Ep. 248: State of the Dental Industry 2026
Dentistry is changing faster than ever in 2026. Are you prepared for what comes next? In this special episode of Dental Business RX, Jeff Blumberg breaks down the biggest trends impacting the industry today and how they compare to back then.
State of the Industry 2026: https://www.mgeonline.com/state-of-the-industry-2026-download-form-page/
Independent Practice Roadmap: https://www.mgeonline.com/independent-practice-roadmap/
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Questions from this Episode
Is private dentistry really in trouble?
Every one of its five hallmarks, doctor ownership, fee independence, clinical autonomy, patient-first care, and operational self-determination, is under pressure at the same time. Practice ownership has fallen from about 85% of dentists in 2005 to 72.5% in 2023, and is projected to drop to roughly 66% by 2033.
Why is the average dentist making less money when dental spending is at an all-time high?
Dental spending hit $189 billion in 2024, nearly double what it was in 2000, but average net income per dentist fell from about $230,000 to $200,000, a 13% drop, while inflation ran 22% over the same period. That's effectively a 35% pay cut, driven by rising expenses and PPO reimbursement rates that stayed flat for 60% of dentists and were cut for another 25%.
Are DSOs going to buy up all the retiring dentists' practices?
It's not playing out that way. Most large DSOs are private-equity backed, many carry heavy debt, expected recapitalizations are being delayed, 37 PE-backed DSOs are five-plus years past their expected recap. And retention is a problem: per ADA Health Policy Institute data, 48% of new dentists in DSO or multi-site group practices plan to leave that setting within five years, versus just 8% in unaffiliated private practice.
What happens to the dental practices nobody buys?
An estimated 36,000 practices could the market over the next decade, and we estimate that up to 17,000 of them will find no buyer, "orphan practices" that sell their charts or hand the keys back to the landlord. At 1,000–2,000 charts each, that's 16 to 32 million patients in transition, and a once-in-a-career buyer's market for dentists ready to acquire and scale.
What should I do if my practice is heavily in-network?
The episode's three-tier model puts network-dependent, volume-driven practices in the "squeezed middle," the tier where the math no longer works: expenses up, fees locked by PPO contracts. The path out is moving toward the independent tier, controlling your own fees and driving your own demand, and the free Independent Practice Roadmap Consultation lays out where to start.
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When we use the term "private dentistry," what does that even mean? While it may have many qualities or nuances as to how it's defined, to me, it's got five defining hallmarks. One, the practice is doctor-owned and doctor-operated. Two, the doctor has fee independence. They decide what they charge. Three, there's clinical autonomy. There's no insurance company, there's no corporate entity in the operatory telling you how to practice. Four, it's patient-centric, not volume-driven. You're not running people through like a factory to hit a number because of your fee structure. And five, you have operational self-determination. The owner decides how the place runs.
That's it: doctor-owned, fee-independent, clinically autonomous, patient-first, self-determined. And that's the kind of dentistry most of you signed up to practice.
And here's the uncomfortable part. Every one of those five points is under some degree of pressure right now, and moving toward extinction in some cases. Some of these points are slowly drifting away. Some are getting ripped out by the roots. Ownership is declining fast, especially amongst younger doctors. Fee independence is getting strangled by network contracts and umbrella plans. Clinical autonomy goes to whoever's signing the checks. And self-determination? Ask anybody who's 70% in-network how self-determined they feel when the PPO sets their fee.
So if you ask me what the situation is in private dentistry, I'd say it's in danger of losing a lot of what has made it private dentistry. And I don't say that to be dramatic — I say it because the numbers say it.
I've been tracking various metrics and trends that shape the dental industry for well over a decade now, and I usually kick off our annual Owners Conference — our biggest event of the year, it's a graduate service with all of our clients — briefing MGE clients on the state of the industry: where things are going, where opportunities are and how to take advantage of them, as well as where the problems are. And every year, I turn around and do a version of it here on the show, because honestly, most dentists aren't getting this picture as a whole anywhere else.
And that's what I want to cover in this week's episode. It's time for the annual update. We'll be taking a look at trends, what's coming, where private dentistry actually stands, and what the future may hold. The real picture, not the press-release version.
Now, a couple of quick things before we dig in. First, sort of an overall summary: there's enormous opportunity in the industry right now for entrepreneurial dentists that move quickly to take advantage of these opportunities. And I say move quickly because these opportunities will not last forever. The flip side: dentistry is rapidly becoming an industry of haves and have-nots, and those who don't make appropriate moves now could find themselves and their profitability being severely squeezed over the next few years.
I've made a slideshow — much of which came from the conference — available to download. It's in the show notes, in the download section. You don't need it to follow along, and I'll walk you through every number in plain language, but if you like seeing the data with your own eyes, you can go grab it, download it, and follow along as I go.
And the next thing is, fair warning: I'm going to throw a lot of numbers at you today. I'm going to keep it conversational — I won't read you a spreadsheet — but I want you walking away with a real picture, not a vibe.
And I want to be crystal clear on something. We've been tracking all of this, like I said, for years, and briefing our clients on this to give them an edge. To that end, I told our clients at the Owners Conference that this is the time that they've been preparing for. These trends are now starting to really bloom, for lack of a better word. There's incredible opportunity on the horizon for doctors who position themselves correctly — maybe the biggest opportunity I've seen in my career, and I'd venture to say in the last 50 years. I'm not that old, folks. And in order to make it work, you need a specific game plan, which I'm going to give you information on how to get towards the end of this episode.
All right, so let's get into it.
So we're going to start off with the supply of dentists. Let's start with the dumbest, simplest question: how many dentists are there? How many dentists does it look like we're going to have over the next 10-plus years? Because everything else hangs off of this number.
All right, so currently, according to the ADA, in 2024 we had 202,485 dentists. Now, this is everybody — dentists, dental specialists, including forensic dentists, dentists working in the public sector, et cetera. 202,485. How does it relate to prior years? Well, that is 181 doctors higher than in 2023. And I don't have 2025 numbers because usually there's a bit of a lag. And roughly about 160,000-ish of these are GPs; the rest are specialists and whatnot. So we went from 202,304 in 2023 to 202,485 in 2024. Not a huge growth. As a matter of fact, the supply has been, in the big picture, relatively static for the last five or six years.
