Strength In Numbers
Buoyed by economic and social changes, group practices pick up steam
The neighborhood dental office—the wood-paneled waiting room stocked with Highlights magazines and a single contour chair staffed by a lone dentist—occupies a corner of most 20th-century memories.
But that scenario has pretty much gone the way of the rotary telephone. One chair has become 10, 15 or even 20, with the number of dentists practicing as a group increasing as well. Following a trend already embraced by other branches of medicine, the number of large group practices and multilocation dental-care chains has been growing at a faster clip than ever before, and the new model of dental practice is likely to become as ingrained in the memories of the next generation of patients as the one-dentist show was to the previous one.
“Solo practice is no longer the only point of entry for a new dentist,” says Kathleen O’Loughlin, D81, executive director and chief operating officer of the American Dental Association (ADA). While there have always been groups of anywhere from two to 10 doctors working together, O’Loughlin says, “the emerging model is multiple sites, sometimes in multiple states, all with an identical management system in place for economies of scale.
“The solo practice is not going away—that’s not what the data shows,” O’Loughlin stresses. “What we’re seeing is a bifurcated model.”
Over the past 25 years, there has been a 10 percent increase in the number of dentists practicing in groups, from 25 percent to 35 percent, according to the ADA. Among specialists, that number has increased from 32 to 42 percent. The very largest group practices—those with anywhere from 20 to more than 200 locations—could account for up to 11 percent of the total dental market share by 2015, the ADA estimates.
From a financial standpoint, large group practices make sense. They allow for reduced capital and operating costs and benefit from economies of scale: volume discounts with suppliers and labs, lower overhead and more attractive reimbursement rates from insurance companies. A chain offers opportunities for widespread advertising and marketing. And having specialists within the group means that outside referrals don’t drain revenue from the practice.
But the real efficiency, says Samuel Shames, D75, managing partner at Gentle Dental of Massachusetts and director of practice management at Tufts School of Dental Medicine, “is that talented dentists are spending time in the office doing what they do best—dentistry—and not spending 20 to 25 percent of their time doing other stuff.”
It’s that other stuff—the tasks of managing a business—that can turn dentists, particularly younger ones, away from solo practice.
“When you’ve been studying science and dentistry for eight to 10 years straight, you can emerge with no perspective as a business owner. And dentistry is a business,” says Joey Pedram, DG11, a pediatric specialist who works for the Pacific Dental chain in Southern California.
At first, David Goldberg, D92, a periodontist, took the traditional route, buying into a practice. He discovered that networking to find patients and establishing relationships with referring dentists to build his part of the business was as stressful—maybe more so—than repairing gums and bone. Two years in, he started working part-time at Gentle Dental of Massachusetts. “I quickly learned that as a specialist [in a group practice], I no longer had to beg to get patients,” he says. Goldberg eventually left solo practice and became a partner with Gentle Dental, where he now oversees periodontics for all locations.
Then there’s the cost of dental care. “The ADA is beginning to see that price sensitivity has become more important” for patients, O’Loughlin says, as the number of people who have third-party dental coverage has declined, according to recent surveys. “As consumerism increases among the public, more and more patients look to cost as well as quality of care,” she says.
And convenience, of course. “Americans want everything under one roof,” says Shames. “They don’t want to leave Target to buy their groceries, and they don’t want to bounce from a general dentist to an endodontist to an oral surgeon. Today’s public is demanding multispecialty practices and extended hours.”
The growth in larger practices began with the spread of employer-provided dental insurance in the 1970s, and received a boost in 1979, when the Federal Trade Commission lifted the ban on advertising by dentists. Not long after, in 1981, Shames and his partner, Ronald Weissman, started Gentle Dental. Shames had been bringing specialists into his solo practice—“I was sick of patients saying, ‘Can’t you do it here?’ ”—and liked the idea of a multispecialty group. Weissman, meanwhile, was interested in how advertising and marketing could help expand a dental practice.
It took some time for multispecialty practices to take hold with patients, both for Gentle Dental and its counterparts around the country. It also took time for these large group practices to be accepted within the profession. Robert Girschek, D92, a partner-owner of Gentle Dental who is based at the Waltham, Mass., location, started working for the group as a hygienist while a student at Tufts and then joined the dental staff after graduation. “In 1992, it was still early on, and, as we’ll all admit, we were shunned by most dentists,” Girschek says. “But I thought it was an interesting model.” Gentle Dental’s growth reflects the industrywide trend. The company, in which the dentist-partners share equity, now has 26 locations in Massachusetts and one in New Hampshire.
There are several models of group practice. State practice acts vary on the specifics of whether nondentists can own a dental practice, or what role a non-dentist can play in the operation of a practice.
Group practices appear to be particularly attractive to new graduates. According to a 2012 study of trends in group practice that appeared in the Journal of Dental Education, dentists who had completed their education less than 10 years prior were three times more likely to work for a larger company.
