The convergence of economic strain and operational challenges is very likely to continue driving dental practice consolidation through 2025 and beyond. Here's a breakdown of how the current pressures are shaping this trend:
🔹 Same-Store Growth vs. Shrinking Margins
While 60% of practices reported same-store production growth in 2024, this growth is being undercut by:
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Rising overhead (especially in rent, supplies, and lab fees)
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Increased labor costs due to dental staffing shortages
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Reimbursement pressure from dental insurance plans not keeping pace with inflation
As a result, many independent practices are seeing revenue growth without meaningful profit growth, prompting owners to consider mergers or selling to DSOs (Dental Support Organizations) for financial relief and operational support.
🔹 Staffing Shortages & Burnout
The national shortage of dental hygienists and assistants has:
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Increased wage pressure
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Led to reduced capacity and longer patient wait times
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Contributed to dentist burnout, especially among solo practitioners
Group practices and DSOs can often offer better benefits, career paths, and recruitment resources, giving them a competitive edge in attracting and retaining staff.
🔹 Insurance & Administrative Complexity
Many dentists are also struggling with:
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Complex claim submissions
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Delayed reimbursements
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Decreasing fee schedules
Larger organizations are more equipped to negotiate better contracts, use technology to automate claims processing, and absorb fluctuations in reimbursement, making consolidation more appealing.
🔹 Access to Capital & Technology
Smaller practices often can't afford:
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High-end equipment (e.g., AI diagnostics, CAD/CAM systems, digital workflow tools)
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Investment in marketing, patient experience, or multi-location scaling
DSOs and large groups can centralize services and invest in innovation, enabling faster growth and increased competitiveness.
🔹 Market Outlook for 2025–2026
Given these trends:
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Valuations for dental practices remain solid, especially for those with clean financials and growth potential. **However industry giants like Heartland Dental have pivoted primarily to a De Novo based growth strategy. If this approach becomes the standard, dental practice valuations will drastically be repriced.
Dr. Rick Workman is famous stating that he believes over 50% of the dental practices in the US are not purchasable, based on the health of their financials and the amount of deferred maintenance in the offices.
Ove the past few years some of the largest DSO's in the country have also been reporting poor financial data, which will also put downward pressure of practice valuations if this pattern continues.
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Some owners nearing retirement will view now as an ideal exit window before valuations soften due to broader economic volatility.
✅ Bottom Line
Yes, these headwinds—despite topline growth—are accelerating the shift from independent ownership to consolidation. Practices are seeking economies of scale, operational support, and financial stability in the face of increasing complexity and risk.
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