Hey there, dental professionals and industry enthusiasts.
Picture this. It's October, and you're in the
middle of one of the most transformative
experiences of your career. You're at the Becker's
Fall Future of Dentistry Roundtable in the vibrant
city of Chicago, fresh off an incredible 3
days at the Hyatt Regency. Imagine yourself inspired
and invigorated
after attending captivating keynote sessions by none other
than the legendary boxing world champion and CEO,
Lila Elite, and the extraordinary
professional basketball player, Caitlin Clark. See yourself engaged
in lively discussions,
exchanging ideas, and collecting a stack of business
cards from fellow dental experts and potential partners.
You've networked with over 350
attendees and learned from more than 80 speakers
who are at the forefront of dental innovation.
You sat in on educational sessions exploring topics
that elevate dental care as a critical element
of whole person health. You've witnessed firsthand how
digital technology is revolutionizing
patient outcomes
and how both large DSOs and independent practices
are flourishing. Get ready to transform your career
and don't miss out on this incredible
opportunity. The Becker's fall future of dentistry roundtable
is from October 30th to November 1, 2024.
Get registered by going to beckersdental.com
and clicking on the events page.
Hello. This is Cameron Cortejano with the Becker's
Dental and DSO review podcast.
I'm thrilled to be joined today by David
Sock, who is the chief development officer at
Specialty Smile Partners.
Dave, thanks so much for being here today.
Hi, Cameron. Look look forward to discussion.
To start us off, can you introduce yourself,
and tell us a little bit about your
background?
Yeah. Absolutely.
So I'm I'm Dave Sopp. As you mentioned
earlier, I I recently joined
Specialty Smile Partners as the chief development officer.
SSP or Specialty Smile Partners is a dental
service organization
that's
focused
on pedodontics
and orthodontics.
As the CDO, my my primary roles are
developing trusted relationships
with potential partners,
evaluating cultural alignment and fit with the docs,
leading due diligence,
executing transactions,
and assisting with the onboarding of new affiliates.
For me, personally, I've spent my career investing
private capital to acquire family owned and owner
operated
businesses,
managing these businesses,
and leading merging acquisitions
for private equity owned dental service organizations
or DSOs.
I was drawn to health care services because
if you do your job well, not only
do you generate a financial return,
but you're also impacting patients,
improving their experiences,
their outcomes,
ensuring their continued access to care.
This is a mission statement for me because
my mom was a nurse, and some of
the stories that she told me growing up
left me wondering,
what is it that's motivating some of these
health care service providers?
Because it is it's not always clear it's
the patient.
Great. Thanks for that introduction.
What are some of the biggest issues
that you're following
in the dental industry,
so far this year?
Well, obviously,
lots going on in the industry, but you
probably wouldn't be surprised
to hear, given my role,
that I'm firstly focused on mergers and acquisitions
and specifically
deal pace and transaction
sizes.
You know as well as anyone that the
pace of acquisitions
has increased during 'twenty four after
a cost and availability of capital driven slowdown
and a resulting internal operations
focus during 'twenty 3.
My belief is that the
2024
first half pace will be sustained during the
second half of this year as
the economy continues to be strong.
DSOs,
again, access debt capital,
and interest rates potentially begin to come down.
I'm also looking for consolidation of consolidators
to occur as
the DSO market
matures
and larger group DSOs
seek liquidity.
Although the timing of this is, I'd I'd
admit, uncertain.
Related to acquisitions, I'm I'm also focused on
how DSOs
ensure
that newly affiliated offices remain
happy and productive after the partnership is formed.
Aside from having proven
processes to work with their new partners,
DSOs have to allow the offices to retain
their clinical autonomy
and the unique cultures that initially attracted them
to the affiliates.
While maybe an oversimplification,
dental officer excuse me. Dental officers are experts
at improving patients' experiences and outcomes,
and
I'm following how DSOs offer support services
to further the office's ability
to improve the experiences
of staff and patients.
Got it. Thanks. And when
you kinda touched on the consolidation
of some of those
DSOs and other consolidators in the industry. What
do you think are some of the drivers
behind
that potentially starting to occur? I know you
said there's not really
a set time that you're expecting this to
happen.
But what do you think are some factors
that could lead that to happen?
Well, the first one, and it's not necessarily
a positive story,
is that
2, 3 dozen DSOs have
are now owned by banks. So private equity
investors have turned the keys over to banks
because of
overlevered balance sheets and other operational
distress.
Those banks are
generally not motivated and not set up to
run and operate these businesses, and the banks
are looking for liquidity events. So,
these assets that are owned by banks
need to be sold,
and those are transactions that are easier to
sell
as an entire portfolio of offices as opposed
to breaking them up and selling them on
a onesie twosies basis to to other DSOs.
That's the primary reason I'd say that I
anticipate
a consolidation of consolidators
to occur.
