Table of Contents

Practice Building
Roundtable
Continuing Education
Endodontics

Inside Dentistry

September 2011, Volume 7, Issue 8
Published by AEGIS Communications

Flying Solo?

Understanding the trends driving large group practice.

By Allison M. DiMatteo, BA, MPS

In the United States, dentists have been practicing in groups for nearly a century. One of the earliest references to group dental practices is an article from a 1929 edition of The Journal of the American Dental Association which noted that 16.3% of dentists who graduated between 1929 and 1939 were members of a group practice. According to the American Dental Association (ADA) Division of Communication and Marketing, group practices were defined as a dentist who did not practice alone.

Perhaps the largest and oldest group dental practice is the US military’s dental corps, which is a controlled group practice, notes E. Mac Edington, DDS, spokesperson and past president for the Academy of General Dentistry and partner in a private group dental practice. He adds that it’s not unusual for father and son to practice together, but that sophisticated group practices (ie, with eight or more individuals) started developing 30 to 40 years ago.

“Groups began to evolve in the early 1970s in response to the developing insurance needs that employers had and the desire for coverage for blocks of employees that weren’t traditionally covered by medical insurance plans,” explains Robert A Hankin, PhD, from the American Academy of Dental Group Practice. “Prepaid plans led to the development of groups large enough to support blocks of employees.” After the ban preventing dentists from advertising was lifted in 1979, the door was opened for dentists to advertise. At that time in the history of the profession, a few dentists experimented with dental offices in what were then non-conventional retail locations.

“I opened my first retail site in a Sears store in 1981. I experimented with extended office hours, opening 7 days per week, 12 hours per day, replicating retail hours,” recalls Edward Meckler, DMD, executive director of the Dental Group Practice Association and chairman of DentalOne Partners, Inc. “I offered the option of paying fees with a revolving Sears charge card. Patients knew they could schedule appointments during convenient hours, which made it easy for them to see a doctor for an emergency after work or on weekends.”

According to Hankin, advertising privileges led organizations to become more involved in marketing and advertising which, in turn, required expenditures at a scale that required more than a solo dental office to make it affordable. In the late 1970s and early 1980s, a trend toward groups that were marketing-oriented, with larger numbers of dentists, coalesced to create the economies of scale that would allow for marketing and advertising, as well as shared expenses for facilities and staff, he explains.

“By bringing general practitioners in with specialists, it wasn’t necessary to refer work out of the practice, but rather keep it in the practice if a specialist was part of the group already,” Hankin says. “The positive economics of groups became evident, leading to further growth, as well as later development of franchised dentistry—groups that were corporately managed and shared administrative expenses across a large number of practices to create consolidated groups, some of which you see today.”

Hankin notes that group dental practices can be segmented into different categories based on size and management. There are consolidated organizations in which a corporation or a central entity owns or partners with large numbers of offices, each of which might be fairly small and only have one to three practitioners. By being part of a large consolidator, those practices are sharing some of their management, administrative, and marketing overhead, he explains.

There also are dental practice management companies, such as American Dental Partners, which manage practices owned by dentists, explains Greg Serrao, chairman, president, and CEO of American Dental Partners. In this model, the individual practices set their fees, hours, schedules, and determine their service mix. American Dental Partners manages around their decisions, he says.

Then there are the traditional groups that developed in the 1970s and 1980s, Hankin says. These are often a one-office group that might contain four to seven practitioners, plus related staff.

The concept of the larger Dental Service Organization (DSO) model evolved in the late 1980s, Meckler explains. In the last five years, a nonprofit trade organization representing the DSOs was formed. Called the Dental Group Practice Association (DGPA), the group currently has 27 member DSOs that represent more than 2,000 practice locations in 46 states, plus Canada, Australia, and New Zealand.

What’s changed over the years is the definition of a group practice. In 2010, the ADA’s Health Policy Resource Center defined a group practice as five or more dentists. The ADA does not yet have statistics focusing specifically on group practices, but the 2009 ADA Survey of Dental Practice shows that 22% of dentists work in a two-dentist practice, and 18.2% of dentists work in practices with more than two dentists, which includes group practices. The ADA is planning to conduct surveys about group dental practices.