Now, here's where it gets interesting — when you start digging into the demographics with relation to doctors. Currently, as of 2024, 34.2% of all doctors are 55 and over. 34.2%. And roughly — I'm just going to say 25%, okay, folks? Otherwise these points, I think, are going to make everybody freak out — let's just say 25% are over 60, we estimate. So that means about 50,000 doctors are over the age of 60, and 34% of that 200-and-some-odd thousand are over 55.
So the reason I bring that up is: what is the average retirement age in dentistry? It's 68.7. Used to be lower — used to be closer to 65 — now it's 68.7. What this tells you is that over the next 10 years, you have a large portion of the profession coming in for a landing, where they're going to be sort of phasing out of the profession. And again, I'm not saying this to practice ageism. I'm not a spring chicken — that's not the point. But if you were to ask me today, "Jeff, how much longer do you plan on doing what you're doing?" I'm not going to say 30 years. If you'd asked me when I was 30, I would say 30 years. So that's just something to keep in mind. We have a large portion of the profession moving towards retirement age, and that means they're not going to be in their practices forever.
And on top of that, most of the older — actually, we picked a new word to use at the Owners Conference for this, because we thought "older" sounded bad. I was personally offended by it. We said "experienced" doctors. Most of the experienced doctors own practices. The majority of ownership is concentrated in the higher-aged demographic.
So if that tells us this, where do we stand with relation to new dentists coming into the profession? Well, right now we have 78 dental schools. And we're projecting, based on the data we were able to gather, that by 2030 we may have between one and three more. Because obviously, starting a dental school is not something that you do overnight. It takes some time — it takes five to seven years to get one going. Based on what's in progress now, you might have anywhere from 79 to 81 dental schools by the year 2030.
So when we take a look at all of that — school capacity, class capacity — what do we estimate the number of new doctors will be between now and 2033? We estimate close to 73,000. Close to 73,000 new doctors will be coming into the profession over the next seven years. And I have projections in the slideshow — I'm not going to go over it year by year. This year we project 7,150. That isn't the point, right? The reason I bring this up: you've got new doctors coming in, and you have experienced doctors that are eventually going to be hitting their retirement horizon.
So to give us some information on how this works — so we can project, okay, with the doctors going out and the doctors coming in, how many doctors are we going to end up with over the next three, four, five, 10 years? — we have a factor called an exit rate. What's an exit rate? Basically, you take a group of dentists and you go: okay, between this age and this age, what percentage of those doctors are going to leave the profession over the next five years? And the ADA has this information. It comes from a publication called "The U.S. Dentist Retirement Career Span," from 2024, from the ADA Health Policy Institute. A lot of this information came from them.
So I'm just going to give you an idea of what these exit rates are so you can think with this. Up to the age of 54 — whenever a doctor graduates school and gets licensed, 26, 27, whatever, up to the age of 54 — over a five-year period, between 2.8% and 4.1% of those folks will leave the profession. So if you were to get a group of doctors up to the age of 54, you put 100 of them in a room, and you came back five years later — we wouldn't leave them in the room for five years — anywhere from three to four of them will have left dentistry. So you'd have 97 left.
Obviously, as these ages go up, as they become more experienced, these exit rate percentages go up. Between the ages of 55 and 64, that exit rate goes up to almost 20%. So again, you take 100 doctors, you come back five years later, 20 of them have left the profession. You get between the ages of 65 to 69, now you have about 43% who have left the profession. Between 70 and 74: 63%. 75 to 84, you're at 80%. 85-plus: 92%.
Now, here's the only thing I'm going to say. I had projected these numbers earlier based on just U.S. demographics, and I had them — especially the upper bracket, over the age of 70 — a lot higher than the ADA had. So I'm using the ADA's numbers here, which are more conservative. But what they're saying here, essentially, is if you have a group of doctors who are 85 and still practicing, 92 of them will retire over five years. I think that number is closer to 98, 99. At least I know it would be for me. If I were 85, I could love dentistry, maybe I maintain my license, but I'm not working a 30-, 40-hour-a-week schedule. I'm sorry.
So if you take into consideration the number of new doctors we're projecting and the number of doctors we project will exit the profession, what does that do to overall dentist supply between now and 2033? That's the horizon I'm using. Well, we project that by 2028, the number of doctors is going to go down. Right now it's roughly 202,500. We project by 2028 that number's going to be closer to 195,000 total in the United States. By 2033, that number should slightly rebound to 205,000. And this sort of fits with what the ADA has been saying. The ADA puts out great numbers, but some of the info I think has not been highlighted. The ADA has been bringing up: look, by the year 2040, based on our projections, we're going to have a lot more doctors. Based on these numbers, that is absolutely true. New schools are coming together. It's moving. But between now and then, there's going to be a dip as the retirements continue — which were originally projected to be done by 2025. They're not. And then eventually it will start to rebound by 2033.
But if you look at it — if we've gone from 201,000 doctors in 2020 to 205,000 in 2033 — that's not a huge change, considering the population change, et cetera. So it's not a hugely growing area at this point. It will eventually grow, but it's not growing as fast as you might want or think. And keep in mind, these models can be changed or materially affected by dental school enrollments going down — these are projected enrollments, which were pretty high — more doctors retiring, people getting re-licensed and coming back, and internationally trained dentists, which usually runs anywhere from 500 to 900 entering the profession per year. That could change. So we don't know. These are projections. We're doing our best with the information we have and past trends, but these are projections.
So now, why is this a big deal? You would think, okay, at first blush, this is great, right? There's going to be not a lot of doctors. And in a way, that is true. If I'm in an area and I have a certain skill set and there's not a lot of me — or people who do what I do — then I have a degree of exclusivity. If you double the number of people with that skill set, it makes it more difficult. It doesn't make it horrible to get business, but it makes it not as easy as if there were less of me. The reason this is a big deal, specifically with relation to private dentistry, has to do with ownership. So let's get into that. I call it the ownership crisis. So right now, let's look at the overall statistics according to the ADA. In 2005 — 84.7%. You know, I think I'm going to start estimating, because my editors hate it when I do the points. Let's just say 85%. I'm going to round up and down more than you're supposed to. In 2005, 85% of doctors owned a practice. So if you had 100,000 dentists, 85,000 owned a practice. By 2021, that ownership rate had dropped to 73%, and by 2023 it had dropped to 72.5% — I'm sorry, I threw a point in there.
