DSO Organic Growth – An Industry Expert Shares Lessons Learned

It is not surprising that most dental groups think about growth primarily in terms of acquisitions. Is it the allure of deal-making and the instant boost to revenues? Or is it just the fastest and easiest option to increase revenue?

DSOs across the country are rolling in practices rapidly, while very few of them are seeing same-store growth/organic growth. Let’s face it, organic growth is not an exciting topic to many, and most groups are frustrated by how long it takes to move the needle. However, dental groups should not underestimate the power of organic growth. It may take more time and effort, but it creates incredible value and says a lot about the health of your organization.

In a McKinsey Global Survey, they identified that companies with more organic growth generated higher shareholder returns than those with growth that relied more heavily on acquisitions for all levels of revenue growth.

Some dental groups have spent a lot of time, money, and effort to push the organic growth initiatives only to experience minimal results or temporary results. Unless you have a strong process and systems in place, it will be hard to get the change you desire.

If you see a dental group with consistently strong organic growth, it’s generally a sign that the organization has a solid operating plan/structure and is executing it well.

So, what is the best approach for achieving organic growth? How do you identify the high growth opportunities? What is the best way to implement them?

Six Steps to Achieve Organic Growth

1. Analytics: Strong analytics is key to identifying the opportunities. There are several great platforms available to dental groups that will extract the data you need to analyze and identify your greatest opportunities. However, I encourage you to understand fully how the data is pulled and calculated. Never assume that you “understand” the data without understanding fully how it is measured. I have seen several different platforms measure PPH, treatment acceptance %, etc. differently. Know what you are measuring.

2. Data: High impact questions to ask when looking at your data:

a. Has hygiene revenue been flat the past three years? If so, why?
b. Has there been a decrease in patient visits or a limited-service mix?
c. Had doctor revenue been flat? If so, why?
d. Have your provider hours been stagnant?
e. In House Specialty? How many referrals are going outside of the organization?
f. What is your patient retention numbers? New patient counts?
g. Have you updated your fee schedule lately? Are you > 85th percentile of fees in your area?

3. Action: Identify the opportunities with your management team. What are the options that your team can quickly and efficiently tackle? What is the ideal metric you want to achieve?

4. Implement: Develop an implementation plan. Do you need to provide training or any resources to the team? How will you create action around the initiative? Who is accountable for the initiative?

5. Dashboard tracking: Track your initiatives every day. You’ve heard it before, and you will hear it again. What gets tracked, gets results.

6. Accountability: Assign responsible parties to each initiative and task. Check in weekly with them to monitor progress and ensure they are on track.

Lessons I’ve Learned

1. Engagement: Your operations team cannot implement fully without the support of your clinical team. You must fully engage your clinical leaders and providers to see the most impactful changes.

Common Scenario: At the monthly office meeting, the practice manager tells the hygiene team that one of the group’s initiatives is to improve periodontal treatment and that they need to start doing more periodontal therapy. How do you think they will respond? First, this is not an initiative, and most importantly, the clinicians will likely roll their eyes and continue to do what they have always done in the past.

2. Consistency: Once you identify your initiatives, stay with them. Many groups are inconsistent. They move their focus often – sometimes monthly. I like to call this the ‘flavor of the month.’  If you are moving your focus constantly, you will never achieve your desired results, and most importantly, your team will become confused, tired, and unaccountable. After all, why place focus on something that will change next month?

3. Flexibility: If your strategy for one of your initiatives is not working, then modify it. You can be consistent and flexible at the same time. Consistent with the goal, flexible with how you are implementing.

In one year, my organization increased revenue by >18% organically in 12 months. 18% is a significant improvement for 12 months, and there was still room for additional growth. Our three top initiatives were:

• Hygiene – a mix of services (fluoride)
• Doctor – a combination of services (full integration of clear aligners)
• Improve in-house referrals.

Don’t underestimate the power of organic growth. The initiatives you implement will be a part of your playbook and repeatable with each acquisition you complete.

Written by: Heidi Arndt, Founder | CEO, Evolve Dental Advisors. Heidi and her team help groups looking for organic growth opportunities and provides the strategy to implement them. Email her for a strategy day info@evolvedentaladvisors.com or call her at 800-578-9767.

Heidi is an executive with deep expertise in establishing, developing and managing multi-location dental groups across the United States. With more than two decades of experience advising and consulting emerging, mid-market and elite DSOs, Heidi supports clinicians, owners, and investors to align clinical success with overall business success.

Heidi previously served as CEO for Strive Dental Management; a private equity-backed DSO based in Austin, Texas with over $20 million in revenue. After advancing the company’s same store growth by 18% over a two-year period, Heidi successfully led the company through an equity sale transaction in July of 2021. Prior to joining Strive Dental, Heidi founded two boutique consulting firms serving DSOs across the United States – Enhanced Hygiene and Enhanced Practice. In early 2019, she successfully sold and exited both companies. Heidi began her career as a clinical dental hygienist at various dental groups, including Mayo Clinic in Rochester, Minnesota and American Dental Partners in Wakefield, Massachusetts, where she would eventually assume the role of National Director of Dental Hygiene. Heidi holds a Bachelor of Science in Dental Hygiene from the University of Minnesota.

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