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“I want to build a group dental practice or dental support organization, but I don’t know how to do it.
How did you do it? Can you help me build one?”
Aspiring dental entrepreneurs have asked me some variation of these questions countless times during my 15 years working as a leader and influencer in the DSO sector of the dental industry. I’ve personally seen many dentists set out on the difficult path of scaling into a DSO, but only a select few end up reaching or exceeding their initial goals. More often than not, after a few years of struggle, I hear a downtrodden owner with markedly less passion relay something similar to the sentiment, “I had no idea it would be so hard!”
The misunderstanding of the nature of success has been responsible for innumerable failed attempts to build organizations, both inside and outside of dentistry. The iceberg illusion (above) perfectly encapsulates the often unrealistic allure of entrepreneurial success.
As with so many successful entrepreneurs before me, I have experienced each and every aspect of this iceberg, right down to the disappointment, failure and sacrifice. Buoyed up by persistence, dedication, discipline, and good old-fashioned hard work, I was fortunate enough to work with an extraordinary team to build what was one of the most successful DSOs in the country.
I recommend that everyone interested in building a DSO deeply examine their motivations for wanting to do so. In my conversations with aspiring DSO leaders, I commonly talk people out of building one after I point out what lies treacherously below the iceberg. The path to success is mostly hidden from the outsider’s view and is fraught with severe hurdles, some expected, and others that are completely unexpected. It is a grind, it is hard, and sometimes our autonomic nervous system directs us towards reversing course and receding back into comfort. Only a rare few have the mix of grit, business acumen, interpersonal skills, emotional intelligence and passion to push them through the slog that people don’t see lying below the water line.
However, all of these positive traits are often still not enough to successfully build a DSO. Also critical to success, is to build a strong framework for the organization to ensure sustainable growth. In my experience, the framework of all successful DSOs is similar. All sustainably successful dental groups exhibit these critical components illustrated below this in the DSO House concept:
The foundation of the DSO House is the organization’s mission, vision and values. This aspect of any house protects it from outside elements that will damage and slowly rot it to oblivion over time. The mission should be short, concise and easily understood by everyone within the organization. It will guide every decision as the DSO grows and scales. The vision should also be short and encapsulate the leader’s plan for what the company will become as it scales. The values of the organization should be minimal in length and universal enough to guide how team members of the DSO act as they treat patients (and how they treat each other) at all times. This foundation is a gating item for all decisions within the organization. In short, if a proposed action does not align with the mission, vision and values, it is not done.
An example of this concept are the mission, vision and values of the DSO I built and led:
Mission: Ultimate Service. Superior Performance. Positive Impact.
Vision: Transform Oral Healthcare.
Value(s): Patients First.
The roof of the DSO House is another critical gating item as you build and scale a DSO. The roof of any house protects it from harmful outside elements such as rain, snow, ice, and wind. It allows the inside of the home to maintain a temperature independent of the outside to keep its inhabitants insulated from the elements. Asking whether any proposed action is simple, scalable and efficient protects the organization from the “scaling of chaos” which often occurs when this roof concept is not firmly in place.
There are three key pillars associated with the DSO House: exceptional clinical quality and leadership, the right financing/investors, and a synergistic management team.
Exceptional clinical quality and leadership is self-explanatory and is prerequisite to ensuring your DSO is built for the long haul. In addition to this pillar, additional pillars support this idea. These secondary pillars assist in fully engaging the dentists who drive practice growth through means that motivate and align their actions with organizational goals. These secondary pillars include building a shared purpose between the organization and the dentists, satisfying the self-interests of the dentist (including compensation and professional goals), ensuring full personal and professional respect of the dentist in every way possible, and creating a culture with traditions that are in alignment with the mutual goals of the dentist and the organization.
The right financing/investors can make or break the growth curve of even the most well conceived DSO. Emerging groups often rely on traditional banks to provide capital in the form of dental loans to fuel growth in early stages. With size and scale, these resources can become limiting to the acceleration of the scaling process when it is time for the exponential growth phase to begin. Investors in the form of private equity firms or family offices (investment firms managed by wealthy families with their own funds) have been increasingly interested in partnering with emerging groups or DSO’s to provide growth capital. Personality/cultural fit, proper deal structure (minority/non-control or majority/control, etc.) and the ability to add clear value to the venture are the critical components required for investors to be the right fit for your organization. Many entrepreneurs find it difficult to know which investors are the best fit, what the proper deal structure ought to be, and what constitutes adding value as a partner. DSO Project Advising is uniquely equipped to assist DSO’s to answer these questions with our network of vetted investors and deep DSO transactional experience.
The final key pillar is a synergistic management team. With some organizational scale, this often consists of the following positions and characteristics:
CEO: visionary, broad skills, curious, lifelong learner, strong emotional intelligence, self-awareness, collaborative, execution focused, polymath, rainmaker
COO: bias toward action, process and systems focused, eye for talent, ambassadorial, squashes drama
CFO/Controller: operational and clinical understanding, dental understanding/experience, quick study
PC President/CDO: respected clinician and mentor, likable, strong integrity, aligned with business goals, influencer
As you embark upon your group practice or DSO journey, the principles of the DSO House coupled with a strong understanding of what underlies success to create your dream DSO, will exponentially increase your odds of success.
Written by Jeromy R. Dixson, DMD, MBA, CEO of The DSO Project and DSO Project Advising. Dr. Dixson was chosen by Group Dentistry Now as one of the ‘DSO Influencers‘ of 2019. You can contact Dr. Dixson at drdixson@dsoproject.com or connect with The DSO Project ecosystem at www.dsoproject.com and www.dsoprojectadvising.com.
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