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Financial Challenges for DSOs

When you are building your DSO, which financials should you focus on? Margaret McGuckin has tried and true advice. McGuckin was the founding COO of the direct-to-consumer model pioneered by ClearChoice Dental Implant Centers, steering the organization from 1 to 31 locations in 14 states in a four-year period. Now she is the co-founder of i3 Ignite, a consulting company for emerging and established DSOs and other types of healthcare companies.

“Because value creation for a DSO is based on revenue, especially in the early days, we recommend you start with something very simple. And that very simple piece is patients. How much revenue do you need per patient to get to the level you want? And then how many patients do you need at that rate?” says McGuckin.

Once you have your target revenue per location and target number of patients, you need to examine how many are showing up for appointments and accepting treatment. To get to your target revenue, you may have to go back and figure out how to reduce the no show rate, how to increase the number of patients coming in the door, and how to increase case acceptance. In this video, McGuckin shares the formula she used to grow ClearChoice Dental Implant Centers to more than $131 million annually in just four years.

According to McGuckin, this is a simpler way of setting financial goals than starting with production. “Only when you have revenue conquered, really dig into the expense side, and you'll get to your EBITDA.”

Her advice: Manage to revenue first and cost second.

 

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