What is a DSO? Understanding Dental Support Organizations
I have been practicing as a periodontist for nearly 20 years. Early in my career, I noticed that only about 1-2 booths at the meetings were related to DSOs or private equity. Now, that number has increased to over 30%. The landscape has certainly changed.
In this article, we are going to discuss what DSOs are, along with the advantages and challenges faced with using them.
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Sign up for my newsletterWhat Is a DSO?
A Dental Service or Support Organization (DSO) is an entity that dental practice owners contract with to manage their dental practice’s administrative, marketing, and business aspects.
DSOs do not provide clinical services. Instead, they allow dentists to focus on providing excellent patient care.
In simpler terms, a DSO is a company that tells a dentist, “We get that you’d rather focus on pulling teeth or cutting crowns—the stuff you’re really good at—instead of wrestling with HR, payroll, marketing, and billing, which might not be your forte. Let us invest in your practice, and we’ll handle all that business stuff for you so you can concentrate on being an outstanding clinician.”
This is a great pitch for most dentists (especially new ones) as dental school doesn’t teach us two important things:
- how to handle money
- how to start and/or run a practice
Navigating the business world can be scary for both new and seasoned dentists. It’s no surprise that DSOs are becoming more popular, thanks to their practical value proposition.
They take the day-to-day administrative tasks off the dentists’ plates, allowing them to focus solely on patient care—a field in which they are knowledgeable, comfortable, and excel.
The DSO Business Model
The DSO model is designed to provide crucial business management and support for non-clinical operations within the dental industry. They vary in size and structure and can be owned by dentists, non-dentists, private equity firms, or other investors.
In the United States, DSOs exist in every state and have even expanded internationally.
When a dental practice partners with a DSO, the DSO assumes responsibility for office management, including:
- Operations
- Marketing
- Administration
- Insurance claim support
How Does a DSO Work?
A DSO is essentially a type of private equity venture. Traditionally, if a new dentist wanted to own a practice, they would typically buy one from a retiring dentist using a bank loan.
A DSO changes this by allowing investors to buy into existing practices directly. This way, they can start applying their business strategies immediately without dealing with traditional bank loans.
Here’s what happens…
The dentist who sells their practice to a DSO receives a substantial amount of money upfront, which frees them from many of the stresses of running a business. Great, right??
They continue to work at their practice but as employees rather than owners. Their salary is usually based on what is typical for the area, but certain conditions might be attached to how much they get initially and how much they continue to earn, depending on how well the practice does.
Most DSO agreements require the dentist to remain at the practice for at least three years. Some of the DSOs that have contacted me have wanted me to stay on for five years.
The DSO itself gains a major share of the practice, taking on a controlling interest in a business that already makes money. Although some states require a dentist to be the majority owner, DSOs often meet this requirement by including a dentist among their investors. They’re smart!
Private Equity Benefits
This arrangement is appealing for private equity because it’s a straightforward investment into a stable market—no need to build from scratch or undergo extensive training.
It includes real assets like property and equipment, plus the goodwill of the existing patient base.
Dentist Benefits
For new dentists, working with a DSO can be quite beneficial. They receive a large upfront payment, shed the burdens of business management, and earn a steady salary, allowing them to focus solely on dentistry.
This makes transitioning into practice smoother and less stressful.
DSO vs. Solo Practice
| Aspect | DSO Benefits | Solo Practice Challenges |
|---|---|---|
| Support | Provides support for non-clinical tasks, allowing dentists to focus on patient care. | Requires dentists to manage both dental work and business operations. |
| Growth Opportunities | Offers more growth opportunities through industry connections and expansion resources. | May face limitations in resources and networking. |
| Economies of Scale | Can negotiate better deals with suppliers and services due to larger scale. | Usually can’t match the discounts DSOs obtain. |
| Management Expertise | Benefits from professional office management and expertise in the field. | Depends on the dentist’s own management skills, which vary in effectiveness. |
Advantages of DSOs
One significant advantage of partnering with a DSO is the economies of scale it provides.
By consolidating resources, DSOs can negotiate better pricing for dental supplies and equipment, lowering the overall cost for your practice. This allows you to offer competitive patient pricing and increase your profit margins.
Additionally, DSOs often handle bulk purchasing and inventory management, freeing your time to focus on providing top-notch patient care.
Operational Support
DSOs provide operational support to your practice, streamlining management processes and enhancing overall efficiency. They offer a range of services, such as:
- Administrative tasks: DSOs can handle tasks like scheduling, insurance claim submissions, and billing. This improves your office support, allowing you to maintain a smoother workflow.
- Financial support: DSOs analyze practices’ financial performance, aiding you in making informed business decisions to drive revenue growth.
- Legal support: Partnering with a DSO provides access to legal assistance, helping you navigate complex dental regulations and avoid potential legal liabilities.
Overall, the operational support provided by DSOs enables a better work-life balance, ensuring that your focus is on delivering quality dental care rather than being overwhelmed by the intricacies of managing a business.
