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Pacific Dental Says Virus Devastating Industry

Irvine-based Pacific Dental Services was on pace to grow revenue 25% to $2 billion this year before the coronavirus pandemic struck.

“We won’t come anywhere close to that—we’ll be happy to do half of that,” founder and Chief Executive Stephen Thorne told the Business Journal, referring to a $1 billion goal for 2020.

“Dentistry has been devastated, which might be a soft word.”

Thorne, who began his company in 1994, has had to temporarily lay off about 8,000 of its 13,000 employees. That includes nearly 500 of its 800 employees at its Irvine headquarters along Red Hill Avenue.

“Ours is a story of survival,” added Chief Enterprise Strategy Officer Daniel Burke.

The irony is that dentists are at the forefront of how to deal with viruses.

“Dentists have been dealing with aerosol communicable diseases for decades,” said Thorne, referring to diseases that can be spread through coughing and sneezing.

“Dentists are used to dealing with saliva and spit. That’s what dentists do.”

Thorne hasn’t heard of one case of the coronavirus being transmitted at dental offices, which have tightened even further their safety protocols.

“Dentists have stepped up their games and gone from safe to safer,” Thorne said.

The Beginning

Thorne got his start at his father’s dental practice by installing a computer system. He recognized a business opportunity when he realized that many dentists didn’t have business backgrounds.

The company builds and manages office practices for dentists, taking care of just about everything except the actual dentistry. It’s what’s known as dental support organization or DSO, where a firm handles daily office operations like managed care contracting and billing and collections.

Other local DSOs include Irvine’s Smile Brands Group Inc., which has about 445 affiliated dental offices, and Orange-based Western Dental Services Inc., which has about 324 affiliated offices.

Pacific Dental has grown to support about 2,000 dentists at more than 800 practices, including 31 in Orange County, in 20 states.

“It’s been a great and growing business for decades,” Thorne said.

The company has been on Inc. magazine’s list of the fastest-growing companies for 14 straight years until 2018. While 2019 is still being tallied and the first two months of 2020 were on pace for another record-breaking year, Thorne is convinced his company will not make the 2020 list.

“There’s not one shot that we’ll be there,” he said.

An Industry in Freefall

The American dental industry may fall this year from a previous estimate of $150 billion to $52 billion, Thorne said.

That drop can be attributed to government officials of 50 different states determining whether a crown or a root canal or orthodontists are needed services, Thorne said. Only 5% of dental offices were open for business, he said during an interview in late April.

“The fundamental issue is that some of the dental boards and governors didn’t make dentistry essential and called it emergency only,” he said. “We are totally at the mercy of the state governments.”

“That’s why we’ve seen this big fall. Dentists have been precluded from seeing patients. We’re estimating that 30% of dental offices in America will close and won’t reopen,” he added.

The banishment of dentists to non-essentials did not make sense as about 2.2 million Americans annually visit hospital ERs for dental reasons.

The inability of dentists to practice might put even more strain on ERs that are trying to concentrate on the coronavirus.

“We have had tens of thousands of patients that need care,” Thorne said. “They cannot be served in emergency rooms or hospitals.”

Pacific Dental spearheaded a social media campaign by promoting the #DentalER grassroots movement to keep dental emergencies out of hospital ERs and to contact their dentists.

“It caught fire on social media,” Burke said. “Great companies in our industry such as Procter & Gamble, Henry Schein and others have joined in to support this public service.”

Building Confidence

After the pandemic broke out in the U.S., Pacific Dental became more active in procuring N95 masks and face shields for its dental offices. Like other businesses, they found prices exorbitant at first, but then came down as more production came online.

It has also expanded into the relatively new field of teledentistry, where it set up a platform in four days.

Teledentistry helps prescreen patients, about 40% of whom did not need to visit the dentist or who could wait for the procedures. Its new service has helped attract referrals from large insurance providers such as Aetna Dental and United Concordia Dental.

“Teledentistry is here to stay, but it is relatively new to all of dentistry,” Thorne said.

The company’s executives are looking carefully at states that are opening such as Georgia. Overall, it will take time to convince the public to see their dentists.

“It will be a slow build as we build back consumer confidence that dentistry is safe,” Thorne said.

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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