The business of dentistry is in the midst of some significant shifts. The corporate talons of dental service organizations, or DSOs, are piercing the armor of many small practices. On top of that, shrinking reimbursement rates are making it increasingly difficult to achieve and maintain profitability. What’s more, the number of potential practice buyers is decreasing due to young dentists’ changing attitudes regarding joining corporate dentistry and excessive student loans, stripping away a layer of financial opportunity from established dentists who may be looking to sell. This confluence of factors leaves many small practice owners in a tumultuous position. As of 2017, solo practices were declining at a rate of 7 percent according to the American Dental Association. Luckily, an entrepreneurial spirit can help position dentists for success by creating new opportunities to drive revenue.
Timothy J. Mcneely CFP, CIMA, author of The Informed Dentist: Five Key Concepts for Financial Success, defines entrepreneurial dentists as “the ones you meet at conferences who are constantly exploring solutions that can deliver greater efficiencies. They enroll in courses to expand their knowledge and broaden their knowledge. Above all, entrepreneurial dentists and their staff relentlessly seek new and better ways to stay on top of their game.”
While solo practices are on the decline, group practices are experiencing an annual growth of 20 percent. According to Best Dental Practice Management author Dr. Marc Cooper, “This growth is fueled by the ingress of large capital investors who see dental practices as highly fragmented businesses that can be easily consolidated to increase margins, profits and EBITDA.” This growth presents a valuable opportunity for dentists who are willing to adapt. Some may be reluctant to such a change, but in the current climate, it could be advantageous to reexamine this.
In addition to consolidation, expansion is another promising way to scratch the entrepreneurial itch. Expansion can help widen the reach of a practice’s unique and specialized offerings. To explore the possibility of opening additional offices, consider these 3 things:
- Create a solid foundation: In addition to being profitable, a practice must be replicable and operationally sound. Make sure to have clearly articulated standard operating procedures pertaining to daily operations. This can help a new office seamlessly replicate another’s success.
- Hire the right people: It may go without saying, but without an expert staff, new offices will likely underperform. Dentists should be inspirational leaders and guide current staff by example while expressing their philosophy to potential candidates and making sure the entire team is on board.
- Foster an atmosphere of learning: Ongoing training such as online programs and webinars can help one’s team stay sharp and attuned to the industry and changes therein.
While not everyone is born an entrepreneur, adopting an entrepreneurial mindset can help a practice not only to survive, but thrive.