Pacific Dental Services Inc. has grown by freeing up dentists to practice by taking care of the business side.
The Irvine-based company saw sales of $389.4 million for the 12 months through June. That’s up 32.4% from two years earlier, a gain that gave it the No. 68 spot on the Business Journal’s list of fastest-growing private companies based here.
Pacific Dental is what’s known as a dental practice manager. It leases space and handles daily office operations such as human resources, managed-care contracting, billing and collections and buying supplies for its clients.
It’s grown to about 250 offices in California and five other states, including 17 in Orange County. The operation includes 4,500 workers and contracts with 800 dentists and dental hygienists.
Since its beginning, Pacific Dental now goes as far east as Houston, and is planning expanding into Oregon, Utah, Oklahoma, Tennessee and Georgia.
Organic growth, rather than deals, has fueled Pacific Dental’s growth, according to Chief Executive Stephen Thorne in an earlier interview.
“We either own the facility—own the dirt, the building—or we lease the building.”
The company considers a number of factors before entering new markets, including the ratio of dentists to population, available real estate and whether a potential state is “pro-business or not,” Thorne said.
Thorne said that organic growth is likely to continue as the company’s core strategy, but the company would look at potential deals that fit its approach.
The company’s offices generally have several dentists and hygienists who offer various specialties, something that puts general dentistry, orthodontics and endodontics, or root canal work, in one location.
Technology
Technology is also a selling point for Pacific, including digital processes for patient records, X-rays and even taking impressions’ of patients’ teeth.
Pacific’s offices generally serve middle- to upper-middle-class patients.
Offices are placed “mostly near shopping centers— wherever women go,” Thorne said. He cited statistics showing that women make almost 80% of dental appointments and often handle the task for other family members.
Pacific was founded in 1994 by Thorne, whose grandfather, father and brothers are dentists, and who is the company’s majority owner. Thorne is not a practicing dentist.
Thorne has said he’d thought about a possible public offering for Pacific.
“We’re always evaluating what the best capital structure is,” he said. “Dentistry is still highly fragmented, and the group practice provides a much more cost-efficient delivery model to the public.”
Big Market
Figures from the American Dental Associa-tion show that Americans spent $102.2 billion on dentistry in 2009, the most recent data available.
The Bureau of Labor Statistics has projected that demand for dental care will rise in coming years because of population growth, middle-aged and older people keeping their natural teeth longer, a greater awareness of dentistry’s importance and an increased ability to pay for services.
In an interview with industry Website Inside-Healthcare, Thorne said that dentistry is “mostly mom and pop; most dentists practice the same way my grandfather did.”
But dentists are now looking at ways to cut costs because reimbursement from insurers isn’t likely to rise, Thorne said.
“Most dentists get very little, if any, training on how to be a good businessperson.”
Model
According to Thorne, healthcare’s future lies in models like Pacific’s of “large networks that provide more resources to the individual practices … The dental industry is ripe for big changes that we can spearhead in the next 20 to 30 years,” he told Inside-Healthcare.
Pacific’s roots are in work that Thorne – an alumnus of the University of California, Los Angeles and Chapman University – did for his father in the Victorville area.
Many of Thorne’s father’s fellow dentists asked for help with the business side of their practices, leading him to figure “there’s a real business here, to help dentists with their practices.
