The Corporate Service Organization (CSO) phenomenon began in the early 1980s founded (in part) by Dr. Howard Rocket and his company Tridont Dental Centres*. One of the great successes of that organization in the early stages was its corporate culture. Dr. Rocket personally met with every single dentist joining the organization and he attended all business meetings. He attended every grand opening and ribbon-cutting ceremony at all the new locations. Tridont offered its team members phenomenal continued education and held 1980s style conventions and functions that anyone who attended will remember! I went to one – wow! Everyone was treated like family in the early years. *http://archive .macleans.ca/article/1981/9/14/department-store-dentistry
As the company grew, the culture supported by the founders diminished as the company spread out; it could no longer build new and became less able to maintain their existing relationships. Things started to fall apart. Tridont peaked at 107 dental offices with about 500 dentists and 2,500 staff. About a decade into the business plan, after going public, the company went bankrupt and shut down. I believe the culture collapse was the largest part of the failure.
Let’s look at today’s various CSOs that are growing in the Canadian dental marketplace and talk about culture collapse. It is a phenomenon that rapidly growing companies are unable to control after a period of time. The founders and the early adapters cannot support the growing number of invested parties and relationships become sterile and impersonal as the focus fixates on the financial side. Imagine a CSO generating hundreds of millions of dollars of revenue, while investing hundreds of millions each year in growth, all the while trying to serve the needs of associates, partners and employees, not to mention patients. It is a massive challenge.
The mandate of the senior managers and the founding partners/investors is to follow their business plan, raise capital and continually invest in the marketplace. This is a natural maturation that all corporations attempt to achieve at one time or another. But after the early stages, when relationships are formed with the founders/early adapters, the later adapters will discover that they are not part of the same club. They are not part of the same inner circle. They feel isolated even though they are fully invested in the business model and they are financially successful, they do not feel they are part of it. They were not there in the beginning stages when the ball started to roll and as the snowball grew, more and more people got behind it until the lineup was so long that you do not feel you are helping but simply following the leadership.
I have spoken with many dentists who have sold to a CSO. Some fulfilled their long-term contract obligations and reported great success in the relationship. On the other hand, many (in particular those who joined the organizations later in the cycle) feel they have just become a number and they were just another spoke in an otherwise massive spinning wheel.
Dentistry is and will remain a hands-on, personal service profession. This belief system cannot be taken away from the practitioner. Surveys indicate that the very large majority of dentists entered the profession to “Be My Own Boss”.
You cannot buy culture nor invent culture. Leaders who crave culture are often found trying to manufacture it when they notice some dissention in the ranks. This is often the beginning of the end for many organizations. Particularly when it starts to disillusion those who were there at the beginning and when they see resignations and turnover at the executive level. At this point, they start to realize that will have trickle-down effect and the result is often another faceless corporation, which may be very profitable, but one that people do not want to work for.
As a business appraiser and broker who primarily focuses on health care practices, we have also looked at other non-dental CSOs that are substantially larger than some focused on dental. The businesses that seem to have the greatest challenges rely upon a dominant, highly skilled labor force. Health care is a perfect example. Let’s look at the medical doctors. What is the culture of the medical doctor working in the present government-controlled, bureaucratic health care system in Ontario and other parts of Canada? I think we know the answers.
The CSO is here to stay in Canada and will likely double in size and ownership/control over the next 3 to 5 years. The culture of each of these CSOs will evolve and some will fail while others will thrive. Much like my experience in the 1980s, I predict the early adapters will eventually suffer a collapse of culture.
Timothy A Brown, CEO & Broker of Record of ROI Corporation, Canada’s largest and longest standing appraisal and brokerage company.