DSO Growth | 2 Pitfalls that Sabotage Expansion

A healthy dental service organization (DSO) always has a plan for growth, and in most cases the expansion happens through targeted acquisition. But what hidden obstacles can befall this generally well-defined process of adding a new practice to the DSO portfolio? An investigative look at the industry and its business transactions indicates there are two primary pitfalls that can derail the best laid DSO growth plans and most capable strategic teams: poor partner vetting and poor change management.  Let’s take a closer look at both.  

1.  Not choosing the right partner

Arguably the most critical step before committing to any DSO practice acquisition is researching and vetting the potential doctor partner and his or her operation. Just as the right practice and doctor partner can be a boon to the DSO’s overarching reputation and success, the wrong one can effectively sabotage a key business venture.  

Ensure doctors are aligned to the DSO’s management philosophy.

This is largely a question of whether the DSO takes a centralized or decentralized approach to marketing and operations management. In centralized management, doctor partners must be willing to onboard and utilize prescribed management and DSO marketing software, standard operating procedures (SOPs), and reporting processes. This may present a greater upfront lift for the practice, but doctors should bear in mind that centralized management can ultimately free them to fully focus on clinical endeavors without getting mired in administrative tactics. On the other hand, a decentralized approach that grants more autonomy to the doctor can still be effective, but the individual practice and its leaders must show they are receptive to DSO recommendations and compliance with any stated operational requirements.  

Conduct on-site research and in-person interviews.

Real-time interactions and interviews present the greatest opportunity to evaluate team morale and overall operational efficiency. This is also an ideal time to fully explore how well aligned the practice leaders will be to the DSO’s management philosophies. Have the doctors and office managers historically demonstrated adaptability and willingness to evolve in the interest of practice health? Are current processes well documented and closely followed? Are individual roles clearly defined and well executed? Has there been high-volume turnover, whether recently or in the past? Building a complete and detailed picture of how the practice operates today will indicate how well it could operate as a new portfolio practice.

Accept that there will be some performance gaps.

In any acquisition conversation, there is a reason—or list of reasons—why a doctor is interested in selling to or partnering with a DSO. With this in mind, accept that there will be some gaps in performance, and these will almost certainly make themselves known during the on-site interview process. Perhaps marketing is inconsistent; maybe patient outreach is an entirely manual (and therefore inefficient) process; or it could be that patient acquisition is low. Whatever the shortcoming, the DSO’s change management plan should account for how these processes will be improved (or it should help identify when a performance gap is a potential deal-breaker).Know the financials inside and out. There is no way around this one. If a practice is grossly failing on the financial front, then it is unlikely to prove a worthy acquisition pursuit. While any number of performance gaps can be effectively addressed with procedures, tools and other resources, poor financials are generally indicative of multiple systemic issues.

2.  Not perfecting change management processes

A comprehensive and intentional change management plan, which includes a dedicated team to oversee it, is critical to successfully transitioning a practice into the DSO portfolio. Lacking such a plan is the second greatest pitfall that can impact an acquisition. From the start, DSO change leaders and practice doctors and staff must be in absolute lockstep, and they must remain that way throughout the transition (which doesn’t always happen quickly).

Remember that staff buy-in is ongoing.

Buy-in is not a one and done agreement; it must be earned throughout the transition, and it is important that the DSO have it. Staff buy-in will contribute immeasurably to the seamless onboarding of platforms, softwares, SOPs, branding changes and more, so the DSO must be committed to a smooth and comfortable transition that will garner them this internal support. Even if the acquiring entity takes a staunchly centralized approach that will require staff turnover and extensive internal change, a definitive and transparent change management plan will mitigate friction along the way and help generate understanding for the “why” behind every change.

Deliver training on new technologies and processes.

If there are any new technology platforms, office hardware, or operating procedures to be implemented (and there certainly will be), make sure there is a team available to deliver extensive training on their upkeep and use. This is another step that is unlikely to be one-and-done; be prepared to offer ongoing training to ensure maximum retention and full utilization. For front office staff in particular, changes in their daily tools and programs can be jarring, and a poorly considered transition can negatively impact their view of the DSO and even their practice.

Ensure all practice staff know who to contact with questions.

The last thing any DSO wants when transitioning a practice is to leave staff feeling stuck. Part of fully supporting practice staff is letting them know who to contact for troubleshooting or general assistance, and this can extend beyond the DSO itself. If the DSO is implementing new technologies, make sure practice staff are connected to appropriate customer support and training teams so they can confidently and effectively manage the new tools put at their disposal.

Does your DSO have a reliable process in place when it comes to evaluating, acquiring and transitioning new portfolio practices? Consider that transparently setting expectations and providing reliable support throughout the transition process can go a long way.  Looking for a strategic partner that can help define your transition process and drive your dental business success? Explore RevenueWell’s customizable suite of software and services that can transform your central operations and drive sustainable growth for your DSO. Learn more about RevenueWell for DSO.