Health care institutions across New Jersey were deeply affected by the COVID-19 pandemic, and the dental sector was not spared. Going into the pandemic, the state had roughly 7,200 dentists. That number has fallen noticeably. “We have fewer dental offices now than before COVID,” said Jim Schulz, director of governmental and public affairs at the New Jersey Dental Association. “We’re starting to dig out.”
The state’s dental industry and staffing levels are 85% of what they were before the pandemic, when many dental practices had to shut down much of their operations because they were considered elective procedures. Many closed their doors for good. Shortages of dental hygienists have been particularly problematic.
Going into the pandemic, dental practices were already going through a wave of consolidation, according to a January 2019 report by the trade publication Group Dentistry Now. The phenomenon had been playing out for years in the wider health care industry,
The American Dental Association, in a 2016 report, noted that employment at “very small dental offices” shrank from 89.3% in 1992 to 80.7% in 2012. Meanwhile, the percentage of employees at largest dentists’ offices grew by half a percentage point during that same time, to 3.9%.
Schulz said he expects a surge in consolidation coming out of the pandemic. A January 2022 report from the ADA, which polled 2,000 dental practices across the nation, found that 69% said they were worried about staffing, while 35% said they were worried about inflation, overhead and rising costs; 23% were worried about insurance and reimbursement; and 22% were worried about patient cancellations.
“You’re seeing the natural progression of consolidation,” he said. With dental practices operating on tight margins, many opt for “consolidation and affiliating to have a better market value proposition.”
Under one type of consolidation, dental partnership organizations are established to handle back-end corporate functions such as insurance, human resources, payroll and information technology. The individual participating practices otherwise maintain their autonomy.
“We take away a lot of the administrative burden from the front desk,” said Paul Gruensfelder, vice president of marketing at one such DSO, Select Dental Management based in Florham Park, which serves 34 practices spanning eight states. “We work with the practice leaders and purchase the majority stake … but the leaders still have skin in the game. It’s a truly collaborative approach.”
SDM Chief Executive Officer Elliot Zibel said consolidation is “picking up considerable steam,” because of the pandemic, and expects that nationwide, the number of dental practices affiliated with a larger group can likely double over the next decade.
Dentistry graduates with high student loan debt, as well as the increasing number of patients over 65 years of age both also drive consolidation, Zibel said.
A similar model is being employed by The Aspen Group, a nationwide health care support organization that supports seven independently owned dental practices in New Jersey, all of which all operate under a single brand: Aspen Dental. “We provide support to independent practice owners and their care teams so they can focus on what matters most: bringing better health care to more people,” said Aspen spokesperson Katie Stafford. She said that the benefits of being in Aspen network include the “full support system,” as well as “continuing education, training and mentorship, state-of-the-art digital technologies.”
“We love supporting that entrepreneurial vision for others – to break down the barriers to care, so each doctor can bring better dental care to the communities they serve,” Stafford said.
Schulz said some practitioners may have difficulty weighing the pros and cons of DSOs and different kinds of consolidation because so much depends on the needs of patients and their demographics.
“You have some who work under the same banner in a more corporate and vertical structure,” he said. “Some work in a more confederated structure … where they’re really managing the non-clinical functions.”
“That is something we did see during the pandemic – people were consolidating, people weren’t even selling. We had a certain subset of members at the height of the pandemic who were like ‘I see no way out … I see business practices changing fundamentally … I don’t have a tolerance to sell.’”
Editor’s note: The story has been updated to clarify that The Aspen Group is a nationwide organization that supports seven independently owned dental practices in New Jersey that operate under a single brand.