Oral Health Group
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The DSO Model: Your Questions Answered

September 12, 2022
by Paul Helpard, DDS, MSOrtho, BSc; Nick Korhonen; Vawn Himmelsbach


In North America, there’s a trend toward consolidation of individual orthodontic practices as the specialty evolves – from people and operations to technology and the business model itself.

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Some have predicted this change, seeing other medical professions consolidating in recent years, including dental, fertility, endocrinology, and even veterinarian clinics. But since most orthodontists are already running successful businesses, why would they want to consider joining a Dental Support Organization (DSO) or Orthodontic Support Organization (OSO) model?

A key reason is the desire to grow further by gaining support to unlock the potential of their practice. With an extended team, DSOs can help orthodontists navigate uncertain economic times, while also providing access to peer collaboration, learning and professional development opportunities. And being part of a larger group can help doctors stay competitive when up against private equity-backed DSOs that are entering their space.

Another reason includes keeping up with the impacts of digital transformation – artificial intelligence, remote monitoring, and other technological advances – which are further evolving the specialty. Since the pandemic, doctors are now considering their options to stay competitive, embracing cutting-edge technology as a best practice to stay one step ahead of the curve.

With a network of peers, buying power, financial capital, administrative support and many more advantages being touted, DSOs have been offering an attractive option for modern orthodontists. If they hadn’t explored this model in the past, many orthodontists are now taking note.

So, as the orthodontic specialty evolves, are DSOs and OSOs really the answer?

We talk to Dr. Paul Helpard, CEO of Corus, and Nick Korhonen, CFO of Corus, about the state of the specialty, financial considerations of DSOs and OSOs, and what to consider before joining one.

Q: Why do orthodontists consider joining DSOs and OSOs?

Dr. Paul Helpard: With shifts in the competitive landscape, orthodontists are often looking for ways to stay current and ahead of the curve. Sometimes they’ve hit a plateau, both professionally and personally, but have a strong desire to continue to grow and develop.

Even if they’re already running an efficient business, all orthodontists have pain points in the running of their practices. Challenges with human resources, marketing, patient communications, and more can create bottlenecks – preventing the doctor being able to grow their practice to its full potential.

Nick Korhonen: We talk to doctors facing all of these issues, along with those feeling burned out and looking for a better work/life balance. Some are even starting to think about transitioning the business – even if that’s 10 or 20 years from now.

These days, selling to another orthodontist is less of an option than it was in the past. Increasing levels of student debt, rising practice valuations, and different priorities around work/life balance make it much more difficult for young doctors to acquire practices. As a result, many doctors are looking to join a DSO or OSO to make that transition easier.

Q: What do most DSOs offer orthodontists?

Paul: All DSOs have a fundamental baseline of what they offer, which includes business support services like accounting, IT, HR, payroll, marketing, and the day-to-day admin work that can weigh a doctor down. Orthodontists can gain quite a lot in the relationship, including financial benefits, networking opportunities, professional growth, and more.

Doctors will often gain a home office team that can be an extension of their practice. They can receive professional education and training, greater buying power, access to R&D and technology that weren’t available in a solo practice, and other advantages depending on the DSO.

Q: What are the key differences between the various DSO models?

Nick: As consolidation has evolved, we have seen a multitude of DSO models – each with a slightly different appeal depending on career stage, values alignment, and end goals.

Where many of the earliest DSOs focused on consolidation of General Practitioner Practices, we are now seeing the emergence of specialty-focused DSOs narrowing their scope to serve a specific specialty such as orthodontics, oral surgery, pediatric dentistry, and more. We have also witnessed the rise of multi-specialty DSOs that try to bring together various specialties under one umbrella.

There are also different levels of control and autonomy amongst DSOs. For example, some will require you to purchase clinical supplies (such as brackets, aligners, etc.) from a select list of preferred vendors, while others leave those decisions entirely in your hands.

Paul: The alternative DSO model we have at Corus takes a patient-first and values-based approach to business. Our practices maintain more autonomy, and the organization is not owned and controlled by private equity investors.

When talking to DSOs, get to know more about their model and business focus so you have a better sense of the group you may join.

Q: What are some of the key concerns orthodontists have about joining a DSO or OSO?