Now, if these trends continue based on the prior decline, we estimate by 2028 that number should be closer to 69%, and by 2033, that number should be closer to 66%. So we've gone from 85% in 2005, and we're estimating we're going to be closer to 66% of doctors owning a practice by 2033.
So now, why are we losing this ownership? Well, it's because more experienced — meaning older — doctors own their practices. Younger doctors are not buying. So where are they going?
Well, let's first look at DSOs. Right now, 16% of U.S. dentists were DSO-affiliated in 2024. That was up from 7% or 7.5% back in 2015. One in four dentists within 10 years of graduation are DSO-affiliated. And I want you to keep one thing in mind: the DSOs are heavily concentrated in urban markets, in cities. They're not in rural areas. Just put that in your pocket for a second, because this is going to become important later. There's not going to be a test. And 32% of dental school seniors in 2024 planned to join a DSO. To give you an idea of how that's accelerated: that was 12% in 2015, 30% in 2020, and it actually was 33% in 2023 — so it's actually gone down by a percentage point, which is good. But still, you're looking at roughly one out of three.
Now, this is where it starts to become problematic. I have a graph in here that I do recommend you look at. It's from the ADA Health Policy Institute, and we projected it forward based on what's currently going on. It's practice ownership declining over time, and it has each age bracket: under 30, 30 to 34, 35 to 44, and so on, up to 65-plus. If you look, you'll see that in 2005, 25% of doctors under 30 owned a practice. And in 2005, of doctors 30 to 34, over 50% owned a practice. Those numbers now: it's 8.8% for doctors under 30, and a little over 30% for doctors 30 to 34. Whereas if you go to the upper ranges of ages — the 45 to 64 group — that number has stayed pretty consistent. There you have 90-plus percent, or the high 80s, owning a practice, and that has not really changed that drastically. So most of the ownership is concentrating in the older and more experienced brackets.
So now, let's look at what's happening with practices in general. How many dental practices are there in the United States? There's about 135,000 total offices — not dentists, but actual locations. And we estimate — and this is tough to figure out — that roughly 13,000 to 19,000 of them are DSO offices. The reason why: defining a DSO is very nebulous. You might be a DSO if you have three offices, as far as this statistic goes. So you've got 135,000 offices, and 13,000 to 19,000 are DSO offices, which means we have about 116,000 to 122,000 that are not DSO.
So now, think with that for a second. If you take what's currently existing, you remove the DSOs from the equation, and you look at the doctors by age group that own a practice — you know, in the 55-to-64 group, you have 90% owning a practice — and you look at who owns practices in the United States right now... I have a little breakdown of this. I'm not going to read every column here, but the point I want to bring up is: currently, close to 50,000 of these 120,000 locations are owned by doctors 55 and over. Close to 50,000 of these 120,000 locations are owned by doctors 55 and over — which means they're 14 years or less away from the average retirement age.
And if you were to look at right now, as of 2024, how many offices are owned by doctors under 30? We estimate it's like 1,100. Thirty to 34: like 5,000. And it's funny — there was a story, I forget where it was, it was on the ADA site, where it talked about how ownership is still happening, but it's delayed. Yeah, that's true — but new doctors are not buying practices.
So I want you to imagine this for a second. You have all these offices — roughly 120,000 offices — and over the next five, 10, 15 years, whoever owns that practice is going to want to leave. They're going to want to sell, most likely, because most doctors would like to get some value out of the practice that they started. The problem is, the buying pool doesn't exist. The buyers that were supposed to come in and buy these offices aren't buying practices. Ownership in the under-45 crowd has plummeted.
So now put those two things together. Where are these offices going to go? Over the next eight to 10 years, we estimate 36,000 practices are going to be sold. Where are they all going to go? Well, some of them will be bought by DSOs — but, and I hate to generalize an entire industry, the DSO industry is not exactly blowing it up right now. They're not doing as well as they were, let's say, three to five years ago. And DSOs have a very specific target when they buy a practice. They're not buying a practice that's doing 500,000 a year with four operatories. Some will be bought by new doctors coming into the profession. But there's not enough new doctors, based on these percentages, to buy all of them.
So we estimate — this is sort of the punchline — that we're going to lose 10,000 locations over the next four to five years. They're just going to go away, meaning the charts will be sold to another practice, or the doctor's going to turn in their keys to the landlord. And then if you follow that forward, based on current ownership trends, by 2033 we could go to 104,000 practices. So we'll go from 120-ish now, to 110 in 2028, to 103 or 104 in 2033. What I mean by that: 16,000 or 17,000 practices by 2033 will just disappear. They're going to go away. They'll be consolidated with other offices. You're going to have less locations, less access, in private dentistry.
Because here's the messed-up thing. Normally, when you have a growing profession, or a healthy profession, you would expect to see the passing of the torch, right? Here come the new doctors, and they're buying the prior generation's practices and continuing these practices. I know plenty of practices that are third or fourth generation — they've been around since 1910 or whatever. They have new equipment, though, at least. But that's going to stop happening as frequently as it had. Because what's happening now is, you would expect ownership to begin to be concentrated in the younger demo. What's happening now is it's being concentrated in the older, more experienced demographic. If you take the current ownership percentages: the share of offices currently owned in the United States by doctors 45 and over is 71%. We're projecting by 2028 that could be 73%; by 2033, 78% — because young doctors aren't buying.
And people will say, "Well, why are younger doctors not buying?" If you're a younger doctor, maybe you could tell me. I've talked to some. I've heard differing answers. Some don't feel comfortable being on their own yet. Some have a lot of debt service, because they have a gazillion dollars in student debt. Dental school tuition is crazy now compared to what it used to be. I did an episode a couple years ago where I pointed out that if you compared the amount of student debt a doctor walked out with to what they could expect as first-year income, that used to be under 100% — meaning a doctor could walk out of dental school with maybe 80,000 or 100,000 in debt, but they could expect to make 120, 140 in their first year. So that wasn't so bad. Whereas now, on the low end — I have a relative who just went to dental school, an out-of-state school, so their first-year tuition is 100,000, and the next three years are 60 each. So just tuition alone is 280. And that's low. I've seen 350. I've seen 500. I saw a story on NYU — it was like 700 if you included interest on loans and things like this.