The other reason I would say is if
you look at the dental market,
my sense is that it may be, I
don't know, a third consolidated,
and there's still runway to be able to,
to consolidate
the the market further. But if you look
at consolidation
trends in other
medical specialties or health care specialties that maybe
you're more mature in in in the consolidation
phase, like a eye care or dermatology
or veterinary.
What you saw in those,
end markets was
as those markets matured and eventual moving into,
a consolidation of consolidators.
So so for me, it's a combination
of
some bank owned platforms that need a liquidity
event
and just the continued maturation of the consolidation
in the dental market.
That makes sense.
Something I'm curious to get your thoughts on
are
what are some of the things that you're
most excited about when it comes to the
dentist,
the dental space right now, and what are
some things that are making you a little
bit nervous?
Yeah.
It's a good question. I I'd say in
terms of what am I excited about,
I'm excited about kind of following on that
last question, the the continued consolidation of of
the industry,
first with owners who own
one to a handful of practices
and eventually
this consolidation of consolidators,
that I mentioned earlier as the market matures.
For me, I get a thrill from developing
relationships with docs and helping them
and DSOs to achieve
collective visions.
Again, this creates a a financial win for
all stakeholders, but it also benefits patients.
I'm also excited about the new technologies
that will enable
patient centric care models
and impact the end excuse me, the industry
in in so many ways,
you know, whether it be AI's impact on
improving care procedures,
enhancing treatment planning and patients' understanding,
or assisting with workflow processes so that the
offices can run more efficiently and effectively. So,
so for me, the excitement is related to,
m and a, how that enables
benefits
financially and from a patient standpoint, and then
how new technology is,
embraced and employed in the dental market.
From a from a nervous standpoint,
I'd say
I continue to
be concerned about the staffing challenges that continue
to impact the industry.
You know, certain states have been progressive in
enacting bills
like empowering dentists to
easily practice in other
participating states through multistate compacts.
But expanding training capacity to increase the number
of
hygienists and assistant graduates annually
and creating new paths to the profession, such
as, like, a hygiene assistant,
I think more solutions are needed.
Progress is being made, but
more work needs to be done.
Yeah. I definitely agree with you on that
last point about the staffing. I think,
it's, like you said, been improving, and, some
states
are doing a little bit more than others
to,
make those improvements.
But it's still
I think a lot of dentists would say,
not
at the same level that it was,
before COVID 19, and,
that has been a a huge problem for
a lot of dental practices
and DSOs in in these past couple of
years.
A 100%. I mean, as you know,
a certain percentage of the employee base left
with COVID and never returned.
And I would say that I'm seeing more
availability of associates today,
but hygienists are definitely hard to find. They're
expensive,
and,
assistance
maybe not quite as acute of an issue
as hygienists, but
still are,
can be challenging roles to fill.
Yeah. Absolutely.
Especially that point about dental hygienists
has has been a huge
huge thing in the industry,
in the past couple of years.
Our last question today is what will the
most effective health care leaders need
in order to be successful in the next
2 to 3 years in your opinion?
Hi. So for 2 to 3 years,
I guess I'd say a couple of things.
First,
the most effective leaders will need staff that
are
fulfilled and motivated.
Look. There are many care options for consumers
to choose, so it's critical that
providers
provide an exceptional patient experience. And if I
think about myself individually, I don't think my
experience is much dissimilar to others, and
that being that I seek care from an
office where I know, like, and trust the
staff members
and where I know that my interests are
what motivates them.
And on this point, I'd I'd recommend a
book called Patients Come Second
to learn about how to create an engaged
workforce.
Being patient focused, this title may sound counterintuitive,
but the concept is is that if you
can connect providers' work
with a higher purpose and provide them with
tools so that they can be leaders,
you can attract and maintain
a motivated staff that is in turn capable
of providing
excellent patient care.
And these goals, they they they may sound
simple and obvious,
but there are many factors that leaders must
get right to achieve them. Creating a culture
of teamwork and community is is influenced by
things like who do you recruit, how do
you inspire them, and what type of opportunity
do you provide them.
So that's one item. The second thing that
I'd say is that leaders must
remain disciplined to be successful during the next
2 to 3 years.
There was just too much undisciplined buying when
capital was readily available and relatively cheap during
21 and 22.
And too often, the goal was growth for
the sake of growth rather than
adhering to a strategic vision of what was
being built and
paying reasonable prices that would allow equity value
to be created.
So to me, I I guess if I
were to sum it up, I'd say the
the most effective health care leaders during the
next 2 to 3 years
will be those who successfully create a culture
that develops and maintains
engaged and motivated staff
and those who remain disciplined about how they
pursue
their strategic visions.
That makes a ton of sense, and, I
think that those are two great points. And
the if if health care leaders can follow
those, then,
the success will likely come afterwards.
Yeah. Well, I wanna thank you for joining
us today, David, and thank you for sharing
your valuable expertise
and insights into the dental industry.
It's been a pleasure speaking with you, and
I look forward to connecting with you again
in the future.
My pleasure. I enjoyed the conversation,
Cameron.