Post-Scale Transformation: Evolution and Monetization Strategies of Dental SaaS Platforms

Dental SaaS is not a new concept; it has been adopted by many clinics and is favored by investors.

Notably, in 2016, LinkCare Info raised a total of over RMB 70 million in its Series A and A+ financing rounds. Meanwhile, Qiezi Dental Cloud carved out a unique market position with its “free SaaS” model. Although SaaS providers have been aggressively expanding offline to acquire dental clinics, an indisputable fact remains that most clinics currently still prefer locally installed, on-demand customized dental software.

Locally installed dental clinic software solutions, such as Qingsong Yayi, Little Bee Dental Software, Dachuan Dental, and Aijian Dental Management Software, have been developed in China for a considerable period, with some having histories exceeding ten years. Over this extended timeframe, these systems have accumulated a substantial base of clinic users, data, and established usage patterns. Even as some clinics begin adopting SaaS software with cloud connectivity, they often retain their local software installations.

As the largest traditional dental software on the market, Easy Dentist, founded in 1999, is used by tens of thousands of hospitals and clinics, having been established around the same time as large dental chains such as Bybo and Arrail.

Public information indicates that its clients include Beijing Stomatological Hospital, the nationwide chain of Jiamei Group, the nationwide chain of Yongkang Dental, the Chengdu Yafei Dental chain, the Beijing Aiyashi Dental chain, the Beijing Gurui Dental chain (SDM Group), and the General Hospital of the Beijing Military Region, among others.

It is evident that local software versions remain widely used across large dental chains, dental hospitals, and small- to medium-sized clinics. So how is dental SaaS, as a formidable competitor, performing in the market? VCBeat interviewed Wu Zhijia, founder of Linker Care, and Cui Wei, founder of Qiezi Dental Cloud, to discuss the changes expected in the dental SaaS sector in 2017 and gain some insights.

Software-as-a-Service (SaaS), with the rapid development of internet technology and the increasing maturity of application software, has become a new type of software operation model. VCBeat has learned that abroad, SaaS is penetrating into all aspects of software applications and beginning to become mainstream. For example, Salesforce, the global pioneer and leader in the SaaS model, which achieved tremendous success with its SaaS-based CRM, has vowed to disrupt traditional enterprise software giant Oracle.

Compared with traditional software, the technical architecture of SaaS software differs significantly. Instead of users commissioning custom development or secondary development from software vendors, SaaS providers deploy applications on their own servers and deliver online software services via the Internet.

In this model, the software provider is responsible for establishing all infrastructure, including network equipment and hardware/software operational platforms, as well as performing ongoing maintenance. Enterprise users subscribe to the required application software services from the provider via the Internet based on their actual needs, typically paying fees determined by the scope of services subscribed, the duration of the subscription, and the number of users.

Clearly, under the SaaS model, users can access software on demand by subscribing to services, eliminating the need for custom software development, hardware procurement, data center construction, or hiring IT maintenance staff. Users are also relieved of post-deployment software maintenance responsibilities; they can simply connect to the internet to enjoy the services provided by the software vendor.

In terms of cost, there is no need to pay a large upfront fee for custom software development; instead, the software can be used by paying only a minimal rental fee, resulting in very low risk. If the software proves incompatible with the company’s management model during later stages of use, the subscription can be discontinued. This approach is particularly suitable for small and medium-sized enterprises (SMEs) with limited capital, such as small and medium-sized dental clinics in the oral healthcare sector.

As for why SaaS can disrupt traditional software and is suitable for dental clinics, Wu Zhijia from LinkCare Information stated: “SaaS abandons the development and interaction models of traditional software. It offers faster deployment and more convenient software upgrades, requires no installation, eliminates certain maintenance and management fees, and removes the need for enterprises to purchase servers. Most importantly, in the era of mobile internet, it enables clinic owners and dentists to access clinic information anytime and anywhere, allowing them to manage patients and clinics during fragmented time periods. This is an irresistible trend.”

