November 2012, Volume 8, Issue 11
Published by AEGIS Communications
An Interview with Pacific Dental Services® (PDS®)
Stephen Thorne, Founder, President, and CEO
INSIDE DENTISTRY (ID): Pacific Dental Services (PDS) was founded in 1994. Please share the background of PDS—how did you get the idea of starting a business that serves dentists?
Stephen Thorne (st): When I graduated from UCLA in 1989, I hadn’t planned to go into the dental industry. My venture into dentistry just evolved.
Because I was good with a computer, my father, who was a dentist, asked me to computerize his dental practice. I spent a great deal of time in his office learning the business side of the practice in order to get the computer system installed. As I helped him around the office, we were able to put systems and processes in place that had a significant impact. In a very short time, his practice grew by about 50%. A few months passed and a practice my father had previously sold was back on the market. The bank contacted my father to see if he was interested in buying it back. My father made me an offer: he would purchase the old practice if I helped to manage it and, in turn, he would share a portion of the profits with me when he sold it. That was my start into the business.
Over the course of four years, my father’s dental business grew from one practice to five practices. Eventually, I left my father’s practice and founded Pacific Dental Services in 1994. The first PDS-supported practice was opened in Costa Mesa, California, in June 1994.
ID: How would you best describe Pacific Dental Services’ business model?
ST: PDS provides a full scope of business and administrative support services to dentists including marketing, real estate, payroll, human resources, billing, accounting, etc.
When I was working for my father, I learned to serve dentists. That service mentality remains at the heart of what we do every day for every dentist we proudly support. The PDS business model is a business-to-business model. Our Private Practice +™ model is designed to enable dentists to focus primarily on serving their patients. PDS provides supported autonomy that allows dentists to concentrate on clinical excellence, build a “clinicians leading clinicians” culture and deliver the highest levels of cost-effective comprehensive patient care.
ID: There has been a lot of discussion recently about Dental Service Organizations (DSOs). How would you describe DSOs and their value in this industry?
ST: DSOs bring tremendous value to dentists. DSOs enable dentists to expand patient access to care, improve the efficiency of office administration, reduce the procurement cost of dental care supplies, and deploy advanced technologies that improve patient care and safety while enabling same-day dentistry. PDS is able to offer its supported dentists and offices access to expensive technologies that they otherwise may not be able to afford. For example, PDS-supported offices are the worldwide leaders in their use of CEREC® CAD/CAM technology, with more than 400,000 restorations placed.
DSOs can also facilitate new educational and professional development components. With a large group practice, there is a wide range of educational and mentoring opportunities for dentists. Additionally, dentists who have chosen to partner with a DSO generally have benefited from better income than independent private practice dentists.
ID: What is the advantage for dentists in partnering with Pacific Dental Services over other DSOs?
ST: The single biggest advantage that PDS has over other business models is our individual office owner doctor model. We have a true equity ownership model for dentists at each office. I cannot speak for other DSOs but our owner doctor model is inculcated throughout the entire organization.
Our owner doctor model works. We have a de novo model in which dentists can build their practice from the ground up. We have helped to develop more than 300 practices and most of those have been very successful. We haven’t batted 1,000, but it has been very close.
ID: Pacific Dental Services and its affiliated offices do a great deal for those in need, giving back and serving communities. Tell us about the company’s culture.
ST: We have a great culture at PDS. PDS is founded on a core set of values that guide our daily lives, distinguish the strength and character of our organization, and direct all our critical decisions. We call the value statements our “We Believes.” The statements permeate throughout the organization; they are not just something on the wall.
Social responsibility is an essential cornerstone of our culture. Throughout the year, the PDS team and supported dentists serve with their time, resources, and expertise both in the communities in which they do business and in less fortunate places around the globe. For example, in August, more than 200 PDS-supported offices participated in Smile Generation Serve Day. The dentists donated more than $2 million in pro bono dentistry for their community members who would not otherwise have access to dental care. We also conduct annual international outreach with trips to Fiji and Ethiopia to provide free dentistry to those in need. Moreover, on the international front, we have partnered with charity: water to help bring clean, safe drinking water to people in developing countries.
ID: To what do you attribute Pacific Dental Services’ accelerated growth?
ST: We are focused and able to do a complicated thing really well: help dentists build a multi-specialty group practice from the ground up. I think some organizations fail because they try to do too many things. PDS-supported practices are clinician-led, community-based, and locally branded, and that is appealing to dentists.
ID: What do you see as your legacy to Pacific Dental Services and the healthcare industry?
ST: My vision of what a great large dental group practice can be is an integrated oral healthcare system where people can get exceptional, comprehensive care at affordable prices in any major metropolitan area in the United States.
I believe that companies that perform best over time build a social purpose into their operations that is as important as their economic purpose. Our social purpose is service to our employees and their families, as well as our communities both domestically and abroad. It is centered on oral care but extends much further than that.
We are creating what we internally call an “Enduring Institution.” An Enduring Institution is one that is not just set up for success now, but set up for success for many years to come. There will always be a need for dentistry. If we organize the systems and structures properly within PDS, we will truly create an Enduring Institution that thrives long after the current management team is gone.
ID: What does the future role look like for a Pacific Dental Services-supported dentist and/or hygienist?
ST: We are constantly looking for ways to improve our service offerings for owner dentists. We are committed to helping them succeed, helping them build great practices and becoming the dental providers of choice in their communities. I believe we will see our supported dentists become more involved in academia and organized dentistry around the country, helping the industry to understand large group practices and the value they can bring to dentistry.
Beyond this, I think we will help create an environment where dentists become financially independent sooner. In turn, they will then become better stewards of what they have been given. Because of the decreased stress, and more efficient use of their time, they will be able to give back to the community where they serve and to their profession.
ID: How is the global economy impacting your operations?
ST: I do not know of any company that is not impacted, directly or indirectly, by the global economy. The cost of capital, raw materials, the flow of goods and services are all impacted in some way. While we do not have operations outside of the United States, many of our largest suppliers do, and these global enterprises are impacted, not just by the economy of this country but, by Europe, Asia and elsewhere. In addition, the global economy has a psychological impact on all of us to some degree. The news reports, which have been consistently negative, impact people’s expectations which, in turn, impact their decision making. For example, a dentist may ask if next year is the year to open their own dental practice; a clinician’s patient may feel that they need to put off needed dental treatment. These decisions impact our operations and the offices we support.
ID: What does the future of Pacific Dental Services look like?
ST: The numbers in and of themselves don’t really excite me if the organization and individuals behind the numbers aren’t something we can all be proud of. Our vision at PDS is to be The Greatest Dental Company in America. We will have our ups and downs, of course, but the end result will be something very special. I think that it will be a place that employees will all be very proud of; a place where millions of patients will get exceptional care from inspired professionals serving together.