Why DSOs must play different in a high-interest rate economy

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Rethinking efficiency in today’s market 

For decades, the formula behind group dentistry has been straightforward: acquire practices, centralize operations, improve efficiencies, and sell on an EBITDA multiple. It was a model fueled by access to cheap debt, where the cost of capital was so low that efficiency gains were often optional rather than essential. 

That world no longer exists. 

In today’s high-interest environment, the same model that once drove growth is straining balance sheets. Debt has doubled or even tripled in cost, acquisitions have slowed to historic lows, and groups that once seemed unstoppable are now facing serious financial headwinds, some even bankruptcy. 

As one well-known saying goes, insanity is doing the same thing over and over again and expecting different results. For DSOs, continuing to operate under the same assumptions is not just unsustainable. It’s irrational. 

The question is no longer whether to change, but how. 

Why the old playbook no longer works 

The traditional DSO playbook was built on scale. Leverage debt, acquire a high number of practices, and rely on centralization to lift margins just enough to justify the investment. 

Pre-COVID, that strategy worked because debt was effectively “free.” Interest rates were nominal, and the difference between 3% or 4% financing costs barely moved the needle. Rolling up practices happened abundantly, and the returns were predictable. 

That reality is gone. 

Take a $1 million acquisition. At a 3% interest rate, monthly payments hover around $3,000 to $4,000. At 6%, they balloon to $6,000 to $8,000. In other words: if interest doubles, so do your debt payments. (Moody BAA Corprate Bond Yield Rates) 

This shift has doubled the pressure on groups to generate profits. Acquisition volume is at its lowest in years, and more DSOs are in dire financial positions. What once looked like a growth engine has become a cash flow trap. 

If the old math no longer works, the operations behind it cannot stay the same. 

Finding real efficiency 

Historically, outsourcing in dentistry has carried a stigma. Teams were expected to be in-office, with every role hired directly into the practice. 

But in today’s financial environment, continuing that mindset is, again, insanity. The goal is not to replace people or diminish quality. It’s to rethink which roles truly need to be in the building, and which don’t. 

Certain jobs should never leave the practice. Patients deserve a human front desk, not an iPad check-in screen. Welcoming, checking in, and checking out patients are high-touch experiences that define patient satisfaction and cannot be replicated remotely. 

Other roles, however, don’t require in-person presence. Insurance verification. Revenue cycle management. Scheduling. 

Keeping these positions tied to physical offices increases costs and also ties up liquidity that could be reinvested where it matters most: the patient experience and the core clinical team. 

Reducing costs here means avoiding layoffs or cutting corners and instead focusing on playing the game differently. 

A financial example: the Florida model 

In Florida, the fully loaded cost of an in-practice front office role is materially higher than the hourly wage suggests once benefits, payroll taxes, and overhead are included. 

According to ZipRecruiter, recent pay data for dental receptionists in Florida clusters around $16 to $20 per hour statewide, with metro snapshots such as Miami and Jacksonville near $17 per hour and statewide aggregators showing ranges from roughly $14 to $20 per hour. 

To translate wages into true employer cost, the Bureau of Labor Statistics notes that private-industry benefits average about 30% of wages, in addition to statutory payroll taxes (federal FICA of 7.65%) and Florida’s state reemployment tax of 0.1% to 5.4% on the first $7,000 of wages. 

Putting this together, a $16–17 per hour wage in Florida typically lands near $23–24 per hour on a fully loaded basisafter benefits and taxes, which equates to roughly $4,000 per month or $48,000 per year for a full-time role. At higher-paying offices closer to $20 per hour, the fully loaded cost approaches $28 per hour, about $5,000 per month and $60,000 per year. 

By comparison, moving that role outside the practice produces approximately $23,334 in annual savings per position, based on a dedicated virtual teammate model versus an in-practice fully loaded hire at Florida levels. 

Now scale that across a group. Fifty positions optimized unlock about $1.16 million in annual cash flow, which at 8x EBITDA translates to roughly $9.3 million in added enterprise value. 

The immediate relief is debt service coverage, but the real advantage is freeing liquidity to reinvest in clinical talent, patient experience, and targeted expansion. 

Lessons from experience 

I know this reality firsthand. Years ago, I led the largest dental focused scheduling team in the US, roughly 300 people dedicated to managing calls and appointment scheduling. 

What looked like success at first was really a fragile model: a fragmented call center with high churn, rising costs, and inconsistent quality. Changing course meant more than effort; it demanded discipline to rebuild on stronger foundations. 

For a time, the model worked. But as costs increased, we reached a breaking point. Continuing with the same approach was no longer sustainable. We had to change. 

That lesson went beyond operations; it was about strategy and ultimately about survival. DSOs across the country now face the same crossroads: the crunch is real, and they must do things differently if they want to grow. 

Practical steps for DSOs 

• Accept that interest rates aren’t going back tomorrow. Hoping for a reversal is not a strategy. 

• Rethink the locations and placement of roles. Keep patient-facing positions in-practice but optimize back-office functions that don’t require in-person presence. 

• Calculate the true cost of staff. Wages are only part of the equation; benefits, overhead, and taxes matter. 

• Invest where it matters most. Clinical teams, patient care, and practice growth. 

• Balance efficiency with sustainability. Build systems where teams and practices thrive together, so cost savings do not come at the expense of long-term stability. 

By reframing the conversation from cost-cutting to value-creating, DSOs can position themselves not just to weather today’s pressures, but to thrive. 

The future belongs to those who adapt 

The market has changed. Debt is no longer cheap. Margins are under pressure. 

But within this challenge lies opportunity. By rethinking how teams are structured, by protecting the human presence where it matters most, and by optimizing where it doesn’t, DSOs can unlock both immediate cash flow and long-term enterprise value. 

The future of group dentistry will belong to those who know how to adapt, those who can preserve patient experience while playing the game differently. 

Why dedicated dental Virtual Assistants are the operating lever 

Dental virtual assistants are not a call center and not gig labor. They are dedicated teammates who log into your systems, follow your playbooks, and join your daily huddles. They handle phones, insurance verification, revenue cycle tasks, and scheduling with consistency while your in-practice team focuses on patient care. The result is higher answer rates, cleaner claims, protected chair time, and steadier cash flow at a lower fully loaded cost. In a high interest environment, that combination is how operators preserve liquidity today and grow enterprise value tomorrow. 

Next step

If you want to explore this approach, schedule a brief conversation with our team to see how dedicated Virtual Assistants fit your operations. In fifteen minutes, we can outline which roles typically transition first, how integration works with your systems, and the KPI’s operators track to validate impact. Visit https://www.getreach.co/. 

About the author: 

Cory Pinegar is the CEO of Reach, a fast-growing company redefining virtual staffing for dental practices across the U.S. Since acquiring the company at 22, he has scaled Reach to support thousands of clinics while cultivating a culture of clarity, accountability, and purpose. A passionate advocate for sustainable growth and human-first leadership, Cory also serves on the boards of Veriffic and the Parkinson’s Foundation.