Prevalence & Growth: What’s Driving the Trend?

"Twenty years ago, predictions were made that all dentists would someday practice in groups, leaving only 10% to 15% of dentists in traditional solo practice,” Edington recalls. “That’s just not happening; we’re too independent. There’s always going to be 50% of us in solo practice, although the percentage in group practices is creeping up.”

Edington believes the reasons that corporate group practices are attractive include the million-dollar set-up costs for new practices, as well as the six-figure debt most graduates have after dental school. Additionally, there is an abundance of individual practices for sale, but typically these have been run into the ground, lack the high-tech equipment today’s dental school graduates desire, and are overpriced, he says.

Large group practices that are DSOs represent approximately 5% of the $100 billion dental industry, Meckler says. The demand for quality, convenient, and affordable dental care has led to the advancement and rapid growth of dental group practices and creation of DSOs, which provide business support to dental practices.

“Dental practices serviced by DSOs are at the forefront in revolutionizing the delivery of dental care and providing career opportunities for dental professionals,” Meckler observes. “The growth of group dental practices is driven by enlightened dentists along with an educated public.”

According to Bob Fontana, president and CEO of Aspen Dental Management, Inc., dental group practices continue to experience solid growth as more dental professionals see value in allowing DSOs to provide service and support to their practices, especially as the economy remains volatile and the insurance industry becomes more complex. He notes that Aspen Dental is one of the largest and fastest-growing networks of dental practices in the United States, with nearly 300 locations in 22 states. In 2011, 55 new Aspen Dental locations are scheduled to open, he says.

“Ultimately, this growth is driven by the fact that Aspen Dental practices meet a significant unmet need in the marketplace. Many patients who visit Aspen Dental do not have a regular pattern of dental care and sometimes have gone years without visiting the dentist,” Fontana comments. “While we see patients from all economic walks of life, our focus is to help the increasing number of families struggling to make ends meet. These families are making tough financial choices every day or living paycheck to paycheck and to them, dental care can become somewhat discretionary or ‘nice-to-have’ as opposed to ‘must have.’”

The doctors choosing a DSO-affiliated practice realize that their strengths and passions are treating patients and practicing dentistry, not the day-to-day administrative matters of running a small business, Meckler emphasizes. A dentist in private practice spends only about 60% of his or her week seeing patients, with the balance spent being a small business owner.

“DSOs lift the burden of practice management and allow the professional to concentrate on patient care,” Meckler says. “Most dentists practicing with a practice serviced by a DSO spend 90% or more of their week seeing patients.”

DSOs are able to take advantage of their purchasing power and economies of scale to keep costs down, while also enabling the purchase of the latest technology. Dental practices serviced by DSOs pass those savings along to their patients in the form of lower fees, willingness and ability to accept dental insurance plans, and extended hours, Meckler comments.

“Obstacles like cost, insurance participation, payment plans, or even taking time off from work to get to the dentist for an appointment can be a real barrier to patients’ oral care,” adds Fontana. “Our purpose is simple: we help patients get the care they need. It starts by removing the barriers and creating access to care.”

According to Serrao, years ago patients made choices about their dentists largely based on word of mouth or what their friends and family did. Today, decisions are based on insurance and convenience, he notes.

When Serrao founded American Dental Partners in 1995, the hypothesis was that independent, solo practices would not be the wave of the future, but that oral healthcare would follow the medical model into larger group practices based on efficiency. More services could be provided more effectively, and with higher quality care, because multiple doctors in the same group inherently fosters a natural peer-review process, he says.

The Impact of Managed & Corporate Group Practices on Traditional Models

According to the 2009 ADA Survey of Dental Practice, approximately 60% of dentists own private practices. Between 1999 and 2009, the number of solo practices dropped by approximately 7%. The number of solo practitioners is on the decline due to dentists partnering with other dentists, the ADA says.