Nonclinical Support Services
Nonclinical support services offered by DSOs help streamline your practice even further. Some key benefits include:
- Marketing support: DSOs can manage your practice’s marketing campaigns, contributing to building your patient base and increasing brand recognition.
- Human resource management: DSOs handle human resource services, such as employee recruitment, training, and retention. This facilitates a productive team without burdening you with the complexities of HR management.
- Insurance claim support: Submitting insurance claims can be a time-consuming process, but DSOs can alleviate that by handling insurance claims on your behalf, decreasing paperwork, and ensuring accurate submissions.
By partnering with a DSO, you gain access to comprehensive support that allows you to focus on your core clinical tasks while maintaining strong business growth.
Impact on Dental Professionals
Career Opportunities for New Dentists
For recent dental school graduates and younger dentists, the DSO model can offer numerous career opportunities. As part of a DSO, you have a chance to enter a dental practice with an established patient base and support systems in place. Here are some factors to consider:
- Consistent Pay: DSOs can offer competitive compensation packages with benefits such as salary growth incentives and sometimes even signing bonuses.
- Mentorship Opportunities: Joining a DSO can grant access to experienced dentists within the organization, giving you valuable mentorship opportunities to grow your clinical skills.
- Less Administrative Burden: With DSOs handling the administrative side of things, you can focus more on your patients and clinical growth.
Benefits for Dental Practice Owners
New and established dental practice owners can benefit from partnering with a DSO. Some of the main advantages:
| Benefit Category | DSO Advantages |
|---|---|
| Increased Efficiency and Productivity | DSOs have established systems and processes to manage business operations, freeing dentists to focus on patient care. |
| Access to Advanced Technology and Resources | DSOs often invest in state-of-the-art equipment, providing dental offices with cutting-edge tools and technology. |
| Marketing and Insurance Support | DSOs handle marketing and insurance claims, aiding practice growth and expanding patient reach with more insurance options. |
Challenges and Considerations
One of the primary concerns for dentists considering partnering with a DSO is the potential loss of autonomy, especially for seasoned dentists.
While DSOs offer critical business management and support services, they can also influence the way you run your practice. It is essential to weigh the benefits of outsourcing the business side of your practice against the possible impact on your professional autonomy.
You may want to consider different DSOs and their specific proposals to determine which, if any, are the right fit for your practice.
Selecting the Right DSO
Finding the right DSO for your dental practice requires due diligence. Not all dental services organizations or dental management organizations are created equal, and it is crucial to make the right decision to ensure a successful partnership. When evaluating potential DSOs, consider the following factors:
Reputation
Research each DSO’s reputation within the industry and among other dentists in similar situations. Look for reviews and testimonials from their current or past partners.
Scope of services
Assess the range of services provided by each DSO and how well those services align with your practice’s needs. Some DSOs may excel in marketing and administrative tasks, while others might focus on providing advanced technology and resources.
Financial stability
Ensure that the DSO you choose has a solid financial background and can support your practice in the long term.
Cultural fit
Evaluate whether the DSO’s values and working style align with your own. This alignment is critical for maintaining a positive working relationship.
Frequently Asked Questions
What are the differences between DSOs and private dental practices?
In a DSO, the administrative, marketing, and non-clinical support is provided by an external entity, allowing dentists to focus on patient care. This contrasts with private dental practices, where dentists handle both the clinical and business aspects of their practice.
Which dental service organizations are considered the best employers?
It’s difficult to pinpoint specific DSOs as the “best” employers, as this can vary based on individual needs and preferences. Before deciding where to work, it’s important to research the various organizations and evaluate factors such as company culture, values, and support services.
Can you list some examples of dental service organizations?
Examples of dental service organizations include Aspen Dental, MB2, Heartland Dental, Pacific Dental Services, and Great Expressions Dental Centers. There are many DSOs, and it’s crucial to research and compare them to find the right fit for your career goals.
What are the benefits of a Dental Service Organization (DSO) for young dentists looking to own a practice?
Joining a DSO can be a great way for young dentists to start their own practice with less risk. DSOs handle many administrative duties, allowing dentists to focus on patient treatment and gain experience without the immediate pressures of business ownership.
How do dental service organizations operate?
DSOs can operate in various ways depending on the dental practice’s needs and the specific organization. They offer assistance in areas such as accounting, marketing, IT support, and human resources, allowing dentists to focus on patient care. The exact services provided can differ among DSOs, so it’s essential to consider this when looking to partner with one.
Are all corporate dentistry models considered DSOs?
Not necessarily. While many corporate dental models involve partnered DSOs, other structures also exist. The key difference is that a DSO provides administrative support to multiple affiliated practices, while corporate dental models are generally larger entities that manage their practices entirely in-house.
What are the reasons dentists might choose to sell their practices to a DSO?
There are several motivators for dentists considering selling their practices to a DSO. These can include increased growth opportunities, access to better technology, and clinical mentorship.
Financial investments and improved work-life balance are also factors, as many business management aspects are handled by the DSO. This choice ultimately depends on the dentist’s personal preferences and long-term goals.