic events – like natural disasters and pandemics – so that staff can remain on the payroll if they aren’t able to work
What are the benefits of joining a DSO for the dentist?
Some DSOs conduct silent acquisitions – no office name change, no change of staff, no obvious way for patients to know that an office has partnered with a DSO.
We have observed three main reasons a dentist might join a DSO.
First is risk mitigation. DSOs are buying aggressively at historic highs: five to seven times multiples for most practices. Dentists without a planned exit strategy should consider partnering with a DSO because it is an assured way to get top dollar for their practice. To not explore this option is to leave a lot up to chance – who will the dentist sell to in the future, and what will practices be selling for then?
The second benefit is work-life balance. Dentists can spend more time seeing patients with family or loved ones or practicing their hobbies by not having to deal with the administrative side of running a practice. While at work, dentists won’t have to worry about administrative burdens—they can focus on practicing their profession and providing quality care.
The third is rollover equity. When a dentist partners with a DSO, they do not sell their practice outright but are offered a mix of cash and stock. Most dentists continue to practice for another three to five years after partnering with a DSO, allowing their equity in the partner DSO to grow. This equity will continue to grow in value until the dentist is ready to cash it out – what we refer to as the “second bite of the apple.”
What you need to know to join a DSO
There are many DSOs out there, and they are not all created equal. Because of that, it’s crucial to find an advisor who can guide you when beginning the conversation of affiliation with a DSO.
At Viper Partners, we guide the dentist through the entire process with our Viper Value System™: High valuations with velocity to victory at the closing table. Our team prepares all documents in-house and negotiates with the DSO for what the dentist and their staff desire. We do all the heavy lifting with due diligence and document preparation and can command top dollar for your practice. At Viper, we are particular about the DSOs we work with, and we only work with those who will put the dentist first and pay the highest prices.
About Viper Partners
Viper Partners, with its deep roots in the healthcare space, pioneered transactions in the aesthetics industry prior to 2020. As the investment bank with the most completed aesthetics transactions, their experience is unmatched for med spas and plastic surgery practices. Viper Partners not only excels at what it does but also cares genuinely for its clients' success, ensuring a seamless and rewarding sale experience.
To learn more about what a partnership with a DSO could mean for your organization, contact us here.