Cui Wei from Qiezi Cloud Dentistry also cited two reasons to the reporter. The first is technology: widespread advancements in cloud computing, big data, and artificial intelligence-based machine learning have driven the maturation of the SaaS model, leading to its adoption by dental clinics, particularly small and medium-sized ones.

Second, it is essentially determined by the market. Small and medium-sized clinics require a secure, fast, and cost-effective tool to enhance efficiency. This tool should be available online 24/7, allowing data access and workflow execution from any location and via any device, thereby maximizing operational efficiency—potentially even surpassing that of large dental chains.

As policies on physicians’ independent practice gradually loosen, the current market trend shows that the growth in the number of standalone clinics far outpaces the expansion of large chain practices. Driven by both technological advancements and market demand, SaaS solutions have reached maturity and experienced explosive growth. However, this transition is not instantaneous and will require a gradual process.

Apart from differences in scale, small and medium-sized standalone clinics face relatively less pressure on profitability. In contrast, large nationwide dental chains, operating under an asset-heavy model, confront multifaceted pressures. The costs of dental chairs and ancillary equipment, essential diagnostic devices such as panoramic X-ray machines and CT scanners, mandatory consumables and pharmaceuticals, rent, online brand management, and physicians’ salaries all constitute a significant financial burden. Furthermore, challenges such as physician turnover, low operational management efficiency, and high customer acquisition costs further strain the profitability of large dental chains.

In early 2017, the large-scale, single-site AUX Dental Clinic, which had been in operation for 11 months, shut down. Journalists roughly estimated its costs: with a business area of 3,030 square meters located on the East Third Ring Road in Chaoyang District, Beijing, its monthly rent and property management expenses amounted to as high as RMB 1 million. The fixed personnel expenditure for physicians alone was estimated at approximately RMB 280,000 per month. These two items alone resulted in monthly fixed costs of RMB 1.28 million.

Looking back at its inception, Aux Group had planned to invest RMB 3 billion over three to five years to establish a nationwide dental care network of 30–50 clinics through mergers and acquisitions as well as greenfield projects, aiming to become a top-tier dental chain in China. Such grand ambition is, in fact, emblematic of the aggressive expansion currently pursued by virtually every dental chain with any competitive drive.

As a highly market-driven sector, dental clinics face relatively low medical risks and have indeed become one of the most active areas for private capital. In July 2014, Bybo Dental received a RMB 1 billion investment from Legend Holdings. Over the following two years, it expanded its network from 75 to nearly 200 clinics. In August 2016, Happy Dental completed a RMB 350 million Series A financing round led by Huatai Medical Industry Fund, setting a target to expand to 100 clinics. In March 2017, Malo Clinic China secured RMB 110 million in Series C financing to establish a presence across the entire dental industry chain. The expansion and mergers and acquisitions of Jiamei Dental have proceeded at an astonishingly rapid pace.

Rapid replication through professional chain operations—opening stores, generating profits, and then opening more stores—has become a well-established model for expansion. However, hidden risks lurk behind such aggressive growth.

The scarcity of high-quality dentists, inefficient management, and high customer acquisition costs erode competitiveness, making dental practices highly susceptible to cash flow crises. In this context, independent clinics or small regional chains represent the most cost-effective operational model. Establishing a high density of locations within a single city is far superior to pursuing low-density expansion across multiple cities.

Since the largest fixed costs for dental clinics are incurred at the individual practice level, the most efficient strategy is to increase patient volume at each location rather than expanding nationwide or globally. Large-scale chains do not possess significant economies of scale. Only if technological advancements reshape the industry landscape and substantially alter the cost structure will there be an opportunity to better amortize these fixed costs over a broader geographic area.

For dental chains, dental SaaS is clearly a new technology or model upgrade. However, at present, the adoption rate among large branded dental chain groups remains low.