So if I'm walking out with six, seven hundred thousand dollars in debt, and I feel like I need to get a bit more seasoned, and you go, "Hey, Jeff, why don't you buy this office for five, six, seven hundred thousand dollars?" — I'm probably not going to do that, because I'm just not comfortable. Plus, I've got to service my student debt. So that could be it. It could be any number of things. But regardless, they're not buying.
So what that means, potentially, is that 10,000 practices could disappear by 2028 — they may give the keys back or sell their charts — and 17,000 could end up disappearing by 2033. Yes, some people will sell, but a lot of people will not be able to.
So what that tells you is: we're going to have a buyer's market for dental practices. If you're looking at acquiring practices — great time. If you're a new doctor and you're thinking, "Hey, I want to buy a practice and get started," you've never picked a better time. The only piece of advice I'm going to give you, if you're a younger doctor looking at buying a practice — or an even more experienced doctor looking at buying a practice — don't go out on a limb and spend a billion dollars. You don't have to. I've seen people who go, "I have 750, 800 for a startup." I wouldn't do that. You can find a place that's doing three, four hundred a year. It's got four chairs. Maybe the carpets are the wrong color and you don't like the paint on the wall and the equipment needs some updates. Buy it for three, four hundred and scale it. You're not going to walk in with a gun to your head debt-wise, and you can actually scale the place and make it do well.
All right, so now you'd think: we've got supply staying relatively static, we have an ownership issue that we've just discussed, but the average doctor is doing okay financially, right? Not true. And here's what's weird. Dental spending over the last 25 years has almost doubled. Per year in 2000, it was $107 billion. As of 2024, it was $189 billion in dental spending. And consumer dental spending is actually up 8% since 2020. So money's being put into dentistry.
But there's a publication called "Trends in Dental Income, Revenue and Hours Worked" by the ADA Health Policy Institute, where they looked at revenue per dentist and net income per dentist. And this is where it gets interesting. There are two time periods: 2015 to 2019, and 2020 to 2024. So let's start with revenue per dentist. In '15 to '19, the revenue per dentist was about 707,000 per year. From 2020 to 2024, it's closer to 698 — down by about $8,500. Expenses per dentist from '15 to '19: $469,000, roughly. From 2020 to 2024: 482,000. That increased by 3%. If you do the math — revenue minus expenses — the net income per dentist in the United States on average went from 230,000 in '15 to '19, down to 200,000 in 2020 to 2024. That in and of itself is not great — it's down by 13%.
But let's compare something. What was the inflationary rate during those periods? From '15 to '19, it was 10% over a five-year period. From 2020 to '24 — you know what I'm about to say — it was high. It was 22%. So effectively, doctors were taking a 13% pay cut in the face of 22% inflation. If you do the math, that's roughly a 35% pay cut.
And if you look at the impact on purchasing power, in plain terms: let's say you had a GP earning 230 in 2019 that had a certain lifestyle. That same lifestyle, if you adjust for inflation, now costs $280,000. But the average GP is only earning 200. So that's almost a $7,000 gap per month. That's a mortgage payment, a kid's tuition, two car payments — gone. And this is what's happening to the average doctor.
And why is this happening? It's not like there's less spending occurring in dentistry. So what's going on here? It's being eaten up by expenses, as well as fee control. We've talked about this before on the podcast. While inflation's been going up — and remember, I'm always too early to this stuff; I did my first inflation video in 2021, "Oh my gosh, inflation's 5%," and nobody watched — while inflation was raging, I remember thinking at the time: what are insurance companies going to do? I bet they're going to be jerks and just do nothing. That was the worst I thought would happen. Little did I know.
So, according to information from the ADA: dental PPO reimbursement rates between 2021 and 2025 — 60% of doctors surveyed saw no change. They didn't go up, they didn't go down, while inflation was 22%. Thank you, insurance companies. Twenty-five percent of dentists saw rates cut. So yes, inflation's going up, and what you're getting is going down. Many of you have told me about this anecdotally. And 7% saw somewhat of an increase. Yay, right? So if you do the calculus here: you have inflation going up, reimbursements going down. It's basic math. Expenses going up, revenue staying stagnant or going down — the net result is less profit.
And one thing I think I should just throw out there: this myth that 80% of Americans have dental insurance. The actual reality is closer to 61% have real, year-round, private dental insurance. The reason I bring this up: we teach our clients not to be insurance-driven. You know — "Okay, I'm only going to do what insurance covers." You can work with insurance. It's just another means of paying, like patient financing. It's just another means of paying. I know patients get attached to it — some do, some don't, some more than others. But it's not as high as you thought. It's not 80%, it's 61%. Almost 40% of people have no coverage. But either way, even if you're out-of-network, there's no reason why you can't still take somebody who's got network insurance — it's just that their reimbursement rate is lower and they're having a higher co-pay. A lot of our clients do this, and we teach them how to get out-of-network.
A last couple of economics plays here. Staff, I know, is a pressure, so I have this in the slideshow, so I'll just bring it up. The current unemployment rate hasn't really drastically changed — it's around 4%. But what's interesting is jobs per unemployed person. If you remember back in '22, there were like two jobs for every one unemployed person. So employees could kind of pick and choose where they wanted to go. That is now one job for every 1.09 people. So we're in a situation where the labor market, especially for non-technical staff or non-providers, has cooled off. It's much easier to hire now than it was five, six years ago, or even three years ago.
Which brings me to hygienists. I've brought this up before — hygienists and assistants — but just as a little bit of an update here. By survey, in 2022, 87% of doctors said it was difficult to find an assistant. That's now down to 70% in 2024. So assistant supply is starting to loosen up a bit. Hygienists are another story. That's barely moved. In 2022, 95% of people said it was tough to find a hygienist; 91% said so in 2024. The hygiene supply has rebounded since COVID, but the biggest problem is that only 53, 54% of hygienists work full-time. So when you're adding one hygienist, it's not like adding an associate doctor who's full-time — they may only be working one or two days a week. Current hygiene supply is going up, but it's still not quite where it needs to be. We project it needs to be about 12,000 new hygienists per year to make it work for dentistry to have enough. It's currently around 9,700.