“I believe that DSOs are having little ‘adverse’ impact on existing traditional practices,” notes Meckler. “DSO-affiliated practices usually advertise and market to their patients. That advertising creates awareness in patients of the need to see their dentist more regularly.”

Such advertising not only creates awareness for DSO patients but also awareness among private practice patients to see their dentist.

“The dental market is over $100 billion,” Meckler reiterates. “There are plenty of patients for all. While there is a growing trend in the number of dentists choosing the benefits of large group practice, there is little to no impact on private practice.”

For established solo dental practitioners with an established patient base, Serrao doesn’t see having a dental practice management company in the same marketplace having much of an impact on the practice. However, he notes that for someone who wants to establish a new practice, it might be more difficult.

“Our practices tend to be open very early in the morning until late at night, and we tend to have Saturday hours. We take many insurance plans, and for a new doctor opening up a practice, he or she will need to meet those convenience points for the patients, or why would a patient go there?” Serrao ponders. “When we talk about an established traditional practice, I don’t think we impact them at all, negatively or positively; but I think we’ve raised the bar for new people coming into a market.”

In his role with the American Academy of Dental Group Practice, Hankin has heard both sides. Smaller groups sometimes feel threatened by larger, corporately run group practice organizations, and concerns center on being swallowed up, losing market share, and not being able to compete with their marketing or the administrative benefits. On the other hand, smaller groups want to maintain their independence and feel they can be more profitable if they’re not part of a larger consolidated group, where they lose control and possibly have to co-share expenses at a greater level, he adds.

“It’s not clear if there’s a sweet spot for the individual group to be part of one of those consolidators or not. It might depend on their additional size,” Hankin suggests. “Very often a retiring dentist or dentist exiting from his or her practice will sell the practice to a consolidator as an exit strategy, and so that smaller practice is a consolidated group, whereas a successful, medium-sized group doesn’t see the need to do that because they’re in that sweet spot, financially and economically, and they don’t see the benefit of becoming part of a consolidator.”

According to Meckler, seasoned dentists wanting to retire now have the opportunity to unlock their investment in their practice by selling the non-clinical assets to DSOs, while continuing to practice in their practice as long as they desire. They benefit from knowing their patients will enjoy continuity of care upon their retirement, he says.

The Question of Care

A common opinion in the dental profession is that privately owned group practices focus their attention on care, not the bottom line. Judi Belitz, DDS, president of the American Association of Women Dentists, sees the upside in privately owned group practices as two or more dentists sufficiently knowledgeable about both business and dentistry to make sound decisions for incoming patients. The privately owned group practices would be more likely to allow dentists the opportunity to use the dental materials they would like, the laboratory they would prefer to work with, and possibly have a more personal relationship with the patients.

“In the corporate model, at least the ones I have seen or had the opportunity to talk with, they have a business outlook focused on making money,” Belitz says. “I think each dentist needs to look at what practice option is best for herself or himself.”

Most DSO-affiliated practices provide significant continuing education opportunities. Due to size and scale, DSOs attract noted educators and lecturers to train doctors of affiliated practices. In addition, most DSO-affiliated practices have regularly monitored quality assurance programs, Meckler explains. Finally, due to a number of factors, many DSOs are able to obtain the “latest and greatest” in equipment and supplies requested by the dental practices they service at prices that increase access to these items by more of the general public.

Often groups believe that because there are large numbers of dentists and more peer review and accreditation, which is something the Academy of Dental Group Practice strongly supports, that there is an atmosphere for higher-quality dentistry, Hankin says. The fact that specialists are in the same practice with general practitioners allows for more back and forth in treatment planning and evaluation, and some argue this enhances the quality of dental care, he adds.

“I don’t have evidence in either direction,” Hankin emphasizes, “But those are the points of view that we often hear expressed.”

