Think Private Equity Is Wiping Out Independent Clinical Practices? Check the Math Before You Sell
Don't believe the hype around private equity eating up independent dentists and other clinical practices. This is the best way to respond when a salesperson calls with an offer.
Imagine you own a successful dental practice. You built it over 15 years. It supports your family, employs eight people and is worth more than your house. Then one morning you read that dentistry is 35% consolidated, private equity is buying everything, and independent practices like yours are going extinct.
You're in your early 50s and not quite financially independent, but close. What do you do with that information?
If you're like a lot of the clinical practice owners I talk to, you start thinking about selling. Or you at least entertain the option with the next person who cold-calls you, maybe sooner than planned, and even though the financial and quality of life trade-offs are a little murky.
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That scary statistic is going to cost you money, and here's the thing: It isn't true.
Check the math before you check out
The 35% figure went viral in dental circles recently. The American Dental Association's actual number is about 16%. That's not a difference of opinion or data sources. That's the difference between "the wave is unstoppable" and "most of the industry is still independent, and will be for a long time."
Where does a number like 35% come from? Usually from mixing questions that sound alike. "How many dentists work for a corporate group?" is a different question than "how many have private equity somewhere upstream?" which is different again from "how many practice alongside other dentists?"
Three partners who own their practice together are a group, but nobody has consolidated anything.
The ADA's Health Policy Institute measures the strict version, corporate affiliation, and gets about 16%. The viral 35% never said which question it was answering, and a number that won't show its work deserves your skepticism, especially when it arrives attached to a prediction about your money. Even the strict number is growing, and it is nowhere near a majority.
Consolidation is happening in clinical businesses. It has also happened in pharmacy, in veterinary medicine and in non-clinical businesses, such as accounting, pet grooming and even car washes. Mature industries consolidate at the edges.
But there's a long distance between "corporate groups exist" and "corporate groups win," and in medicine that distance is protected by something the spreadsheets keep missing.
The people problem private equity can't solve
The kind of person who spends eight to 12 years training to become a dentist, a dermatologist or an optometrist tends to share two traits: Ambition and skill. Those are precisely the traits that make someone a terrible long-term employee of a large corporation.
I've guided more than 1,500 dentists through practice purchases, and I can tell you what the ambitious ones do inside corporate jobs: They leave. They save their money, they learn the systems and they open or buy a practice of their own, often down the street.
The corporate groups' greatest recruiting challenge is that their best employees are their future competitors. The skill that is ultimately being purchased by private equity is literally in the hands of a person, not a system or technology.
An industry built on that kind of talent doesn't consolidate the way a chain of car washes does.
And for all the headlines, there is no good evidence yet that patients are better off, or that profit margins are better, in investor-owned practices. Until that changes, the independent practice's core advantage — a doctor who owns the relationship — keeps its value.
What a business owner should actually do
If you own a practice or any small business in a "consolidating" industry, the actionable advice comes down to two moves.
First, never sell into a narrative. Sell into your numbers. Get an independent valuation from someone who doesn't earn a commission on your sale, know what your business actually produces in owner cash flow, and compare any offer against the value of simply continuing to own.
Line up both the difference between a private versus corporate valuation and the difference in remaining lifetime earnings when you're the owner versus an employee. Salespeople who lead with scary statistics are telling you something about their negotiating strategy, not about your business.
Second, remember that the seller with the most options and least fear always gets the best price. Every owner who sells in a panic sells for less than market value, and also makes the next acquisition cheaper.
The owners who do best in consolidating industries are the ones who treat consolidation as one bidder in the auction, not the auctioneer.
The same test works on any scary market claim aimed at your money, whether it's about housing, AI replacing your job, or the death of the independent professional. Someone is usually selling the fear along with the solution.
Your practice took years to build. Don't let a statistic that can't survive some basic research determine who controls your career.
You can read more about this issue in this article I wrote for DentistryIQ.
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