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With pressures on the solo practitioner becoming more difficult, the industry is talking about PepperPointe Partnerships. It’s a unique DSO in that PepperPointe is fully owned by partnering doctors who seek to fully leverage the strengths and culture of doctor-owned dental practices. At the Dykema DSO 2021 conference, Patient Prism’s CEO, Amol Nirgudkar, asked PepperPointe’s CEO and president, Dr. Greg White, to tell the PepperPointe story.

 

Why Pepperpointe?

After 28 years as a practicing orthodontist in Lexington, Kentucky, Dr. Greg White observed the dental industry changing more quickly than he had ever seen it before. As the manager of an orthodontic group, with 20 locations and eight partners in Central Kentucky, he became concerned about their exit strategy. What would dentistry look like and what would their options be ten years down the road? 

“I looked at the DSO's,” says White. “I talked to private equity, and I realized there was going to be a valuation of our practice, and we were going to receive a check, greatly reduced income and some stock that might over time turn into more money. I thought, ‘There's got to be something different. If we were to have our own DSO, which was doctor-owned, what would that look like? What would a consolidation within our area look like?”

White began approaching orthodontists and pediatric dentists in his area and I said, "Hey, I think there are some disruptions coming here. And I think that we need to stop looking at one another as competitors and start looking at each other as partners. If we put that into a formal structure, I think we can create a wall of protection around us that will protect us from many of the disruptions out there…the higher cost of staying relevant and known…the higher cost of supplies and equipment…lower compensation from third-party payers."

About five months after that, on August 3rd of 2019, 20 unique practices (16 pediatric and four orthodontic) making up 50 office locations, all came together to form one company. No money changed hands.

“We built a wall of protection around us,” says White. “Now it would be very difficult or unlikely that a DSO would come into our 80% consolidated ortho-pedo market to compete against us. And we were able to negotiate increases with third-party payers of 35-45%.”

 

 

How is PepperPointe different?

In most DSO models, when you consolidate, you are given money up front, stock, and decreased income. In PepperPointe’s model, when you consolidate, you do not receive money up front, and your income will continue to rise without having to work more. Whenever you retire, you receive passive income through your continued ownership in the DSO that you keep forever, or you can sell your ownership back to the group, so it can be picked up by one of the group’s associate dentists. “If you decide to sell your portion, you have a known buyer that's able to perpetuate your legacy at a known formula,” says White.

The operating agreement of PepperPointe makes the sale of the DSO unlikely because this requires a majority vote of 75%. The doctors who prefer this model know their income is protected and they “love the fact that their legacy practice is going to get passed on to another generation of dentists who will be owners who provide continuity for patients who stick with the practice for 25 to 30 years,” says White. 

“You’ve got to want to compete. I'm very upfront about this. If that's not you if you're not a team player, and you don't believe in the mission and the vision of perpetuating what you've built and protecting what you've built for the purpose of protecting the people that you have served, then this isn't for you.”

– Greg White, DMD, CEO & President of PepperPointe Partnerships

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PepperPointe is growing and PepperPointe has dentists approaching them who are interested in forming similar DSOs. “We have had folks come to us,” says White. “We are working with them in two different states right now. We’re helping them consolidate because they want to fight for what they built and they're willing to do it.”

 

How is PepperPointe a traditional DSO?

Like traditional DSOs, PepperPointe provides centralized business support services, while allowing local practices to preserve their community branding and clinical autonomy. Its professionally managed services include comprehensive training, ongoing growth opportunities, recruiting, marketing and business development, information technology, accounting and finance, procurement, billing and collections, and compliance support.

“Corporate dentistry, as it is called so many times, is not about how someone performs dentistry,” says White. “We provide the payroll aspects, the benefits administration for all of the employees. We provide the marketing plan and strategy for all 57 brands because everybody keeps their own name. We also monitor all the metrics of the practices in real-time through a Cloud-based practice management system—on the ortho side, CloudNine, Dentrix Ascend, and on the pedo side, Dentrix Ascend for GP. But that allows us to be able to get all the metrics in real-time. And then through our BI [business information] dashboard, we can identify issues and make good decisions to correct them on the practice’s behalf.”

For example, if an ortho practice is generating less profit than another one in the organization, working the same hours with the same number of personnel, it’s usually a process problem or a people problem says White. Maybe the processes need to be documented and shared. Maybe a team member doesn’t subscribe to the same core values, or they are in the wrong seat. “What we try to do is help them become the best version of themselves,” says White, who manages integration between the DSO and the group’s practices. “I know what the issues and goals are. And then I present options and guidance. They know I’m looking out for the best interests of all the owners, and they’re part of a team.”

 

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