How does private equity ownership really affect dental practices?

Private equity (PE) ownership within the dental industry is rapidly growing; the percentage of dental practices under PE ownership nearly doubled between 2015 and 2021. But is this shift beneficial for both practices and patients? New data from Health Services Research breaks down how private equity is changing the dental landscape and what it may mean for the future of practice ownership.

The PE surge in dentistry

Typically, PE firms are attracted to practices that are small and fragmented, solo-owned, and below efficient scale-and most PE dental acquisitions involve DSOs, which take care of nonclinical functions such as billing, purchasing, and staffing.

According to Health Services Research, PE investment in US health care has exceeded $750 billion since 2013, with dentistry becoming a major target; dental private equity investments garnered roughly $4.4 billion between 2004 and 2021. Additionally, the share of dentists who own their practices declined from 85% in 2005 to 73% in 2023, while multisite group practices now employ about 25% of dentists.

Health Policy Institute vice president Marko Vujicic and his team examined whether PE acquisition of dental practices interfered with the innerworkings of the office and patient care-and if they were associated with higher prices and charges in dental insurance claims and changes in service mix, care intensity, and staffing structure.

PE's impact on dental practice operations

Data showed PE-acquired offices differ from those that were never PE-owned in a variety of ways. In terms of demographics, PE-owned offices employ younger dentists (46.5 compared to 49.7 years) and are located in less rural areas (6.6% vs. 10.7%), which typically have lower median household incomes, fewer dentists per capita, and more non-white residents.

There are also differences when it comes to financial and operational characteristics. Prior to acquisition, PE-targeted offices had:

• Slightly lower submitted charges

• Slightly lower allowed payments

• A higher share of nonpreventive and nondiagnostic procedures

• Greater likelihood of being multispecialty

• Higher participation in Medicaid or CHIP programs

Price-wise, PE acquisitions affect submitted charges (list prices) but not negotiated insurance payments. Submitted charges in PE-acquired offices increased by approximately 3.3% compared to those that were never acquired. List prices also rose immediately after acquisition and continued to increase over time-Health Services data revealed that by the third year post-acquisition, charges were more than 5% higher. However, negotiated payments roughly remained the same following PE acquisition.

PE's impact on patient care and treatment

Following acquisition, dental practices saw an increase in nonpreventive and nondiagnostic procedures, with higher-cost procedures growing over time.

Data showed dental implant procedures per visit increased significantly after an acquisition (a 14% increase from baseline), with this number rising to 46% four years later. Interestingly, private equity acquisitions did not significantly affect the amount of root canals performed per visit.

Although PE acquisition did not change Medicaid participation rates, PE-acquired offices were to become multispecialty, with a 49% increase from the baseline.

The bottom line

Overall, private equity acquisitions do alter various aspects of a dental practice. In their findings, researchers noted that "Private equity firms can enhance dental practice revenue by shifting from preventive procedures to higher-cost restorative procedures while not reimbursing providers at a higher amount. In other words, financial enhancement of dental practices under private equity may not translate into benefits for providers or patients. Policymakers should be aware of the effects private equity acquisition has on provider and patient welfare."¹ Self-paying patients may bear higher costs as over 40% of dental spending is paid out of pocket, which is a far higher number than in other sectors of health care. If a dentist-owner is thinking of turning their practice over to a private equity form, it's important to know what sort of financial, operational, and patient-related consequences this decision may have.

Reference

1. K Nasseh, AT LoSasso, M Vujicic, T Downey. Financial incisors: Cutting through the effects of private equity on dentistry market dynamics and care delivery," Health Services Research (2025): e70075, https://doi.org/10.1111/1475-6773.70075.