As for the reasons, Cui Wei from Qiezi Dental Cloud told reporters that this actually dates back to the period when these chains emerged, specifically during their aggressive expansion starting in 2000. At that time, concepts such as SaaS technology and cloud computing did not yet exist; however, certain informatization tools were available. For instance, Hospital Information Systems (HIS) from large hospitals were modified to suit their management systems.

“In fact, large dental chain brands were the earliest to adopt information-based management. Through improvements and iterations, they achieved systematic management, but the pace of iteration has been relatively slow. As clinic operations mature, this system can only support a limited number of locations, whether through expansion or mergers and acquisitions. It may suffice for over one hundred clinics, but it is impossible to scale to thousands or tens of thousands. Within such a closed-loop chain network, efficiency and compatibility continue to improve, yet the system becomes increasingly closed and incompatible with stores of other brands. Its openness is undoubtedly weak,” said Cui Wei.

On one hand, given the massive scale of its clinic network, the company’s proprietary dental software has become increasingly well-adapted to its long-established management system, effectively accommodating all operational needs and customization requirements. Embracing openness would entail establishing a new standard, which would require either adapting to third-party systems or developing bespoke solutions—a formidable challenge.

On the other hand, against the backdrop of mounting revenue pressures, large branded dental chains’ first instinct is to pursue relentless expansion, pressing ahead without pause from tier-1 cities into tier-2 and tier-3 markets—a strategy dictated by their inherent business model.

VCBeat has learned that the investment required to establish a medium-sized dental clinic ranges from RMB 2 million to RMB 5 million—neither inexpensive nor exorbitant. Fixed costs are primarily allocated to license applications, equipment procurement, renovation, and initial operational cash flow. In terms of staffing, the minimal configuration may consist of a single dentist, while the most complex setup typically includes five to six dentists, over a dozen nurses, and several front-desk, administrative, and marketing personnel.

However, for patients in the dental industry, the likelihood of switching to other clinics is very low once they become familiar with a specific clinic and dentist. Meanwhile, unlike other medical specialists, dentists can generally manage all oral conditions independently, making collaborative treatment with other physicians rarely necessary.

In other words, there are no fixed costs that can be shared between stores, so the significance of forming a chain is limited, and this industry will naturally present a relatively fragmented state.

Referencing data on U.S. dental clinics from 2002 to 2012, as reported by the U.S. Census Bureau’s Statistics of U.S. Businesses program: Although small, single-practice clinics continue to dominate the U.S. outpatient dental market, large chain operators have grown at a rate far exceeding the market average over this ten-year period. This growth is reflected not only in the increased number of large chain organizations but also in the greater number of locations operated by each organization. A key factor driving this trend is the expansion of management reach enabled by technological advancements.

Before the widespread adoption of internet technologies (prior to 2002), many functions could not be centralized at all. For instance, when all appointments and financial records were maintained by hand, centralizing financial operations was extremely difficult; likewise, a centralized call center was unfeasible before customer data could be managed electronically via computers.

From 2002 to 2012, clinic management software evolved from standalone versions and multi-machine versions to the current cloud-based solutions. It is these technological advancements that have made centralized management of multiple clinics possible. Therefore, viewed from a historical development trend, the replacement of traditional software by SaaS is an irreversible trend and an inevitable path for future store expansion.

“I want to particularly clarify one point: SaaS is a software interaction model that requires no installation, enabling data entry at a single point with multi-terminal display and real-time information interaction. Some dental practice management software solutions actually require downloading and installation from websites, which means they are not SaaS at all.” Wu Zhijia, founder of LinkCare Information, has been emphasizing the fundamental nature of SaaS to reporters.