Serrao notes that American Dental Partners practices—which are all group practices—make peer review and quality assurance a top priority, with all practices receiving accreditation by a third party (Accreditation Association for Ambulatory Healthcare). All practices perform peer reviews to ensure there is consistency in protocols and adherence to those protocols, he adds.

“At least in our group practices, I think our dentists are providing a higher level of quality care that’s actually being measured by not just ourselves, but by a third party,” Serrao says.

Career Opportunities in the Modern Group Practice Model

According to Meckler, patient care providers in large group practices, including doctors, hygienists, and assistants, enjoy an enhanced work/life balance. They are free to dedicate their work hours to delivering patient care and can leave at the end of the workday to enjoy their family life, without being accompanied by a briefcase filled with practice management issues. Providers do not need to work a typical 8 to 5 work day, since they can opt for some evening and/or weekend hours and, in some situations, choose to work a reduced week to provide child or elder care, he elaborates.

“In some cases, our doctors even have chosen to relocate to a different state or region when a spouse relocates,” Meckler adds. “It’s not just the lifestyle advantages that DSO-affiliated practice offers that is attractive to many dentists. The earnings of the average DSO-affiliated dentist are greater than the earnings of the average solo practitioner.”

A graduating dentist today setting up a new practice oftentimes services about $250,000 or more in student loan debt, topped off with $300,000 to $500,000 in additional loans for a new practice before the first patient schedules an exam, Meckler points out. This dentist can, instead, choose to affiliate with a practice serviced by a DSO without assuming any additional debt and enjoy the benefits of a guaranteed patient flow.

“I believe the rapid growth of dental group practices is directly related to the rising costs of dental school debt. It’s not unusual for somebody to be several hundred thousand dollars in debt just getting out of school,” Belitz admits. “For somebody with this level of debt to begin with, actually either buying into or starting up their own practice could be a very daunting situation. Joining a group practice gives them the opportunity to earn a decent salary so they can start paying back their loans before either going into their own private practice or buying into a private group.”

“Historically, some practices fail due to lack of funds, poor business management, or a host of other business reasons,” Meckler explains. “DSOs employ professional managers and sophisticated business systems to efficiently manage the ‘back office’ activities of the dental practices they service.”

At Aspen Dental, the profile of dentists runs the gamut from a young professional just out of dental school to the 15-year private practice veteran looking for a respite from the business-side burdens of running a successful practice on his or her own, Fontana says. Aspen Dental practices offer tremendous earning potential, a defined path to ownership, a proven practice model, and ongoing professional development, he adds.

Belitz is wary of the long-term opportunities such an arrangement without ownership would provide—particularly within a corporate group practice. “I think dentists would max out their earning potential at some point,” she says.

Edington observes that both types of group practice have the opportunity to provide more benefits for auxiliaries than a solo practitioner, such as disability insurance and 401K plans.

“We have hygienists who are hygiene leads and hygiene mentors and, because of the size of the group, have greater career opportunities,” says Serrao. “We have a director of hygiene for American Dental Partners who oversees hygiene for all of our hygienists across the country, and she began her career as a clinical hygienist, moved up to team leader, then became operations manager in one of the groups. Such career opportunities don’t exist in a traditional practice.”

Generally speaking, a common perception has been that corporate group practices are ideal for women dentists. However, Belitz sees the definite long-term opportunities and advantages for women dentists who own a private group practice together.

“I think working in a privately owned group dental practice is definitely a career opportunity, especially for a younger dentist, in order to see how dental offices are run from a business perspective,” Belitz notes. “The focus of our dental education is dentistry, not the business aspect of owning or running a dental practice.”

Hankin says that because dental schools train their students in dental school clinics, an atmosphere more like a group than a solo practice, many dentists coming out of school see group practices as good places to start practicing and learn more, or start practicing and work their way into the practice to be an eventual partner. The dental school training concept prepares young students for group atmospheres, collegiality, and peer review, he explains.

