Created to support the administrative aspects of dental offices, Dental Service Organizations (DSOs) have rapidly evolved over the past decade to become important, strategic players in the dental industry.
The American Dental Association (ADA) predicts that the segment will more than triple in size by 2035, as it redefines the dental space by serving as innovative, patient-focused partners to dental practices.
There are several reasons for DSOs’ tremendous growth and their expanding role. More people are seeking dental care, and there are fewer dentists and clinical staff to provide it. Existing dental staff are under significant pressure to do more with less, and there’s little time for the important back-office aspects of dental care. The dental industry needs support, and practices are increasingly turning to DSOs to find it.
As the popularity of DSOs continues to rise, so do the challenges the organizations face. In this article, we will share the top seven challenges facing DSOs while on their path to growth.
1. Recruiting and Retaining Clinical Talent
According to the American Dental Association, the dental sector is facing a serious workforce shortage.
Like other health professions, dental practices and DSOs were impacted by disruptions and pressures caused by the pandemic, The Great Resignation, and The Great Retirement that followed. They’re still dealing with the fallout, according to ADA, who reports 24% of dentists surveyed do not have enough administrative staff, and 32% do not have enough clinical staff.
Factors impacting retention, according to the ADA’s survey, include staff feeling overworked and not having opportunities for growth.
Employees aging out of the workforce is also contributing to the labor shortage. Approximately one-third of the dental assistants and dental hygienists the ADA surveyed said they expect to retire in the next five years.
What does this mean for DSOs? The labor shortage impacts their ability to staff multiple locations, schedule timely appointments, and acquire new practices.
2. Integrating Acquired Practices
Adding new practices to their organization is challenging for DSOs. It means maintaining consistent, quality care and a unified brand while managing change. They merge operational processes and procedures, systems, equipment, and people across multiple locations.
Staff need to be trained on new ways of operating, including how they interact with patients, schedule appointments, and manage the finances. There are supplies to purchase, and more importantly, skilled talent to find, recruit, and onboard to new or expanded offices.
3. Managing Fragmented Technology Stacks
Integrating technology as new dental practices are acquired can be complex for DSOs. Each practice has back-office technology solutions for billing, scheduling and HR, as well as technology for patient care, and more. The solutions, workflows, and IT infrastructure aren’t necessarily interoperable.
Integrating a decentralized back-office requires untangling legacy systems and protocols, while safeguarding patient, financial, and HR data and ensuring uninterrupted care.
4. Navigating Regulatory and Compliance Hurdles
Running a multiple-location business requires DSOs to contend with complex regulatory and compliance requirements that vary by state.
The compliance checklist for dental groups includes:
- Corporate Practice of Dentistry (CPOD) to ensure legal separation between business and clinical decision-making
- Licensing and credentials for all dentists, hygienists, and clinical staff
- Insurance payer credentialing
- HIPAA and patient privacy requirements
- OSHA, Infection Control and Safety protocols and training
- Billing, Coding and Insurance rules
- HR and Labor Laws
Managing the requirements and staying on top of compliance can be time consuming and complex, taking time away from patients. However, it’s critical for groups to properly manage their regulatory environment, as they otherwise expose their people, their patients, and their business to significant risk.
5. Maintaining Patient Experience At Scale
While DSOs have traditionally focused on the business aspects of dental care, enabling a positive patient experience is critical to their success. They’re challenged with ensuring consistent, top-notch service such as, hiring and retaining friendly and professional staff, convenient scheduling, on-time appointments, and accurate billing-across every practice in their organization.
“With patients increasingly prioritizing personalized care and seamless experiences, the demand for exceptional service has never been greater. In this context, DSOs are challenged not just to deliver high-quality clinical outcomes, but also to ensure that every aspect of the patient journey is optimized for satisfaction.”
6. Tackling Insurance Reimbursement and Cash Flow Challenges
DSOs manage numerous insurance providers, plan types, and fee schedules that vary by provider and state. This makes managing insurance reimbursements complex and time consuming. Without a one-size-fits-all billing structure, claims processing can be slow and prone to errors, which can lead to claim denials and delayed payments.
Staff must navigate the details of each plan, along with updating frequent changes in CDT (Current Dental Terminology) and coverage rules. Using outdated codes or missed documentation changes can also result in denials, do-overs, and delays.
Payment delays lead to time-consuming follow-ups, and they take focus away from patient care. Delays also impact finance managers’ ability to manage their cash flow, including recurring expenses like rent, salaries, utilities, or investing in new acquisitions.
7. Driving Financial Efficiency Amid Rising Operational Costs
Numerous macroeconomic factors make it a challenge to plan for future growth. Rising inflation and higher costs for everything from office real estate, to labor, to dental supplies, makes it increasingly expensive to manage operations.
Driving operational efficiency has become mission-critical towards dental groups’ profitability, patient satisfaction, and their ability to scale depends on it.
The report notes their concerns over economic conditions, such as higher costs, and recruitment challenges. Many DSOs are grappling with inflation-driven price hikes on supplies and services, making it more expensive to maintain profitability.
At the same time, workforce shortages, especially in attracting and retaining skilled dental professionals-are adding further strain, limiting operational capacity, and hindering growth.
The Next Step in Smarter DSO Operations
To combat these challenges, many DSOs are investing in technology like AI and automation to create efficiencies and enable growth. Accounts Payable (AP) automation technology can help them scale their business by centralizing the back-office to improve visibility and more easily integrate acquired dental practices.
To learn more about how AP automation can help your DSO tackle these operational challenges, download our free guide: Scaling Smarter: A DSO’s Guide to Growth.