As we have recently springboarded into a new year, it makes sense to take a look at what is in store for all of us in 2020. Like you, I am very interested to see how 2020 takes shape in a few critical areas. I’ve noticed some consistent trends in what people are talking about, but, in addition, I also see several trends that aren’t being covered, that probably should be.
For example, we all expect to continue to see more dental market consolidation and growth of DSOs. We don’t need a crystal ball for that one. But with that consolidation, we are also seeing more reach of DSOs into dental specialization such as orthodontics, endodontics, and other specialties. Also, we have been hearing about healthcare organizations’ increasing interest in dentistry, but we may hear less about expansion of alternative organizations that provide dental care.
What’s really going to happen in 2020? Here is my take on a few key trends we might see.
TREND #1 – DSOs WILL CONTINUE TO GROW IN SIZE AND REVENUE—LARGELY THROUGH ACQUISITIONS AND MERGERS
We all love a good underdog story (in this case solo practices), but the truth is that the larger dental organizations will continue to grow in strength, largely fueled by acquisitions. Although the de novo growth strategy is working effectively for DSOs that are expanding in underserved markets, we primarily are going to see more acquisitions, partnerships, and mergers for growth.
With these acquisitions, we can expect to see increases in revenue for DSOs. In 2018, the ADA reported that Compound Annual Growth Rate (CAGR) for the DSO marketing was in the 12% range. I think in 2020, we are going to see that number bump up a point or two, or even more.
The nature of the market leads me to believe that acquisition activity will reach beyond adding solo practices. I predict we are going to see some additional consolidation strategies that include more DSO mergers and consolidation in this new year.
TREND #2 – DSOs WILL INCREASINGLY EXPAND THROUGH ACQUIRING SPECIALISTS
The acquisition growth strategy mentioned above will be deployed in a handful of ways. One key area may be through a specialty focus within DSOs. DSO leaders I’ve talked to have expressed an interest in continuing to maximize their share of wallet (percentage of dental care revenue) from their existing patients. The ability to manage multiple specialties under the same roof will continue in 2020 as it’s a relatively easy way to both keep patients and expand offerings. Why refer out the work when you can do it in house?
TREND #3 – DENTAL PATIENTS WILL HAVE MORE CHOICES—THROUGH EXPANDING HEALTH ORGANIZATIONS
Also in the growth spectrum, this year will see increased pressure and growth from a variety of health organizations all zeroing in on the dental industry.
With clear visibility and current research into the overall health advantages of dentistry, the healthcare industry is certainly taking note. We can expect to see more traditional healthcare involvement based on integrated care models. It appears that the mouth is being put “back into the body” in terms of its importance in overall health. While dentists have always known the role of dental health in overall patient health, this imperative may be driven increasingly from the medical side.
What will that look like? In the long run, the landscape may evolve so that patients can see a dentist almost anywhere they can get medical care—hospitals, community centers, dental clinics, etc.
TREND #4 – DENTAL PATIENTS WILL HAVE MORE CHOICES—THROUGH ALTERNATIVE DELIVERY CHANNELS
In 2020, in addition to expansion in healthcare settings (which will create new competition), I believe we’re going to start seeing more competition from non-traditional organizational types. For example, patients may have an opportunity to visit their dentist while shopping at Walmart.
The needs across each of these verticals and opportunities are very different and will require a unique lens into each setting to help support dental growth. Each could present opportunities for collaboration for DSOs.
These four areas are just a sampling of trends I will be watching with interest in 2020. I look forward to sharing more in future newsletters. What trends are you watching? I’d love to hear your thoughts – email me at [email protected]. I hope to hear from you. Best wishes for a successful 2020!