The corporate dentistry asteroid has hit the earth. The skies are darkening. Solo dental practices are declining at a rate of 7% per year. Independent solo practices may not become extinct—they are always a few contrarians who soldier on—but they are becoming an endangered species. The 7% rate of decline may not be fixed; it is likely to accelerate.
The consolidation of practices is being driven by the DSO model, an acronym for “Dental Service Organization” or “Dental Support Organization”—the terms are used interchangeably. DSO’s are relentless in their pursuit of efficiency as driven by technology.
There are 168 hours in a week. The average solo practice in the United States is open 35 hours per week. In those 35 hours, the practice has to pay all overhead expenses and generate a profit. If we focus for the moment only on fixed overhead, the solo practice is strikingly inefficient. For 133 hours per week, the office is dark. The fixed overhead meter runs like clockwork, week after week, month after month; but the production needed to offset fixed overhead only occurs during those precious 35 hours when the doors are open to patients.
The average DSO office is open 45 hours per week. DSO offices usually have more than one dentist working at a time. If there are just two dentists in a DSO office, and each dentist works 35 hours per week, the DSO office has double the production of the solo office.
With that kind of production power, the DSO can afford to buy the latest technology. There are nimble solo dentists who make every minute count. They post impressive production numbers and they also buy up-to-date equipment. Ultimately, though, the hamster wheel can only spin so fast. With expanded hours and more dentists, DSO’s have a built-in advantage.
Next blog: Challenges that DSO’s face.
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