Dental Service Organizations

According to the American Dental Association, more than 16 percent of all new dentists ages 21-34 are affiliated with dental service organizations (DSOs). By contrast, only 7.4 percent of dentists overall are affiliated with DSOs. In any event, more and more dentists today are giving the DSO model serious consideration.

For many new dentists, excessive student loan debt and start up costs pose significant challenges to launching a practice, which makes becoming part of a DSO an attractive option. At the same time, established dentists looking to grow their practice or to provide a wider range of specialty services can also benefit from this arrangement. When considering whether to become affiliated with a DSO, it helps to have the advice and guidance of an attorney who provides legal services to dental professionals

How does a DSO work?

The first thing to note is that a dental service organization is not a group practice, nor does it buy dental practices — dentists are legally required to own their practices. Instead, a DSO contracts with a dental practice to provide nonclinical operations such as accounting, billing, human resources, payroll, professional office management, and ownership and leasing of equipment, while the dentist retains control of the clinical operations.

Because DSOs have increased purchasing power through economies of scale and lower overhead costs than private dentists, members can provide dental care to underserved communities while remaining profitability. In a perfect world, DSOs enable dentists to outsource all aspects of management and maximize their practices, which, in turn, can enhance patient outcomes. 

Why are more dentists joining dental service organizations?

There are a number of factors driving the growth of dental service organizations, including:

  • High levels of student debt among new dentists
  • An increase of women in dentistry who demand work flexibility, such as options for part-time or full-time employment
  • The DSO’s assumption of both risk and operational costs of the practice
  • Greater opportunity to use technological tools to allow for better patient outcomes
  • Private-practice dentists reaching retirement or seeking wish to sell their practices

There is a downside, not the least of which is not being in control of the practice and working within an outside management structure. In addition to control issues, compensation is also a consideration. In some arrangements, the dentist is paid a straight salary, in others, a percentage of collections. Finally, becoming a member of a DSO may require entering into a non-compete agreement, which could prevent a dentist from opening a practice in the same area if the arrangement with the DSO doesn’t pan out.

Why This Matters

Whether you are a new dentist, looking to grow your practice, or considering downsizing as a path to retirement, joining a dental service organization may be a viable option for you. In short, it is necessary to balance the risks and rewards of the DSO model, and relinquishing control of the practice is not for everyone. Ultimately, the best decision you can make for your future is to seek legal advice from a trustworthy attorney.