So that's sort of the state of things economically. Which brings me to DSOs. So corporate dentistry, or DSOs, was a big concern for a lot of guys back in 2010, '15, et cetera. And then it seemed like they really came on hard in the 2020s, because there was a lot of easy money flowing around. That growth, that expansion, has slowed down considerably. So where are we with DSOs right now?
Well, right now there are an estimated 200 to 250 true DSOs in the U.S. — in other words, with five or more locations. Less than 60 of these have over 50 locations. Twenty to 25 of these have 100-plus locations. We estimate that 10,000-plus practices are owned by the top 50 DSOs combined. And 130 of these 200 to 250 DSOs are backed by private equity. I'm not going to get into a whole thing on this — private equity, hedge funds, big money — are backing these, investing in these. Which is actually more than any other healthcare sector.
So who owns these DSOs? Nine of the top 10 DSOs in the United States are owned or backed by private equity. Twenty-seven of the top 30 are backed by private equity — about 84% of major DSO locations.
Now, the reason this has become an issue — and I've seen this happen with our clients, because part of the "problem" with our clients is they grow. We have doctors doing a million a month, or 1.2 a month. Private dentistry, great practices. Or 500 a month, 400 a month — it's not uncommon for an MGE client to be doing that well. Part of the issue when you have a practice doing four, five, six million dollars a year is: if you want to sell, who's going to buy it? The average individual dentist can't purchase that practice.
And then the valuation methodology changed since private equity entered the dental space. It used to be — you may have heard me say this before — the standard in dentistry for years, since I've been in the industry, was 70% of last year's collections. That's how much a practice would go for. So if you went to a doctor in your town — you're a newer dentist and you want to own your own place — and that doctor did 500,000 the prior year, you would buy that practice for $350,000. You might pay a little less if the equipment is older, or the doctor is doing a bit of a fire sale and wants to get rid of it. Or you might pay a little more if they had newer equipment, or there were a lot of people buying practices in that area. I remember in 2006 or 2007, talking to a doctor in Orange County who'd paid 100% of last year's collections for her practice. And I know in Canada it's closer to 100%. But the point being: that used to be how practices changed hands. A doctor wanted to retire, they sold it for 70% of last year's collections. It was very, very simple.
Private equity entered the scene, and the whole valuation methodology changed. It became a multiple of EBITDA — which, I'm not going to get into what that is; let's just keep it simple: it's sort of like profit. And it became a multiple of profit. So if your practice profit last year was 500,000 and the DSO was going to pay a 5X multiple of EBITDA — again, EBITDA and profit are not the exact same thing, but there's a lot of similarities — you would get $2.5 million. And you notice that has nothing to do with how much the practice collected. That's become the new valuation methodology for the larger practices when DSOs are buying. We had a client who sold their practice, that was doing $4 million a year, for $7 million. Had they sold that practice 10 years ago to just another independent buyer, it would've sold for 2.8. Do you see? So that became the major difference.
Now, usually, early on — when you had DSOs like Heartland, or some of the early ones — they would just buy the practice outright. They would ask the doctor-owner to stay on for anywhere from as low as two years, I've seen, up to four or five, and then the doctor would leave. That was the norm when Heartland was buying up.
Well, now what's happening — this is the more recent common structure I've seen of these deals — is they'll come in and pay you 70% of the total value. Meaning, let's say your practice is worth $10 million: they're going to cut you a check for 7 million. They're going to leave you with 20% of the practice. And then that other 10% — because 70% you get the check for, 20% you're keeping — that other 10% becomes an investment in the DSO, with the idea that if this DSO blows up and does well, you're going to make a lot more money than you would've made otherwise. Because the DSO all of a sudden was worth, whatever, 100 million, and now it's worth 500 million — well, you're going to benefit from that, because 10% of your practice's value was invested in the DSO. They call it the second bite.
Now, the way the DSOs would pay out on these second bites is by recapitalizing. Again, to keep it simple — some of you know what this is. What's recapitalization? When a private equity firm puts more money into a company, or sells it to another investor to keep growing or cash out — that's recapitalization. Because normally, private equity's model is they don't want to hold onto a business for more than five years, sometimes up to seven — that's rare. They buy a business, they take the money out that they're going to take out, they maximize the profit, and then they sell it to either another private equity firm or someone else. That's generally how private equity works. So recapitalization is where someone buys part of the company, or they sell it to another investor, and then they can cash out. It's like hitting a financial refresh button. And for DSOs, these deals pay off old debt, fund new acquisitions, and reward investors.
So basically, let's say I'm a DSO and I'm worth 30 million. I sell a portion of my DSO. I use that money to buy other practices. By buying these other practices, I increase — on paper, at least — the value of my DSO. So then the next person who invests is going to be paying a higher price. Do you see? I don't want to get too crazy with this, but I want you to get the idea. So if I'm a dentist, and 10% of my practice value went into this DSO, and another person comes in and buys part of the DSO — well, now I get to cash out with more money. That's the basic idea of how it worked.
What we're seeing with clients now is that second bite they were supposed to get from the DSO is not happening, or it's being delayed, because some of these DSOs are not doing as well as one would like for them to do.
Now, the basic problem with DSOs is many of them are in heavy debt — billions of dollars of debt. And when you have debt in a company — you're a big company and you've taken on debt for acquisition — you have to pay that debt back. How much interest you pay on that debt depends on how your debt is rated. You've probably heard about this before, with bond ratings. A bond is rated triple-A, or A1 — there are different rating systems. Some DSOs' bond ratings are not very high, so they'd be paying higher-interest debt. Like, for instance, there's a PE group called KKR that owns part of Heartland — I don't know what percentage of it they own. Heartland has $2 billion in debt. Because the debt rating is not super high, they're paying a lot of interest on that debt. And again, I'm just saying this anecdotally — I haven't had a lot of clients that Heartland has approached in the last five years. If I had to guess, they're probably one of the more healthy ones, because they've been around for a while. I also know they weren't paying as much as some of these other ones, and I think that's part of what happened. You had DSOs entering the scene, and I heard people telling me, "Oh, they're giving me a 10-times multiple of EBITDA," or "a 12X multiple." Like, this was being promised.