Wu Zhijia also strongly agrees, noting that large chain organizations have already awakened to the trend of adopting the SaaS model. The reporter learned that Linker’s e-Kanya dental SaaS management software currently primarily serves private dental medical institutions, particularly those in the mid-to-high-end customer segment. Regarding the rationale behind this positioning, Wu Zhijia shared several reasons:

First, mid-to-high-end private dental clinics have a very strong demand for clinical management and operational support. LinkCare Information has signed Beijing Ruicheng Stomatological Hospital, a well-known Level II specialized dental hospital.

Traditional software struggles to meet the needs of physicians practicing at multiple locations, as well as certain clinical and managerial requirements. The dental industry is highly marketized; to establish chain operations—particularly for small, high-end private dental clinics—refined management demands robust data support. Traditional software, based on client-server (C/S) architecture, offers inadequate cross-regional support and is inherently disadvantaged in the current landscape of widespread mobile work and multi-site medical practice.

Second, large chain institutions possess a unified brand identity. Beyond the standardized requirements for clinical diagnosis and treatment, they have greater demands regarding chain management, membership systems, two-way referrals, outpatient management, operational efficiency, and supply chain management. Currently, all major chain institutions exhibit varying degrees of issues, utilizing disparate software solutions to manage different outpatient clinics, resulting in insufficient uniformity in their informatization systems.

Third, e-Kanya Dental SaaS: Building upon the foundation of U.S. mobile healthcare SaaS models and integrating the specific characteristics of China’s dental industry, the team has made significant improvements in technical architecture, workflow engines, rule engines, and other areas. In addition to emphasizing process optimization and data utilization, the platform effectively leverages clinical management and operational data for strategic advantage. It helps large dental chains improve work efficiency, enhance doctor-patient communication, and support clinical practice as well as refined management and operations. After evaluating multiple dental management software solutions, Happy Dentistry began using LinkCare’s e-Kanya system.

At the current stage, where localized software and SaaS coexist, Qiezi Dental Cloud has pioneered a fully cloud-based approach with no on-premise version. Cui Wei stated, “Some software vendors offer both on-premise and cloud versions, which is highly problematic. This dual-model approach incurs substantial costs for later-stage iterations and maintenance, and fails to ensure data synchronization—or at best, only achieves non-real-time synchronization. Consequently, its value is significantly diminished in the context of big data, cloud adoption, and even future AI-driven collaborative applications.”

From a professional perspective, cloud-based SaaS delivers standardized services; improving efficiency requires establishing relatively standardized processes. Cui Wei of Qiezi Dental Cloud shared a statistic with reporters: there are currently 100,000 private dental practices in China, varying in size and service requirements. How, then, can dental SaaS providers deliver standardized services?

Cui Wei analyzed calmly, “Rather than saying we target small and medium-sized clinics, it is more accurate to say that we precisely address their needs. Of course, each clinic has its own specific requirements. We do not provide customization for every clinic; customization is part of our on-premise service offering. For cloud-based solutions, standardization of processes is the first priority. We deliver services based on data after iterative improvements driven by user feedback. For instance, single-location clinics and small chains have different needs regarding multi-account versus single-account management. Therefore, we cannot accommodate every minor individualized request, as SaaS has not yet reached that level of granularity. Currently, we generally provide personalized matching based on clinic size and service categories.”

Among 100,000 private clinics, Qiezi Dental Cloud broadly categorizes them into three types based on scale. The first category comprises approximately 50,000 small clinics with 1–3 dental chairs. Some of these clinics may not have yet adopted locally deployed software, with some still relying on paper-and-paper records. These clinics can be directly onboarded through training and education to start using SaaS solutions, for which providing basic SaaS workflows is sufficient.

The second category, comprising approximately 30,000 to 40,000 clinics with roughly 3–8 dental chairs each, often achieves profitability comparable to that of large chain practices on a per-clinic basis. These clinics are particularly active in second- and third-tier cities and represent a key target market for Qiezi Dental Cloud.

