It’s no secret that the pace of dental service organization growth has increased in the last few years.
In what’s likely to be unwelcome news for a number of dentists, Smile Brands, Inc. (Smile Brands), a portfolio company of Gryphon Investors recently completed its acquisition of Midwest Dental’s 230 offices.
Midwest Dental is located primarily in the upper Midwest and New England regions. The acquisition brings Smile Direct to a combined total of 650 offices in 30 states.
Luke Schroeder, Gryphon Deal Partner and Co-Head of Gryphon's Healthcare Group, said in part, "We believe that the pace of consolidation in the dental industry will quicken as a result of the pandemic, and Smile Brands is ideally positioned to support an increasing number of high-quality dental providers based on its unique history of successfully completing large corporate combinations."
What’s The Likely Impact?
Given the relatively large footprint of the combined organization, accompanied by the economies of scale that dental service organizations enjoy, the combined company may pose a serious competitive challenge to solo and small group practices in different markets.
To be sure, 650 practices are a relatively small proportion of the total number of U.S.-based practices, but all dentistry is local. Going head to head with a well-funded and run dental service organization (DSO), particularly in smaller markets, may lead to significant price undercutting at a time when most dentists are only seeing 80 percent of their early 2020 patient flow.
And if Mr. Schroeder’s view of the M&A market is correct, those challenges will only steepen over time.
There is a way to make DSOs irrelevant to your success in 2021 and beyond. SmartBox has an excellent track record of helping dentists dominate their respective markets regardless of the competition.
Schedule a complimentary Practice Growth Call with one of SmartBox’s Practice Growth Experts. Unlike the typical “sales” call, this is a mutual exploration of your competitive environment, your goals, and your practice growth efforts. There’s no obligation and, following completion of the call, you’ll receive a completely personalized Roadmap to the success you want… DSOs notwithstanding.
SmartBox employs the best minds in dentistry to help you grow your practice. Our Practice Growth System™ is proven to help dentists in every market area across the country achieve predictable year-over-year growth.