And then you had — if you guys remember these — what they used to call roll-ups, where you'd have 10 offices, 10 different doctors, get together and say, "Hey, we're all one DSO, let's see if we can get more money." Private equity got wise to that and decided maybe this isn't a good idea. When a private equity-backed DSO buys a practice, they want to own all the underlying assets. They may not own the charts, but they want to own the chairs and the space, et cetera, so that they actually own something.
Now, part of the problem with a DSO, in my mind — and this is just from having worked with private dental practitioners for 30 years — is that a lot of what makes the practice go is the dentist. If you have a practice that's doing 4 million a year, and a lot of that production's coming from the owner-doctor who's really invested, who built that place — if you remove that doctor, it's very difficult to maintain not just the customer service and quality, but just the overall revenue. It's difficult, because that was the person who was driving it.
So one of the bigger issues DSOs have is turnover. Right now, by survey, 51% of new dentists in DSOs plan on leaving, versus in a non-DSO practice — these are associate doctors — only 7% plan on leaving. It's a 7X turnover gap.
And then the last problem with the DSOs is the fact that there was a lot of free money — interest rates were low, there was money floating around everywhere — and the whole idea of buying these places up heavily in the 2020s has kind of gone down a bit, because not everything is as rosy as it appeared to be. So private equity is not as heavily invested or aggressive as they were, let's say, five years ago. The money is drying up a bit, so those recapitalizations aren't happening as expected. Exits are getting delayed. Thirty-seven private equity-backed DSOs are five-plus years past the expected recapitalization. Seventeen of those are seven years past. So dentists who sold with the idea of getting that second bite when the recapitalization was supposed to happen — I've talked to a few who aren't getting it.
And just to give you an idea, there's a quote here from a guy named Eric Yetter, from FOCUS Investment Banking — it came from something called the Dental Transactions Update, in June of 2025. It says: many of the private equity-backed DSOs are preparing for their own sale process. Okay, fine. This creates an incentive to grow before sale, as increasing the DSO's EBITDA through acquisition will likely increase its transaction value. So some of these offices — and I actually talked to a guy: when they had their DSO meeting with all the other offices, this was the strategy — to increase their on-paper, quote-unquote "value," they're buying more offices.
So the operational picture, in my mind — and this is Jeff's opinion — is I think we have two problems. One: sure, they may operate efficiently, they have economy of scale, they can keep their expenses down because they have 100 offices buying supplies or whatever. But it's not the same as a privately owned practice — there's not someone on the scene as invested in the practice as there would be with a privately owned practice. And the other, bigger problem in my mind: the owner-doctors eventually bail in a lot of these offices, and they won't be able to maintain the numbers. So in addition to these practices from the more experienced doctors that are going to end up on the market, I think you're going to end up with DSO practices on the market — this is just my two cents — down the road, as some of these more recent comers to the game, who maybe weren't as judicious in how they threw their money around, end up not doing as well. I think you'll still end up with some of the bigger players around, but it's not as big of a thing. It was supposed to be this humongous threat — dentistry was going to go corporate. I don't see it. I just don't. I don't see that this is where it's going to go long-term, because it isn't being sustained now.
All right. So what does this all look like, then? If we project this out into the future, where is this all going? Let's take a look.
We have a drop in the supply of dentists through 2028, and then a slight rebound by 2033, projected. We project that 36,000 practices will be on the market over the next decade as the top end of the age demographic retires. Younger doctors aren't buying practices the way they did 20-plus years ago. So we estimate that approximately 17,000 of these practices that end up on the market will find no buyer. We called them orphan practices. They're just going to either sell the charts or close the office. We have a situation where revenues are down despite increased spending in the dental space, and we have a net 35% pay cut in the average dentist's purchasing power between 2021 and 2024 — and a lot of that is pushed by fee suppression by plans. Twenty-five percent of doctors surveyed saw their reimbursement rates cut; 60% saw zero raise over that time period, against 22% inflation from 2020 to 2024 — and roughly 28% through 2026.
Now, an interesting sort of canary in the coal mine here — and I think I mentioned this last year, because it was in process at the time — Delta Dental bought a DSO called Cherry Tree Dental. Delta Dental of Wisconsin acquired Cherry Tree Dental, which is a regional DSO. So for the first time, a dominant dental insurer in a state directly owns the practices it pays. Now, of course, they've come out and said there's no conflict of interest or whatever — which, I'll believe that when I see it. Maybe I'm being a bit controversial when I say that. The ADA's response to this was: when an insurance company becomes both healthcare provider and insurance payer, questions arise regarding potential conflict of interest; from a business standpoint, a dental insurance company seeks to minimize cost and maximize profit. So we got a strongly worded letter, right?
But why is this a big deal, if this pattern becomes a thing? Well, Delta Dental is the largest dental insurance network in the United States. Thirty-nine member companies. Eighty-five million people covered. A hundred fifty-seven thousand employer groups. If they own practices and set the reimbursement rates, what happens to fees for everyone else? Now, this whole thing did trigger a request for investigation by the FTC and DOJ — Department of Justice. But you can see this for a second — and I wondered about this: if I'm an insurance company, why not just cut out the middleman and have the dentist work for me? They do it with lawyers. Your malpractice company, most likely, if you're talking to an attorney — they may be paying a separate attorney, or they may employ that attorney. Why have to deal with another company and pay a premium? Do you see? And who knows — this Delta thing might be a bit of a shot across the bow. They're trying something. Obviously, this is quite a gutsy move, in my opinion, on their part. It's the first time, to my knowledge, this has ever happened, where an insurance carrier went direct to buy practices. So depending on how that shakes out — which we'll know over the next six months to a year, most likely — you'd end up with a situation where the same entity controls the insurance contract, the reimbursement rate, the practice receiving the patient, and the patient's plan choice. If that model were to multiply — let's say this is successful and more insurance companies do this — what would that mean for the average network-dependent dentist? This is something that I'd want to think about. Because if I'm network-dependent, this is a problem for me. Whereas if I'm not, that's a whole other story.
