Background and challenge
A leading dental support organization (DSO) has experienced performance decline over the past several quarters. The organization asked L.E.K. Consulting to assist with performance improvement and SG&A optimization. We were enlisted to help define the client’s three-year strategy and to advance a suite of initiatives that would improve revenue and profitability performance.
Approach and recommendations
L.E.K. worked with executive management and the board of directors to further develop and articulate the client’s broader vision and strategy. We determined the key challenges the client should prioritize, including (1) optimizing operations to ensure efficient and effective reach of patients; (2) deploying incremental resources to markets with the greatest potential; and (3) securing sufficient dentists to meet existing demand. We developed revenue and cost performance initiatives around these growth and improvement areas. We defined initiative owners, dependencies, milestones and key work steps. We also worked closely with the management team to determine specific performance targets required to enable successful execution of initiatives and margin improvement.
Performance improvement initiatives were piloted in selected states to assess their effectiveness, ease of implementation and impact. L.E.K. leveraged the experience in these pilots to define implementation timelines and calculate the EBITDA of each initiative. Finally, we quantified potential uplift of the performance improvement plan and identified the benefits, costs, risks and complexities of implementing the strategy over the next three years.
The client aligned around its longer-term strategy and a clear set of initiatives to improve performance. The organization had an understanding of the impact of the initiatives based on the pilot programs and EBITDA improvement potential. The client is now implementing these initiatives and has already seen success, achieving EBIDTA improvement of approximately $20 million.