{"id":11236,"date":"2024-07-31T07:47:21","date_gmt":"2024-07-31T14:47:21","guid":{"rendered":"https:\/\/www.planetdds.com\/?p=11236"},"modified":"2024-11-15T11:21:09","modified_gmt":"2024-11-15T19:21:09","slug":"dental-practice-consolidation-strategies","status":"publish","type":"post","link":"https:\/\/www.planetdds.com\/blog\/dental-practice-consolidation-strategies\/","title":{"rendered":"Navigating Consolidation: Top Strategies for Dental Practices"},"content":{"rendered":"
\n
\n
\n
\n
<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
\n
\n
\n
\n
\n
In recent years, a significant trend toward consolidation<\/a> is reshaping how dental practices operate. Increasingly, independent practices are joining larger dental groups or dental service organizations (DSOs<\/a>), driven by economic factors and changing healthcare dynamics. This shift offers practices advantages such as improved efficiency and access to advanced resources and technologies. But as this trend gains momentum, how do dental practices position themselves strategically to ensure sustainable growth for the future?<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

75% of Dental Practices Will Consolidate in Ten Years<\/strong>\u00a0<\/span><\/h2>\n

High interest rates have slowed dental mergers and acquisitions (M&A<\/a>) in 2024, but the wave of rapid consolidation is coming. <\/span>\u201cI predict that 75% to 80% of dental practices will be consolidated in ten to fifteen years,\u201d said Brian Colao, the director of the Dykema DSO Industry Group<\/a> and the leading expert on mergers and acquisitions in the U.S. dental industry.<\/span>\u00a0<\/span><\/p>\n

Currently, about one-third of dental practices are consolidated, a trend that started in 2010, and then took off in 2015 when it was easy to get financing. This trend continued until 2022 when higher interest rates impacted mergers and acquisitions.<\/span><\/p>\n

Now, private practice owners are feeling the squeeze from stagnant insurance carrier reimbursements combined with higher employer salaries, supply costs, lab fees, and interest rates.<\/span>\u00a0<\/span>That has many considering selling their private practices to a dental group. To prepare, they\u2019re looking for ways to increase their revenue so they can be attractive to buyers.<\/span>\u00a0<\/span><\/p>\n

Dental M&A Trends: Seeking Practices with 20% EBITDA\u00a0<\/span><\/b>\u00a0<\/span><\/h2>\n

\u201cDSOs are seeking to affiliate with practices that have greater than 20% EBITDA, are willing to roll equity, and where the owner dentist will stay on for at least five years,\u201d said Chris McClure, co-founder of Aligned Dental Partners, which provides M&A advisory and consulting services to group practices.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

There are two ways to increase EBITDA (earnings before interest, taxes, depreciation, and amortization). The first is by cutting costs. The second is by increasing revenue.<\/span>\u00a0<\/span><\/p>\n

Many dental practice owners cut costs in these ways:\u00a0<\/strong><\/p>\n