The evolution of a cottage industry
Since its earliest days, dentistry has been a cottage industry of loosely organized independent practitioners. There have been attempts to organize over the years with varying degrees of success. However, it was not until around the dawn of the new millennium that we began to see the market share of large group practices grow significantly. While the majority of dentists still work in traditional small private practice settings, the number of dentists employed by larger groups is increasing.
The best and most recent data that I have seen comes from the research brief, "Considering Large Group Practices as a Vehicle for Consolidation," by Albert Guay, DMD, and Robert Wall, MBA, which is available from the Health Policy Institute at ADA.org.1 Their analysis reveals that the market share of very small practices (fewer than 20 employees) has decreased from 89.3% in 1992 to 81.7% in 2012. Concurrently, the number of larger practices has grown, though we can expect much debate on exactly how to categorize those larger groups.
ALSO BY DR. CHRIS SALIERNO |Trust, but verify
So there's a trend toward organizing and consolidating our cottage industry. Who is driving this trend? You're probably thinking of a major DSO, but groups with 100 or more employees made up only 6.2% of the market in 2012. From the same data, 13.1% of practices had between 20 and 99 employees. In that group you'll find some smaller DSOs and an interesting group of dentists who own and operate multiple practices. These entrepreneurs have realized the benefits of economies of scale, vertical and horizontal integration, and other business strategies that DSOs have brought to our industry.
Whether you have designs on owning multiple practices or not, let's admit that we can all learn from the professional businesspeople who have applied their skills to dentistry. Yes, we are health-care providers who are bound to ethical codes and to the law in how we treat our patients and conduct our practices. That's a hallmark of our profession that we should always fight for. But incorporating certain operational strategies and maintaining a high standard of care are not mutually exclusive concepts; in fact, quite the opposite.
ALSO BY DR. CHRIS SALIERNO |Dodging the Minotaur
I believe that dentistry will largely remain a cottage industry for the foreseeable future, but that doesn't mean we get to conduct business the same way we did for the last century. Let's take notes on what larger practices are doing right and see if we can gain some leverage in our own practices.
Chris Salierno, DDS
1. Guay A, Wall T. Considering large group practices as a vehicle for consolidation in dentistry. Health Policy Institute Research Brief. American Dental Association. http://www.ada.org/~/media/ADA/Science%20and%20Research/HPI/Files/HPIBrief_0416_1.pdf. Published April 2016. Accessed November 18, 2016.