The State of the DSO Industry

The last five years have brought monumental change to the dental industry. In fact, one could argue that there has been more change over the past 5 years than in the previous 100 years of the dental industry.  

Over the last five years the dental industry has experienced six significant seismic events. 

 
The Great Lockdown 

In March 2020, dental offices worldwide faced an unprecedented shutdown, limited to emergency cases only. This drastic measure exacted a heavy toll: patients were denied essential care, and dentists lost their livelihoods until practices could reopen. 
 

The Great Reopening 
By summer 2020, dental offices began reopening on an unprecedented scale. This rapid reopening posed numerous challenges, including shortages of PPE and staff, reluctance to return to work, and patient fears about resuming treatment. 
 

The Great Recovery 
Starting in summer 2020, dental offices began to recover revenue, but the recovery was uneven. Some organizations thrived, while others struggled, creating a divide. Those able to navigate post-lockdown challenges successfully became significantly more valuable than those that faltered. 
 

The Great Resignation 
The post-pandemic labor market revealed dramatic changes. Many dental staff members chose not to return, moved to other professions, or returned with new, often costly demands. This led to one of the most expensive labor markets in dental history. 
 

The Great Inflation 
Beginning in 2022, inflation soared to its highest rate in decades. Interest rates skyrocketed, the cost of goods increased significantly, and the buying power of money was greatly reduced. 
 

The Great Uncertainty 
The combination of historically high labor and goods costs, along with high interest rates, has created immense pressure on EBITDA and reduced dental organization valuations. Persistent high interest rates and additional global conflicts further destabilize financial markets, leading to uncertain market conditions. Consequently, many organizations have suspended M&A activity, cut costs, reduced their workforce, and postponed capital expenditures, marking the era of the Great Uncertainty. 

Interested in learning more about the current state of the DSO industry? Check out The State of the DSO Industry: The Great Evolution of Dentistry and Dental Service Organizations.