“I think for certain graduates, corporate group practices are not a bad situation,” notes Gerard Kugel, DMD, MS, PhD, associate dean for research at Tufts University School of Dental Medicine. “However, my sense from talking to some graduates who have worked at different group practices is that some do concentrate on production and quality. For certain young dentists without much experience, who work slower, and who aren’t comfortable in their decision making, those environments can be stressful if they’re focusing on producing a certain amount of income.”

The ADA is planning to study the impact that group dental practices might have on dentists.

The Tenor of the Profession

“I think group practice is healthy for the profession. Anytime you have a group of professionals together, they can collaborate on difficult cases, provide second opinions, and assure each other that proposed treatments are best for the patient,” Edington comments. “As an individual in solo practice, you have nobody to go to.”

Belitz notes that the American Association of Women Dentists’ mission is to be the recognized resource for women dentists regarding dental issues and be supportive of women dentists through mentorship and networking—two valuable resources readily available in dental school through friends, mentors, advisers, and teacher/student relationships. Once dentists complete dental school and begin practicing—whether in solo practice, private group practice, or a corporately owned practice—she recognizes that some of that networking ability is lost. Therefore, she sees working in a group practice setting as an opportunity for networking and furthering goals.

“Recent dental school graduates, as well as retiring dentists or dentists who no longer wish to own practices, have been the source of the practitioner labor force for larger groups for a long time, and they do provide an opportunity for collegiality, which has been quite positive,” Hankin observes. “Working in the isolation of a solo practice is something many dentists have expressed concern about over the years.”

According to the ADA, whether a dentist works alone or with other dentists, the most important thing is the doctor/patient relationship and the duty of care the dentist owes the patient. Dentists are obligated to provide the best oral healthcare to their patients regardless of their practice setting.

“When you’re a young dentist, what you learn early on in your career really sets the tone for what you do later in life. Therefore, it’s important that dental school graduates enter a quality practice early on to establish good habits,” Kugel emphasizes. “It’s hard to determine the quality of a practice, but my opinion is that if you’re not fast and you’re expected to generate more income, there’s a risk that quality of care will suffer.”

Group dental practices also have afforded dental professionals—and patients—more flexibility and convenience in terms of scheduling. Hankin notes that larger group practices tend to be open evenings and weekends, and family leaves are handled much more easily in a large group versus a solo practice.

“Additionally, I think it’s across the board that dental professionals—not just women dentists—are realizing that scheduling can be changed depending upon what patients need, what dentists themselves need, and what their patient environment is like,” Belitz observes. “Caregivers as a whole—and not just women or women dentists—are looking at different options that are not necessarily traditional dental hours from 8 to 4, 8 to 5, or 9 to 5.”

Conclusion

“Clearly, from our perspective, the upside of group practice is enhanced work/life balance with the opportunity to deliver patient care without the burden of administration and operations, and without the debt of building or buying a private dental practice,” Meckler emphasizes.

According to Fontana, being a part of a dental service organization allows the dentist to focus on what he or she loves to do: provide great care to his or her patients, with the support of a team of experts providing the back-end business support. To the dentist, that means he or she no longer has to wear multiple hats, such as serving as human resource director, information technology professional, payroll clerk, benefits administrator, and accountant, to name a few. Rather, they can focus on caring for patients and leading their office team.

“For American Dental Partners dentists, because they continue to own the professional practice, it’s like the best of both worlds,” comments Serrao. “They don’t have to manage the business day to day. They don’t have to risk capital on equipment because that’s our responsibility. But they control the clinical practice, decide what patients to see, what hours to work, what procedures to perform, and how much time is required for those treatments.”

“The model itself can be seen as a downside for some dentists,” Fontana admits. “For a dentist who prefers to operate as more of a lone wolf, doesn’t see the value of collaborating with his or her peers, or truly enjoys the business side [and] administrative burdens of running a practice, then Aspen Dental or group practice isn’t the right place to be.”

Edington would concur, noting that there’s good and bad to each model, and the secret for dentists is identifying what model best suits their own particular personality and professional ideal. For some, group practice is great. For others, it’s not.

“I think that’s a strength in our profession,” Edington emphasizes. “We have options.”