Paul: Some orthodontists we chat with have already been doing research and have given serious consideration to joining a DSO. But they do have initial concerns, having put their whole life into building up their practice and their career. Will it also mean losing their brand, their name, and the goodwill they’ve built in their communities?

Many aren’t ready to retire – in fact, they might even just be starting out in their career. These doctors often want to build a business with a lasting legacy and be active in their own practice, rather than having someone tell them what to do and how to do it.

Nick: You want to be thoughtful of long-term impacts on the speciality. When it comes to consolidation, the worry is that large profit-driven corporate groups will come in and dictate operational structure to maximize margins, saying, ‘You must use this system, you must use this brand and you must charge your patients this much.’ That’s a significant area of risk. It interferes with the dental practitioner’s ability to act in the best interests of their patients, regardless of the potential financial outcome.

Yes, finances matter, but delivering high-quality care is crucial. For us at Corus, we remove that external influence – that primary profit motive – and keep that power in the hands of practitioners with additional support so they can actually improve the quality of care.

Q: What questions should doctors be asking about the DSO model?

Paul: Ask yourself self-reflective questions to start. What do I see as my future? What are my goals, my values, and my lifestyle needs?

Then look at the DSO itself to learn more about their model and leadership. In the DSO, who makes the decisions? Who are the leaders and investors? Do they put patient care first, and how so? What is their time horizon?

Probe about your autonomy and future development. What decisions do I continue to make versus direction from the DSO? Is there investment in my growth? Will I continue to develop as an orthodontist?

Nick: When it comes to financials, ask what options are available to you and how you’ll be compensated. In most groups, you’ll receive some combination of base compensation, bonus incentives, and equity. It’s imperative that you understand all three of these components and how they fit together to create your complete financial outcome.

Some OSOs like Corus provide shares at the parent company level, where all owners share equally in the success of the entire organization. Whereas other structures might only provide equity at the practice level, or might provide preferred returns to a subset of owners, such as private equity groups.

Paul: The other question you should ask is how people in the network support each other. Some DSOs offer a true network where you can connect, interact and learn from others. You can pick up the phone and talk to your peers about clinical cases, equipment decisions or team challenges. It’s shifting that mentality of doing things on your own to being part of something bigger.

How do those orthodontists work together? What are their values? What kind of culture are they building? And finally, ask yourself who you want to leave your practice to. In our group, the next generation is going to be an owner in that practice and will continue the legacy you’ve built.

Q: How does private equity play into the DSO model?

Nick: A private equity company is often a financial sponsor with a shorter-term outlook – usually three to five years. They typically have the majority of the seats on the board of directors and have the ultimate decision-making power for the organization.

Decisions are driven toward maximizing financials, so a lot of attention is placed on the efficiency and performance of each practice in the organization and the corporation as a whole.

Paul: It’s also imperative to look beyond the financials – which of course are also very important – but consider the entire scope of value you’ll be getting. Evaluate the time, energy, and resources organizations put into their people, which can indicate if their values match yours.

Nick: For example, from a pure return-on-investment perspective, a DSO wouldn’t likely do weekend team-building retreats and fly their staff to conferences if they’re primarily motivated by a three-year exit strategy. They’d probably be limiting their team gatherings, events, and professional development programs. But if you’re looking for a fast exit with high financial return, this may meet your criteria.

On the other hand, if a DSO has made a significant financial commitment to building culture and connection, they’re likely more focused on a long-term growth plan. So if you’re also hoping to develop your team, enhance your practice’s culture, and build a business for the long term, that’s an investment you may appreciate.

Q: What exactly does it mean to be a shareholder?

Nick: The definition of a shareholder is worth exploring because it can be different for each DSO. Some groups might issue shares that have a fixed value, which means they don’t grow, but instead promise an annual distribution. In that case, you can’t monetize your practice until the day you decide to sell it – and then it’s your job to find someone to buy those shares. You are forced to take on that responsibility with no guarantees because the company doesn’t handle or manage it for you.

Private equity-owned groups usually have preferred shares, which means they have a preference on their returns. So when you’re looking at company growth and how much everybody’s making, private equity gets paid before anybody else. Whatever’s left goes to the other shareholders, which may or may not be the doctors.