Now, you remember earlier in the episode, I talked about urban versus rural doctors. (Sorry, I have problems saying the word "rural.") So, an interesting statistic for you, because generally speaking, new graduates tend to gravitate towards metro areas. First, I want to give you a number. If you go to an urban area, the average city, there are 65 dentists for every 100,000 people. In rural areas, that number is 33 dentists for every 100,000 people — and it's actually been declining since 2015. If I were a newer doctor and I was looking to buy a practice, I would definitely go outside of a city. That would make complete sense to me. And the joke is, for the most part, everybody in the United States is not far — an hour to maybe two hours away — from what would be considered a rural area. I'm in the Tampa Bay area, so if I drive an hour and a half north, I'm not in the sticks, but I'm not in a big city area. And to begin with, Tampa's not a huge city. But if you drive an hour north, you're out in a rural area. That isn't that far. So if my main office was in Tampa and I were looking to expand to a second location, I'd probably be going into those areas, because there are less dentists per population. Can you be successful if you're in a highly competitive market? Absolutely — our clients do it all the time. But if I could go to a less competitive market, why the heck not?
We say that new grads gravitate urban because 31% of dentists under five years out of school are DSO-affiliated, and DSOs are primarily concentrated in metro markets.
Now, some interesting economics when you take a rural versus an urban practice. Earlier, I went over the average practice — revenue from 2015–19 versus 2020–24, the average for the United States. Well, now I have this broken down by rural practice and urban practice, same two periods. This gets really interesting. Let's look at our first metric, which is revenue per dentist. In urban areas, revenue per dentist in 2015–19 was 703,000. That number in 2020–24 went down to 695,000 — down by 1.2%. In rural areas, the number's actually gone up. Revenue has gone from 737,000 to 782,000 — up by 6.1%.
But here's the kicker. Let's look at expenses per dentist. In urban areas, it's gone from 464,000 to 480,000 — up by 3.4%. In rural areas, expenses per dentist have gone up astronomically: from an average of 472,000 in '15–'19 to 550,000 in 2020–24. Up by 16.4%. So while rural dentists are bringing in more revenue, their expenses have gone up astronomically. Let's look at net income. Net income for urban doctors has gone from 225 to 200 — so they're feeling that bite we were talking about earlier in the episode. Net income in rural areas has gone from 251 to 210. So rural practices generate almost $90,000 more revenue than urban practices, yet the net is dropping for each.
If you look at why the net is dropping: if my expenses are going up... Let's take a look at something for a second. If I own a restaurant — you probably know somebody who owns a restaurant or some type of retail business — and my suppliers start charging me more for meat and baked goods and soda, what am I going to do? I'm going to pass that on to the consumer. If I'm being charged more for Coca-Cola, Coca-Cola's going to go up in my restaurant, as far as the price goes. The problem is, if you are 70% in-network: yes, your expenses are going up — that's just a fact of life right now — but you cannot raise your fees. And that is a huge problem, because you can't respond effectively. You're sort of trapped. And if I look at the rural-versus-urban numbers with expenses going up — yeah, we knew expenses were going to go up, but revenues have not gone up in step with that, because they can't raise their fees.
All right. So the next thing — we're going over what's going to happen. One thing we hadn't taken a look at here: I went over that 36,000 practices should be for sale over the next 10 years, and we estimate that 16,000 to 17,000 of those practices will not sell. They're just going to go away. Now, if we say the average practice has 1,000 to 2,000 charts, what does that mean in actual patient numbers? That's 16 to 32 million patients in transition over the next 10 years.
So basically, what that means is we're going to end up with less availability for patients. Sure, some of these practices are going to absorb charts, and patients will find other dentists, et cetera. But you're going to end up with this huge transition where, in many cases, people don't have a dentist near them. And this is why I brought this up as a huge opportunity for MGE clients. You're going to have these practices sort of vanishing — we've been talking with our clients about this for the last decade, and many of our clients are taking advantage of it. MGE clients know how to scale. They can pick up additional practices for a reasonable investment without competing with DSOs.
And this is an important thing: if you're going to buy a practice — a second location, or heck, I would even say your first location — don't go spending a billion dollars on this. It's a buyer's market right now, and it will be for the next five, six, maybe seven years. I would be looking at practices that have potential or upside: four or five chairs, some activity, some charts. Maybe I have to update the equipment. Maybe there's shag carpet in the reception area and wood paneling. It's ugly. But who cares? Those are cosmetic fixes, and chairs you can get for next to nothing now — I see people getting chairs for 8,000 bucks with an in-chair delivery system and a free Cavitron. I would be buying practices that are doing three, four, five hundred thousand a year, because I'm getting those cheap and I can scale those things. This is what our clients are doing. I have one client who bought a practice that was doing 350 a year. That practice collected $600,000 in a month, two or three months ago. The point being: you can scale these things.
So MGE clients know how to scale. They can pick up practices for a reasonable investment. And what this does — what I really like — is it takes responsibility for these practices, doesn't let them vanish. It takes responsibility for these patients, and potentially associate doctors — not having to go into a DSO-type environment — and it provides an excellent career trajectory.
Now, on the flip side: if nobody grabs these practices, if they just sort of vanish, if nothing fills the gap, let's look at what we might be looking at. Again, nobody really knows. One, you might have practices closing where former patients find themselves 50 to 100 miles from a dentist, especially in rural areas. You might have astronomical wait times emerge in some areas. Underserved areas — I don't know if you've ever heard that term before; basically it has to do with the patient-to-dentist ratio in an area, and when it hits a certain level, the government considers it underserved — underserved areas will become more underserved. And yes, there'll be less dentists and offices. You may be busier for a period. But this void is not going to go unnoticed by DSOs, PPOs, or government officials.
So what could this lead to? And I'm just speculating here. We could end up with any combination of public-private options, especially in underserved areas. You might have an office with heavy network participation, a lot of government plans, insurance partnerships, government programs where they're paying to put offices in. I've seen this happen with our clients — we had a client in Nebraska who was offered money by the state to open a practice somewhere. They were going to pay for the whole office. But you're going to end up with a higher-volume, lower-margin-per-patient model, which only works at scale with controlled labor costs. It's not the type of private dentistry most people want to practice.
