HEALTH CARE
As higher costs and fierce competition take a bite out of independent dental practices, corporate players look to move in
Why B.C. dentists are turning to big business to set up shop
If you're one of B.C.'S 3,400odd dentists, chances are you run your own business. But several trends, from crushing student debt to the rising price of setting up shop, are paving the way for large corporate dental groups to push into the local market.
A generation ago, dentists could open a practice right out of school. With startup costs now sitting at about $600,000 and the average recent graduate carrying $400,000 in debt, going the independent route keeps getting tougher, says consultant Nadean Burkett, whose Port Moody-based My Practice Matters provides business management support and coaching to dentists. When it comes to buying an established practice, an overconcentration of dentists in urban centres has prompted bidding wars, accord- ing to the Canadian Dental Association.
Solo owner-operator is still by the far most common business model in Canada, but groups of dentists and nondentists are acquiring multiple practices. Some recruit new dentists through dental schools. Although corporate entities own just two per cent of dental offices in Canada, versus 30 to 40 per cent in the U.S., the CDA expects corporatization to increase. Dental Corp. of Canada Inc., a management group that launched in 2011 and has 170 locations, including roughly 25 in B.C., claims to be the largest
such network in the country.
Dentistry is one of several professions targeted by corporate players, observes Timothy Brown, president and CEO of ROI Corp., a Mississauga, Ont.based brokerage that sells dental, optometry and veterinary practices. “These are profitable business systems, so that's why they're buying them,” he says. “Corporatization or accumulation of multiple locations leads to tremendous economies of scale.”
ROI was the agent for Walmart Canada Corp.'s dental franchise, Smile Shapers Dental Clinic, when it launched in 2014. There are 25 Smile Shapers clinics in Eastern Canada, with a B.C. clinic in the works for Richmond. “Walmart's the landlord, and the dental clinic rents from Walmart,” Brown says. “Walmart already has pharmacies. It has optometry and medical clinics in some of its stores. Now it has dental offices.”
Besides franchises and solo outfits, the bewildering number of dental business models include various types of shared practices; dentists who invest in multiple practices; and nondentists like Dentalcorp that invest in, partner with or manage multiple clinics. “Dentists themselves are confused,” Burkett says. “Dentists are trained to be technicians. They really don't know much about business, about dentistry as a business or how to run a company.”
Corporate groups make the same argument to justify their move into dentistry. Dentalcorp, for example, claims to be revolutionizing the business by managing practices and supporting growth so dentists can focus on “optimal patient care.”
Critics of corporate dentistry counter that it puts profit before care; they point to the U.S., where chains have brought in sales quotas and encouraged unnecessary treatments. Despite rules in some states restricting ownership of dental practices to dentists, as is the case in B.C., dental management companies won complete control over operations, according to a 2013 Senate investigation.
Another concern is that nondentists aren't governed by the College of Dental Surgeons of B.C. CDSBC registrar and CEO Jerome Marburg says dentists have a fiduciary duty to put the health needs of their patient above their own financial or business interests, and most of them do. Of the 150 to 300 complaints the college receives each year, more than 60 per cent are unsubstantiated. The catch, Burkett notes: CDSBC can only investigate registered dentists, not third parties.
The corporatization of vision care led a group of 30 Western Canadian optometrists to band together. Frame suppliers and lens makers were not only buying practices but also beginning to influence the practitioners, recalls now-retired Surrey–north Delta optometrist Nick White. Profit was starting to take precedence over patient care, he says.
In 2008, the group merged their practices and became shareholders in a private company owned and managed by like-minded optometrists. Called Fyidoctors, it now has some 450 optometrists serving about 260 locations across Canada. The board of directors includes business experts like former Dragons' Den judge Arlene Dickinson.
“A lot of health care professionals, like optometrists, dentists, veterinarians, don't get a high level of training in practice nor business management, and that skill set can have a substantial influence on your enjoyment of practice, your opportunity to grow and prosper and serve your patient base well,” White says. “So to bring in some of the icons of business to help guide you, there's some merits in that."
As for dentistry, many independent practitioners are thriving, consultant Burkett contends. “We're talking about dentists who really understand they're in the people business,” she says. “They're there to serve their patients and understand their patients' needs and expectations and do their best to meet them. That's really what's making them successful.”
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