Filling the Gaps – NJBIZ
New Jersey healthcare facilities have been deeply impacted by the COVID-19 pandemic, and the dental industry has not been spared. At the start of the pandemic, the state had about 7,200 dentists. This number has dropped significantly. “We have fewer dental offices now than before COVID,” said Jim Schulz, director of government and public affairs at the New Jersey Dental Association. “We start digging.”
The dental industry and state workforce is 85% of what it was before the pandemic, when many dental offices had to shut down large portions of their operations because they were considered elective procedures. Many have closed their doors permanently. Shortages of dental hygienists have been particularly problematic.
At the start of the pandemic, dental practices were already going through a wave of consolidation, according to a January 2019 report by the industry publication Group Dentistry Now. The phenomenon had been happening for years throughout the healthcare industry,
The American Dental Association, in a 2016 report, noted that employment in “very small dental practices” fell from 89.3% in 1992 to 80.7% in 2012. Meanwhile, the percentage of ‘Employees in the largest dental practices rose half a percentage point over the same time, to 3.9%.
Schulz said he expects a surge in consolidation following the pandemic. A January 2022 report from the ADA, which surveyed 2,000 dental practices across the country, found that 69% said they were concerned about staffing, while 35% said they were concerned about inflation, fees overhead and rising costs; 23% worried about insurance and reimbursement; and 22% were concerned about patient cancellations.
“You see the natural progression of consolidation,” he said. With dental practices operating on tight margins, many are opting for “consolidation and affiliation to have a better market value proposition.”
In one type of consolidation, dental partnership organizations are created to handle the back-end functions of the business such as insurance, human resources, payroll, and information technology. Participating individual practices also retain their autonomy.
“We’re taking a lot of the administrative burden out of the front desk,” said Paul Gruensfelder, vice president of marketing at one such DSO, Florham Park-based Select Dental Management, which serves 34 practices across eight states. “We work with the leaders of the practice and buy the majority stake…but the leaders still have their skin in the game. It’s a real collaborative approach.
SDM Chief Executive Elliot Zibel said consolidation is “taking on a massive scale” due to the pandemic, and expects that nationwide the number of dental practices affiliated with a larger group is likely to double over the next decade.
Dental graduates with high student debt, along with the growing number of patients over age 65, are also driving consolidation, Zibel said.
A similar model is used by The Aspen Group and Aspen Dental, a national company with seven New Jersey locations that each have a unique practice name. “We provide support to independent practice owners and their care teams so they can focus on what matters most: bringing better healthcare to more people,” the spokeswoman said. Aspen, Katie Stafford. She said the benefits of being in the Aspen network include the “comprehensive support system”, as well as “continuous education, training and mentoring, advanced digital technologies”.
“We love supporting this entrepreneurial vision for others — to break down barriers to care, so that every physician can bring better dental care to the communities they serve,” Stafford said.
Schulz said some practitioners might find it difficult to weigh the pros and cons of DSOs and different types of consolidation, because it all depends on patient needs and demographics.
“You have some working under the same banner in a more corporate and vertical structure,” he said. “Some work in a more confederate structure…where they really manage the non-clinical functions.”
“It’s something we’ve seen during the pandemic – people were consolidating, people weren’t even selling. We had a certain subset of members at the height of the pandemic who were saying, “I don’t see any way out…I see business practices fundamentally changing…I don’t have the tolerance to sell.