Historically, independence in the dental industry was the name of the game. More than 95% of dentists were solo practitioners in the 1980s. During the past 30 years, however, this traditional business model has declined in favor of the more corporate group practice model. Today, more than 17% of dentists work in group practices. While managed group practices are growing at a rate of 20% per year, private practices are shrinking by 7% per year.
But even as some practitioners move toward working in a group dental setting, many patients still prefer traditional business models that encourage the building of relationships with their dentists. Many dentists also aim for independent practice ownership as a means of providing the best possible care to patients.
The Pros and Cons
Several economic factors contributed to a shift toward the managed group dental practice model. Since 2008, national spending on dentistry has remained low, and incomes for dentists have not recovered since their decline in 2007. Also, insurance companies continue to squeeze reimbursements while the expenses of owning and operating a dental practice snowball.
Caused in part by close to a 100% increase in tuition expenses, rising student loan debt has decreased motivation for taking on the additional debt of purchasing a solo practice as well. Less than 10% of new dentists, who often have student loan debt exceeding $250,000, are interested in purchasing existing dental practices soon after graduation.
However, research indicates that patients prefer the personalized treatment they receive at a solo practice. Patients value a dentist who offers personal support and care and provides a dedicated dental team to meet their needs. In the United States, patients show strong preferences toward dentists who are friendly and trustworthy, who possess good communications skills, and who are supportive.
In addition, dental patients who receive personalized and supportive treatment are empowered to take control of their own oral health. These types of high-quality relationships are typically cultivated in private practice, where dentists have more opportunity to get to know their patients through repeated contact over time, rather than a corporate, one-size-fits-all treatment approach.
Most dentists want the freedom, clinical autonomy, and growth potential that comes with private practice ownership, instead of becoming an employee in a corporate dental practice. Even millennial dentists, though many feel they must initially start out in a group practice to pay down student debt, would prefer to own their own private practice.
Millennial dentists understand the importance of authentic relationships and want to be able to provide the best care possible to a patient pool they carefully develop over time. As 42% of working dentists are 55 years old or older, younger dentists may soon have plenty of opportunities to buy their own private practice.
Owning a successful solo practice involves a good amount of business sense in addition to the clinical skills a certified dentist acquires. A dentist with a private practice must be able to perform or outsource all the necessary business operations to generate revenue, including managing costs, decreasing expenses, negotiating with vendors, hiring personnel, and providing strong benefit packages for their staff. In addition, dentists who control the business operations must not be averse to risk and must be willing to fail. These dentist entrepreneurs should be pioneering, early adapters open to change.
Yet most clinicians do not receive formal business training and do not have time to focus on every detail of their practice’s operation. Using an outsourcing business model, dentists may still own their own private practice and retain clinical control over it, but turn nonclinical services over to professional third-party service providers. With this model, dentists are left to focus on the clinical areas that matter most to them and their patients.
Mr. LaTrace is CEO of Boyd Industries and has more than 25 years of leadership in companies ranging from startups to large public corporations in the healthcare, renewable energy, and aerospace industries. He earned his MBA from the Kellogg School of Management at Northwestern University and has a bachelor’s degree in chemistry from the Citadel. He can be reached at email@example.com.
Disclosure: Adrian LaTrace is CEO of Boyd Industries.