There’s also a less common third model, which we have here at Corus. All of the shareholders have the exact same class of shares with the exact same rights and obligations. They participate together, so they win together. This means that profits are split between all the shareholders, with no one person or business getting paid out before anyone else.

Every scenario has its benefits, but we think that when every shareholder is on equal footing, you not only diversify your investment, but you’re more invested in the organization’s overall success.

Q: How does owning shares help me grow my practice?

Paul: The OSO/DSO continues to grow as it brings on new practices and new doctors. And that’s separate from the amount of time that you’re spending in your individual practice. When you think about your own business, there’s a peak – you can only reach a certain level of value before it stops because you only have so much time that you can give to growing the business.

That peak doesn’t exist when you’re part of a DSO. Over the long term, if you’re a mid-career doctor with 15 to 20 years left, the DSO allows for a couple decades of continuous growth – and that compounding really adds up over time.

Q: What does Corus do differently?

Paul: When Corus came together, the idea was to bring strong orthodontists together without external financial influence while maintaining clinical autonomy. We purposely decided to be doctor-owned, so we don’t dictate what systems you can use, how you deliver treatment or how you charge your patients. We help consolidate data and facilitate collaboration to help you make better decisions.

That was the foundation of how Corus was built, in order to counteract some of those negative pressures that we saw with consolidation in the marketplace.

Nick: We’re not private equity-led, and that means we are truly orthodontist-driven. Orthodontists control the vision of the company.
We don’t have performance quotas in the same way as other OSOs/DSOs, and you’re not bound by new rules, policies and processes that inhibit the way you like to practice.

Paul: Personally, I understand what other doctors are going through in these decisions. I myself was approached in the past by DSOs who tried to woo me to join. But their models were geared towards pure financial gains, and I would have just sold my practices and exited. Money can be made, but a legacy is truly earned, and that has to be part of the equation.

I care a great deal about the legacy of my practice, having spent more than 25 years building my brand and establishing deep roots in my community. My partners and I care about local causes and the well-being of our current and future patients. We couldn’t leave our practice owned by a corporation and run by associates.

Now with Corus, all of my partners are owners and share the same vested interest in our community and in the specialty of orthodontics.

Q: What’s ahead for the specialty and for Corus?

Nick: The evolution of the specialty is exciting with DSOs and OSOs helping set the stage. Our focus today is completely different in terms of how we support our practices. We’re not just thinking about optimizing the current model of orthodontics – we’re reimagining what care delivery and patient direction looks like in the future.

Paul: It’s like taking ortho to a whole new level that I could never have imagined – I wish I had another 20 years to practice because this would be an exciting time to join a group like ours.

We see a future for patients, doctors, and team members that is transformational. Clinical outcomes will be enhanced and made more predictable using best practices, data analytics, artificial intelligence, advanced technology, and digitization that a network like ours makes possible. In addition, treatment experience for our patients and team members is being reimagined using advanced analysis of patient needs and desires.

Q: How should an orthodontist get started on the path to joining a DSO?

Paul: No matter what career stage you’re in, if you’re even slightly considering a DSO or OSO, do your research. Get informed and learn about the different models, the key players, and what you might envision for your future. Reach out to peers in your network and talk to doctors who have already joined groups to learn about their experiences.

When you’re ready, have a conversation with each organization and ask the hard questions. Who has the decision-making power and how will you fit into that network? In turn, share your own business challenges, lifestyle needs, and goals to understand how they’ll align with your values, your practice culture and of course, your economics.

This will likely be the most important decision you’ll make in your career as an orthodontist. Do your homework, make an informed decision, and above all else, ensure the DSO and OSO shares your goals for the future you want to create.

Oral Health welcomes this original article.


About the Author

Paul Helpard is CEO and founder of Corus Orthodontists, an OSO formed in October 2019. Paul holds an undergraduate science degree from Western University, a dental degree from McGill University and a Master of Science and Certificate in Orthodontics from the University of Iowa.

 

Nick Korhonen is CFO of Corus, responsible for overseeing all aspects of Corus’ financial management. Nick is a chartered professional accountant, chartered accountant, and holds a Bachelor of Commerce degree from Carleton University.

 

 

Vawn Himmelsbach is a senior writer and editor with Titan ONE, covering business growth stories and technology across multiple industries.


Check out more articles from the 2o22 Orthodontics issue!


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