A larger number of dental chairs indicates stronger business performance, with many clinics already offering high-return treatments such as dental implants and orthodontics. Basic SaaS services are certainly insufficient to meet their needs. Therefore, based on these service types, Qiezi Dental Cloud will implement personalized upgrades to develop new standardized services with more distinctive features or enhanced functionality.

The third category, comprising 5,000 to 10,000 large branded chain clinics, is not currently the target clientele of Qiezi Dental Cloud. “For now, we are not engaging with large branded chains, as they were among the earliest adopters of information management systems. They have developed their own tailored management frameworks based on modified Hospital Information Systems (HIS). However, I believe it is only a matter of time before they integrate into SaaS ecosystems,” said Cui Wei.

Standardization is, in fact, a common challenge faced by all SaaS enterprises. How does Linkcare Information approach this issue? Wu Zhijia told VCBeat that, from the perspective of SaaS itself, first, it is essential to meet the needs of customers in different regions, which requires substantial investment in cybersecurity and data security. Second, since the SaaS model must cater to high-end, mid-range, and low-end clients of varying scales, its technical architecture must be highly flexible and scalable. Third, Linkcare Information’s outpatient management module features support for chain practice management, accommodating China’s complex hybrid chain models, including both direct-operated and franchised clinics.

Therefore, to meet the needs of clients at different levels, in addition to leveraging its technical architectural advantages and providing flexible configuration for the business processes of high-, mid-, and low-end clinics, LinkCare Information also offers a range of robust data reporting and data mining capabilities. Naturally, this imposes higher requirements on data storage security and data transmission security.

“Precisely because of these practical business challenges, LinkCare Information also screens out a portion of potential clients and adheres to specific criteria when selecting clinics. In terms of clinic selection, we tended to focus on mid-to-high-end clinics in 2017; from 2018 to 2019, there was a gradual shift downward, moving from mid-to-high-end to lower-end clinics,” said Wu Zhijia.

As indicated in Salesforce’s 2016 annual report, revenue is primarily concentrated in two segments: Sales Cloud and Service Cloud. Sales Cloud enables companies to store data, monitor leads and progress, forecast opportunities, gain insights through data analytics, and integrate PC and mobile platforms. Service Cloud empowers companies to deliver smarter, faster, and more personalized customer service and support. The core of profitability lies in paid subscriptions, which leverage data mining and utilization to provide related professional services.

Wu Zhijia from Linkcare Information stated that since its promotion began in March 2016, e-Kanya has acquired over 5,000 mid-to-high-end clients within a year. As a paid service, e-Kanya currently offers three versions: the Professional Edition, designed for clinics with 1–3 dental chairs; the Enterprise Edition, suitable for dental outpatient departments with more than four dental chairs; and the Flagship Edition, intended for large chain clinics, including both directly operated and franchised locations.

Different versions come with varying pricing structures. As a fee-based service provider, LinkCare has consistently advocated for value-driven sales, prioritizing product functionality and user experience. Consequently, word-of-mouth marketing serves as a crucial promotional strategy for LinkCare. In addition, the company employs offline ground promotion tactics, utilizing a direct-sales-like model to expand its market reach.

Eggplant Dental Cloud adheres to a free-of-charge strategy. Cui Wei stated, “Frankly speaking, although customers no longer perceive cloud services as insecure compared to over a year ago, and the SaaS industry has moved past its nascent stage, it remains in a phase of competition for scale. From a business model perspective, without offering free services, how can one achieve large-scale expansion? For the 100,000 private dental practices in China, the first-stage target should be to reach approximately 50,000 clients in order to attain security through scale. Currently, Eggplant Dental Cloud serves more than 27,700 practices, which still does not constitute an absolute market advantage.”

It is evident that Qiezi Dental Cloud started by targeting small and medium-sized clinics, helping them improve efficiency with a low-cost, user-friendly solution that allows access anytime and anywhere. This approach precisely addressed the urgent need of small clinics for standardized system tools. Of course, the expansion process also relied on continuous capital support. After achieving scale accumulation, the company aims to better serve customers through its paid data products in the later stage. Cui Wei stated that large-scale clinics are also part of Qiezi Dental Cloud’s future targets.

