How Technology Drives Growth and Valuation for DSOs and Dental Groups
As the dental industry faces mounting pressure from staffing shortages, rising costs, and an increasingly competitive industry, one solution is emerging as a powerful lever for growth and valuation: technology. From streamlined operations to enhanced patient experiences, dental support organizations (DSOs) and dental groups that invest in modern tech stacks are positioning themselves to thrive, both operationally and in the eyes of private equity investors.
Efficiency Gains That Offset Labor Shortages
Automation and smart software tools are proving critical for DSOs and dental groups that are stretched thin. For example, online appointment scheduling and automated reminders help reduce no-shows, while AI tools assist in diagnostics and improve patient understanding. At Peak Dental Services, founder A.J. Peak is embracing AI and automation to keep the quality of patient care high despite economic pressures.
“I’m impressed with how AI technology gives DSO operators tools to innovate and deliver higher quality outcomes faster despite fewer resources,” said Peak. “For example, Denticon’s 835 auto posting feature saves our team significant time on revenue cycle management. Pearl AI helps with radiograph analysis, and Patient Prism uses AI to improve scheduling and call handling.”
These kinds of tools not only relieve administrative burdens but also help dental groups retain talent and reduce burnout, which are key advantages in a tight labor market.
“Staffing can often be challenging, which emphasizes the importance of strategic innovation,” said Nithya Vinjamoori, partner at McKinsey & Company. “As hiring needs continue to grow, there may be ways that tech can support workforces while alleviating pain points.”
A More Attractive Bet for Private Equity
Private equity investors are increasingly scrutinizing the technological sophistication of DSOs before writing checks. According to Gareth Petsch, managing director of pH Partners, investors want to see strong infrastructure, clean financials, and standardized systems across all locations. Without it, deals can fall apart.
“The tech stack is one of the many diligence items investors review,” Petsch said. “High levels of standardization and consistency across the platform would be considered best-in-class and receive favorable outcomes. A lack of clarity and standardization, especially in data systems, can delay or derail M&A transactions.”
In one case, he shared, unresolved data issues triggered regulatory scrutiny that put a transaction on ice. “Data is the new asset,” he added. “And data gaps or breaches can quickly become liabilities.”
Tech Investments Drive Higher Valuation
While standardizing technology systems won’t automatically spike a company’s valuation, it plays a crucial role in avoiding value erosion and preparing for future growth.
Vinjamoori noted that tech stack development enables more effective acquisition integration, operational value creation, and organic growth, all of which influence how a business is appraised.
“We’re seeing the most successful groups address four core areas: growth, clinical operations, revenue cycle management, and operational efficiency,” she said. “Within dentistry, there’s particular opportunity to invest in tools that give visibility into site-level financials and better identify patient needs.”
In other words, dental groups that put in the work now—unifying platforms, automating manual tasks, and improving the patient journey—are laying the foundation for higher multiples later. That includes preparing for the so-called “second bite at the apple,” a common scenario in private equity where sellers retain some equity and cash out again at a higher valuation four-to-six years post-transaction.
Building the Foundation for Scalable Growth
Standardizing the tech stack across multiple sites is about more than just smoother operations. It’s about building a repeatable, reliable patient experience, something that matters deeply to both patients and investors.
“DSOs benefit from ensuring locations are well integrated, with uniformity from practice management software to HR procedures,” said Petsch. “A clear, consistent patient experience across locations is key.”
Vinjamoori agreed, adding that groups should also invest in marketing and analytics to support underperforming locations and drive site-specific improvements. By visualizing performance metrics and aligning operations with patient demand, DSOs can uncover new opportunities for growth.
Strengthen Growth Potential for DSOs and Dental Groups
Tech-enabled DSO and dental groups are better equipped to manage today’s staffing and financial challenges while setting themselves up for future success. The message from investors and operators alike is clear: technology isn’t just a nice-to-have; it’s a strategic imperative. “AI and automation allow us to do more with less, and to do it better,” Peak explained.
By embracing tech stack standardization and innovation now, DSOs not only increase efficiency but become far more attractive partners when the next wave of mergers and acquisitions heats up.
Contact Planet DDS to explore how scalable, integrated solutions can support your DSO’s growth strategy and operational goals.
Editor’s note: This article was written by Planet DDS and originally published on DrBicuspid.com.
