> Growth
Strategic Planning Building a sustainable DSO begins and ends with trust. : By Jeromy R. Dixson, DMD MBA The key to building a sustainable DSO is trust. Pretty cliché, right? While that might seem like the obvious ingredient to building any business, earning trust is critical to accomplishing organizational goals and ensuring that you, as the leader, are granted the ability to lead your team. It’s difficult to establish trust in working relationships, and it’s even harder to build a sustainable company once you lose it.
Building trust within your DSO With acquisitions, you are typically affiliating whole practices into your organization, with them adopting your brand identity and your team’s culture. This process requires an enormous amount of trust on the side of the affiliating dentist/practice, and it is something all DSOs should take very seriously. It’s all about trust, integrity, building rapport, and building working relationships that benefit everyone involved in a simple, aligned structure. Many times when you are affiliating new practices, these doctors are seasoned and are looking for an exit strategy. You must always deliver on your sales pitch and not overpromise/underdeliver, but if you’ve only been doing this for a few years or you are much younger than them, you must first earn their trust. The way to accomplish this is to construct your DSO with a compelling and inspirational mission, vision, values and culture. When you have a
dentalgrouppractice.com
compelling vision for the future of dentistry, it gives doctors and practices something to join in on that will improve dentistry while also taking care of their teams. The only caveat is that you must deliver on your vision. If you don’t deliver on it, the trust they have in you is gone forever. It’s tough to get that back (if not impossible), both from the doctor and the team. So, you need to start with a vision that allows for others to trust you and give you a chance. If you do it right, you will be able to use those practices as references and leverage those references into more business. Another key component of your organization trusting the new affiliate is to conduct proper diligence. This ensures the new acquisition is a great fit for the organization. A well-constructed system of questions about the dentist and the practice will help ensure there are no surprises post-acquisition, eroding trust. Also, another simple diligence hack is to investigate some
primary elements of their procedure mix. The most important things to look at initially are the percentage of revenue from hygiene, and the percentage of revenue from crowns and fixed prosthodontics. Crowns and fixed prosthodontics tend to drive practice revenue and profitability up or down, depending on whether they are in normal ranges. If they are significantly higher or lower than 25-35% of a practice or group’s revenue it will require additional diligence. I also look at the percentage of the overall revenue from hygiene, hoping for an opportunity or as a signal for over-treatment. If the percentage of hygiene to overall revenue is under 25-35% it likely indicates an over-treatment planning issue, while a percentage over 25-35% likely indicates under-treatment planning and a significant revenue-increasing opportunity post-acquisition.
Three pillars of a solid DSO house Building a sustainable, investable DSO while maintaining trust might seem like an insurmountable challenge, but it is possible. My favorite way to illustrate the key components of a sustainable, investable DSO is using the analogy of a “DSO house”. Picture a very simple, basic house or structure that has a solid foundation on the bottom, a robust roof on the top, and three major pillars in between holding up the roof from the foundation.
DENTAL GROUP PRACTICE • NOVEMBER/DECEMBER 2021
17