In short, in the highly competitive dental consumer market, SaaS companies have targeted offline clinics, opening up their API interfaces to enable enterprise customers to use their services more conveniently and quickly, thereby intensifying competition. However, whether clinic users are truly willing to pay for these products hinges on whether the SaaS solutions can genuinely enhance their operational efficiency.

If we attempt to categorize the current dental SaaS software, it can be broadly divided into two types: one is relatively lightweight SaaS, leaning towards CRM marketing; the other is full-process.

Regarding business model exploration, Wu Zhijia of LinkCare Information stated that the company is piloting dental insurance initiatives and recently launched a pediatric dental insurance product in collaboration with ZhongAn Insurance. In the future, it will also explore models such as “SaaS + consumables” and “SaaS + transactions.” As for the currently hot topic of supply chain finance, the company is not currently involved in this area.

“For a startup, it is essential to maintain focus in order to thoroughly refine and perfect its offerings. Once we achieve a certain market share through our SaaS promotion, dental insurance and the ‘SaaS + transaction’ model will naturally integrate. At that point, a simple business will evolve into a scalable and profitable business model.”

Qiezi Dental Cloud has also made some explorations in its business model. Cui Wei said, “In fact, since 2016, when the number of clinics exceeded 10,000, we have already begun targeted discussions on business models, or rather, trial and error, based on the overarching goal of helping clinics generate profits.”

According to reporters, Qiezi Oral Cloud is currently working on connecting dental scanning devices and exploring a model that links directly with processing factories. Compared with traditional molds, this approach offers higher standardization and lower error rates, thereby enhancing the user experience. In terms of WeChat-based micro-marketing, the platform has also explored ways to facilitate interaction between clinics and patients. Additionally, Qiezi Oral Cloud has partnered with well-known international insurance companies to establish a claims settlement system called “Qiezi Bao.” In the area of financial installment services, “Jin Qiezi” has become a recognized installment payment brand in the dental industry, having been in operation for over six months.

“How was the profit model developed? It is based on the vast amount of data accumulated by the Qiezi Dental Cloud Platform at a certain scale. Under compliant conditions, we later conduct modeling and data refinement analysis—for example, establishing claims settlement systems with large foreign insurance companies, which cannot be achieved through ordinary resources. We are also exploring the Anqie risk control support system. These efforts take time, with the aim of enhancing original consumption capacity, generating incremental growth, and ultimately enabling clinics to achieve higher profitability.”

Another trend is that, from the perspective of dental clinic users, there is a growing expectation to access a broader range of services through a single SaaS application. The future development of SaaS will undoubtedly be intelligence-driven, with increasing integration between IaaS and PaaS. As a result, the barriers to entry and trial-and-error costs for entrepreneurs entering the SaaS sector will continue to decline, making it increasingly feasible to develop SaaS products with more powerful functionalities and superior user experiences.

At present, the integration of big data with enterprise-grade SaaS is the most profound, with artificial intelligence, particularly deep learning, emerging as the dominant trend. As Cui Wei from Qiezi Dental Cloud stated, “Leveraging vast amounts of data, we continuously develop new application tools—such as financial installment plans and risk control systems—while delivering a superior user experience. These tools guide ongoing product iteration, with the ultimate aim of helping dental clinics increase their revenue.”

The success of a business model is invariably driven by a confluence of economic, technological, and other factors. In the United States, SaaS-based enterprise services achieved robust maturity a decade ago, offering valuable precedents. Ultimately, exceptional product design and superior service quality remain the key differentiators for SaaS providers in the marketplace.

Note: All data in this article were provided and confirmed by the interviewees, or obtained from publicly available sources.

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8. The Second Half of SaaS: 3 Major Trends, 2 Opportunities, and 4 Challenges