A big driver is economics. Dentists are leaving school with increasing amounts of debt—the American Dental Education Association puts the average student debt at $203,000. In addition, since the start of the recession, small private practices have not been hiring new graduates at the rates they once were, according to the ADA’s New Dentist Committee. The economic downturn has also cut into the number of older dentists who are retiring—and that, in turn, has created a seller’s market for practices and raised prices for new graduates looking to buy.
But the appeal of group practice is about much more than money, says O’Loughlin. Young dentists, both male and female, like the quality of life that large group practices provide. “The Millennial Generation seeks balance in life,” she says. “They are different from previous generations—employers have been talking about that for a number of years.”
Still, more women than men do work in large group practices, according to the 2012 journal study. “When you talk to woman dentists, the most compelling thing for them is time,” O’Loughlin says. “They really value their time as much, or more, than money, especially when they’re in the position of bearing children and raising children. Many women dentists are married to other professionals. When you have two actively engaged professionals, they really value their time, want time off together.”
Quality of Life
When Nicholas Miller, D08, graduated from Tufts, he wasn’t sure whether he wanted to stay in the Boston area or return to his native Michigan. Either way, he needed a job. Through another Tufts alumnus, he got in touch with the Aspen Dental chain.
“I was very honest with them about what my goals were,” says Miller. Among them was a steady income that would allow him to start paying back his loans while living a comfortable life. Working as an associate moving among three Aspen offices in suburban Boston, he was able to do just that.
When he returned to Michigan in 2010 and started looking into buying his own practice, he weighed the choice of setting out on his own, or buying into the Aspen network. With private practices in the Grand Rapids area running anywhere from $400,000 to $1 million, Miller says, “I think it’s fair to say that Aspen’s price was two to three times less than purchasing a private office with comparable revenue.” Aspen also helped provide an attractive financing package through an outside lender, he said.
In July 2010, Miller purchased an existing Aspen office. In the three years since, he bought another existing office and a start-up. “I manage the clinical end, and Aspen manages the business,” he says. “I own the dental practices and, along with my team of dentists, make all the clinical decisions in our offices. What Aspen provides is the business framework—professional training, accounting services, marketing strategy, insurance operations, facilities management, human resources, at my discretion.
“It has given me work-life balance. I am able to go to work and concentrate on my patients and not worry about making sure that the mortgage payment is sent out or ordering supplies. Then I can go home and continue to have a life.”
Those feelings are shared by dentists further along in their careers, too. “I like to pick and choose my headaches,” says Girschek, of Gentle Dental. “The older I get, the more quality of life is important.”
Goldberg, the periodontist, says, “One of the things that stresses dentists out” is getting stuck on how to handle a difficult clinical case. “In a group practice, when you have the benefit of specialists working with you, the whole thing is more synergistic—you have more minds working on the same problem.”
“Americans want everything under one roof. They don’t want to leave target to buy their groceries, and they don’t want to bounce from a general dentist to an endodontist to an oral surgeon.”
—Samuel Shames, D75
Recently, more private equity firms and other corporate entities have invested in dental chains because their rapid growth makes them attractive in a sluggish economy. Some of these companies have come under scrutiny by various state and federal regulators regarding the extent to which the non-dentist investors are involved in clinical decision-making, or, in some cases, in connection with Medicaid abuses.
Perhaps publicity from those cases has, to some extent, cast a shadow over the entire segment of the industry—unfairly so, say O’Loughlin, of the ADA, and others.
“You can’t generalize that that behavior happens just in corporate practices,” O’Loughlin says. “It happens anywhere people are not following the rules. It’s important people don’t make broad assumptions. If you’ve seen one DMSO [dental services management organization], you’ve seen one DMSO. Members of ADA agree to adhere to the ADA Code of Ethics that puts the patient’s best interest at the center of the doctor-patient relationship, and that code holds for an ADA member regardless of his or her career path,” she says.
Miller, the Aspen owner in Michigan, says it’s important to confront such assumptions. “Sometimes dental service organizations, they do have a stigma,” he says. Both he and Pedram, of Pacific Dental, stress that they oversee all clinical decisions in their offices. “I have complete autonomy,” Miller says. “Aspen has never told me how to treat a patient.”
Another assumption, says Shames, of Gentle Dental, is that large groups place inordinate pressure on their dentists to perform procedures to generate revenue. Private practice owners, he points out, aren’t immune to that. “If you buy a practice for $800,000 and have payroll to meet every week and rent and loans to repay, there is much more pressure to produce,” he says.
Traditionally, large chains have seen high turnover, as young dentists gain experience and go off to establish their own practices. Whether that will change in this fluid economic climate is unknown. O’Loughlin says the ADA is interested in collecting more data about turnover rates as well as other aspects of the large group practice phenomenon.
Pedram, who splits his time between working at Pacific Dental and as an associate in a private pediatric practice, says his dual experience has allowed him to assess the benefits and drawbacks of each. While he’s not sure what direction he’ll go in, he makes this observation: “In a few years, if I finally want to open my own practice, the way it’s going now, competing against these corporations is going to be tough.”
Helene Ragovin, the editor of this magazine, can be reached at email@example.com.