The Smile Source® business model allows independents to thrive
Even from across industries and marketplaces, the business potential in dentistry is evident. “Dentistry is a growing, stable and profitable profession founded in the noble cause of serving people and their needs,” says Andy Goldsmith, Chief Dental Officer/ VP Vendor Relations, Smile Source®. The backbone of which is the dentists themselves.
However, it’s also an industry that has relied on high profit margins for years. As a result, independent dentists haven’t necessarily seen the need – nor had the bandwidth – to educate themselves or train their staff more on the business side of their practices. At best, this has meant they’ve missed key revenue opportunities that could have been capitalized on with better business practices. At worst, it’s led to a poorly run business, despite their best of intentions and high level of care they’re providing for their patients.
But how could local dentists leverage their independence while gaining the resources of a large group practice organization?
That was the question Smile Source® aimed to answer through its business model.
“We believe that through collaboration, sharing of best practices and utilizing economies of scale, we can make them more efficient, grow their practices and make them more profitable,” Goldsmith says.
Eyes on the dental market
Smile Source® consists of independently owned dental practices empowered as one alliance. Dentists maintain 100 percent ownership in their practices and remain autonomous in the decision making. “What unites us is a unique franchise structure that follows federal guidelines and is approved in all 50 states,” says Goldsmith. “Our member practices pay a monthly franchise fee and in return they have access to the efficiencies typically only afforded to group practices such as world-class marketing services and tools, education and staff training and buying power.”
The Smile Source® model comes from its parent organization, Vision Source®, a leader in optometry, which started 22 years ago and now has over 2,800 locations in the United States. Goldsmith says they conducted research with dentists and worked with industry-leading brand experts that led to mapping out plans for entering the dental market through an alliance model that helps preserve the independence of local dentistry.
Within a short timeframe the company has built its presence in the dental market. Smile Source® has added 87 new locations in the last 12 months, and currently has over 100 locations in 17 states, according to Goldsmith. The average practice has seen an increase in new patients of about 10 percent, and lowered their cost of goods percentage by 2.7 percent, he says.
However, like any business venture, there were starts and stalls during the process. “Our greatest challenge was getting started,” Goldsmith says. “In the beginning, we were able to jump to 20 locations quickly, but then we stalled. Establishing and executing a strategic growth strategy was key to overcoming our hurdles.”
Goldsmith says one of the biggest “aha” moments for Smile Source® was in realizing how the value proposition must be positioned in order to resonate uniquely with dentists. By operating as a franchise, the members receive certain protection and valuable programs.
“We enable them to brand, and participate in group marketing efforts. There is an established infrastructure along with sound financials.”
With marketing, most dentists do “one-offs,” because they simply don’t have the resources, time or personnel to devote to creating, managing and tracking the return on investment of a marketing campaign. “We create a strategic marketing campaign for them and in some instances we are able to leverage our groups to manage a campaign covering multiple locations and even obtain the group marketing funds from outside vendors,” says
Goldsmith. “With a group, a marketing fund is significantly larger and the effect is exponential. I always use the analogy that alone I may not be able to afford a billboard, but between 10 of us, not only can we afford it, but our risk is lower and we can all benefit from a quantifiably greater return on investment.”
Looking to the future
The dental landscape of today is already shifting. Goldsmith says dentists can expect mergers and acquisitions to increase, along with the proliferation of DSOs. “Eventually dentists will see a shift from a traditionally cottage industry and solo practices to a different business model of group practices, longer, more patient-centric hours, pricing, and options,” he says. “Further, the general climate is in support of centralized healthcare so, dentists will no longer be able to perform dentistry without compliance to standards. I see the need for a system that evaluates outcomes and establishes protocol that promotes overall health.”
This puts dentists in a unique position, he says. “Dentists are uniquely positioned to provide general healthcare in the form of screenings for health concerns such as hypertension, diabetes, and possibly even administer flu shots. The idea of being a fee-for-service dentist is going to shrink into a niche within dentistry and will no longer be the norm. You will see the larger groups capitalizing on opportunities like collaborating on accountable care initiatives. Meanwhile the patient pool will decrease for independent minded dentists. You will also see a shift in the way restorative dentistry is delivered from an “ideal” to “healthy function.” However, dentists will be increasingly compensated for keeping their patients healthy versus only restoring disease, Goldsmith says.
Dentistry is at a “watershed” where the tides of change will begin to move swiftly and abruptly, much to the surprise of the uninformed solo dentist, Goldsmith says. “Ten years from now, dentistry will look very different than it does now. The days of low quality, ‘corporate chains’ are gone. They have been replaced by quality minded DSOs that will be leading change in the profession. I see groups like Smile Source® carrying the banner for independent dentists.”
Smile Source® core values
Empowering the independence, freedom and growth of its members through strategic marketing services and tools, providing education and staff training, greatest value on cost of goods along with a cross-referral network with Vision Source®