So what I see happening — and again, this is speculation — is you're going to end up in dentistry with what we might consider three tiers of practicing dentists. It could be five tiers, but let's take three basic tiers here. Tier one is the independent. They control their fees, they're out-of-network, and they can drive demand into their practice. That's what we're teaching our clients to be. Tier two is DSOs — potentially with insurance partnerships and public partnerships, meaning the government stepping in — heavy network participation, lower-cost labor, et cetera. Tier three is what we're calling the squeezed middle. These are network-dependent, volume-driven practices. This is the average doctor. This is the doctor collecting 60, 70 thousand a month, and they're 70% in-network, and they're kind of making a living now, even though they've seen their expenses go up over the last four or five years and their profit go down, and they're sort of just waiting it out, hoping things get better. That person is in trouble, in my opinion, over the next five to 10 years.
Who wins is tier one, the independent practice. They control their own fees. It's high-quality private dentistry. Many of their patients might be insured, but the practice isn't in-network. Tier two — the DSO, public-private, insurance-company-driven model — this is heavy network, et cetera. Because here's what I think: if you end up with a bunch of offices closing and there's no one to pick up the slack, what do you think is going to happen when government officials start to find out about this stuff? They're going to demand, "We have to put a dental office there," and they're going to come up with different ideas on how to do that.
And I'm going to be talking about this on an upcoming episode, but I don't know if you've ever heard of something called a dental therapist. Maybe you haven't — I've asked a bunch of clients about it, and they had not. Now, I don't have all the numbers in front of me with regards to dental therapists, but look it up. They usually are only allowed to practice in underserved areas. Minnesota was the first state, if I'm not mistaken, that kicked off this concept. And basically, it's sort of like a master's-type program — you take a hygienist, and I think it's a two-year program; I could be wrong on the details. What are these folks allowed to do? I think there are two different levels of dental therapists — advanced and basic. But they're allowed to place fillings, extract deciduous teeth, et cetera. When you get to the advanced-level dental therapist, they can do a lot of basic dentistry — simple extractions on adults, filling adult teeth, et cetera. And the idea was: if you didn't have enough dentists in an area, you could use dental therapists. It's sort of like the concept we're all familiar with of a physician's assistant or a nurse practitioner. That's what we've got. Those are coming. As a matter of fact, they almost passed in the Florida Legislature this year. So I would take a look at where that stands in your state — because if you have shortages in areas, and no one wants to go to those areas, that might be what's coming in those areas.
And I think, personally, a dental therapist, if you use them properly — and usually, in most of the areas where dental therapists are practicing right now, they're only allowed to practice in underserved areas, but that could change over time — they could be a force multiplier for a private dentist. If I had a dental therapist, I could go into an op, prep six crowns, and they could do the fillings. They could even make the temps, and I could split. It would actually help. It would be like a super-assistant, and they could do some basic stuff for me. But eventually, when you end up with these advanced therapists — they don't have to have direct supervision; they don't even have to be on-site — you could literally have one doctor managing five or six dental therapists in five or six different offices. So if we end up with areas where there are just no dentists, that's what's going to fill the gap, to some degree or another. So I would suggest, to sort of carry the torch forward for private dentistry: if you're looking at adding offices or going into an office, look in these rural areas, because there's definite opportunity there.
So we've got tier one, the independent doctor. Tier two — the DSOs, the insurance companies, public-private options and partnerships. The middle, tier three, is where the danger is. The top and the bottom both have a path — tier one, tier two. The middle gets eaten. Why? Well, we've gone over this earlier. For the average, heavily in-network, volume-driven practice, the math is not working anymore. We had 22% inflation from 2020 to 2024 — 28% through 2026. Real income has declined by 13%. PPO reimbursement rates are flat or down. That's effectively a 35% pay cut. So if you're really looking at this: do you think this is going to improve, or is it going to get worse? Inflation's not going anywhere. It might slow down, but it's not going anywhere. And I don't think insurance company CEOs are going to wake up one morning and go, "We've been treating these dentists really badly. We should increase reimbursement." I really don't see that. Maybe I'm an idiot, but I don't see that happening.
So if I'm you, I would want to move myself into becoming the independent doctor who's not network-dependent. Sure, I have patients who are in-network — I'm just not participating, and they're paying a higher co-pay — but I'm delivering the type of care that I want to deliver. That would be the direction I would be moving towards if I wanted to make sure that I was successful over the next 10 years, long-term.
So here's what I'd suggest. I mentioned earlier in the episode, this is sort of the path forward — becoming that independent — and there are a number of points that you would want to start working on in order to move towards making sure your practice is fully independent. We have something called the Independent Practice Roadmap. It's a consultation. We do it for free. I'll put a link to it on the episode webpage if you want to check it out and find out what you can do to start moving your practice in that direction — because it might take some time, especially if you're heavily in-network. And it's not just about getting out of plans. There's a lot more to this. But this is something that I would do if I were you, if your long-term goal is to have a successful, profitable practice — not working three or four operatories trying to make ends meet, but doing the type of dentistry that you want to do. That would be my suggestion to you.
Anyway, that's sort of the overall picture, from what we see here, as to what's happening in the industry. There's opportunity there. There's also — if you don't take action, in my opinion — potential problems, as I've mentioned throughout the episode. And obviously, look: if you're listening to this, you're interested in doing something to improve your practice. So my suggestion to you would be, do that consultation. Find out what you can do to start moving yourself in the right direction and setting yourself up so that you're successful in practicing the way that you want over the next 10, 20 years. Because look, there are a lot of people depending on you. Between you and your family, it's your team, and your patients, and your future patients. So I'd say you owe it to yourself to make sure that you're doing well going into the future.
Anyway, folks, that's all I have for you this week. I know it's a longer episode, but I do it every year. I have the slideshow download on the episode webpage — you can go through all this. I have all the numbers, as well as all the sources, at the bottom of the various slides. And don't forget, the link to the Independent Practice Roadmap consultation is there. You can fill that out. It's free, there's no obligation, and I would definitely recommend that you check it out. Otherwise, if you want to find out more about MGE, you can find us online at mgeonline.com, or call us at 800-640-1140. Folks, have a great week, and we'll see you at the next episode.
