Dental Service Organizations

DSO vs. Owner-Operator Model

Dental Service Organizations (DSOs) and owner-operator practices represent two different approaches to managing a dental practice. In an owner-operator model, the dentist owns and manages the practice independently, taking care of all aspects of the business, from patient care to marketing, billing, and HR management.
On the other hand, DSOs provide business and administrative support services to dental practices, allowing dentists to focus on patient care. This dental practice support can include everything from billing and collections to marketing, compliance, and technology support.

Advantages and Disadvantages of DSOs

Working with Dental Service Organizations (DSOs) can significantly impact the day-to-day operation of your dental practice. Whether you are a new dental practice owner or a seasoned professional looking to grow your practice, you may consider a DSO consolidation. Before making any decisions, it’s important to know the potential pros and cons of having a third party making your business decisions and influencing your clinical decisions.

DSO Advantages:

Economies of scale: DSOs can leverage their size and scale to negotiate better prices for supplies, equipment, and services, which can help reduce costs for dental practices.
Access to technology and expertise: DSOs can provide access to the latest technology and best practices in dental practice management, allowing practices to stay competitive and offer high-quality care.
Business support services: DSOs can take care of non-clinical aspects of running a dental practice, such as billing and collections, marketing, and HR management, allowing dentists to focus on patient care.

DSO Disadvantages:

Loss of autonomy: Dentists who work with DSOs may have less control over the operations of their practices, including decision-making about patient care and the direction of the business.
Corporate influence: DSOs are often owned by investors or private equity firms, leading to concerns about corporate influence on patient care and workforce development.
Lack of transparency: Some DSOs may not disclose their ownership structure or financial performance, making it difficult for dentists to fully understand the implications of working with them.
Workforce issues: DSOs may employ dentists, hygienists, and other staff on a contract basis, which can lead to concerns about job security, workforce development and quality of care.

Selling to a DSO

Affiliating with a DSO is an impactful, career-changing decision for any practice owner. It’s why having as much information as possible about the process and the potential DSO is vital. If selling to a DSO is done properly, it can be financially and emotionally rewarding. If selling to a DSO is done poorly, this transition can lead to financial hardship and loss of autonomy. We’re here to help you fully understand the benefits and pitfalls of selling your dental practice to a DSO.

The Most Frequently Asked Questions about DSOs

Do you have questions about Dental Service Organizations, ADS, or a practice transition? We’ve got answers. Contact us today.

Q: What does DSO mean?

A: DSOs (Dental Service Organizations) provide critical business management and support—including non-clinical operations. DSOs offer professional office management. This arrangement enables dentists to focus on dentistry while giving up supervising the practice.

Q: What are the potential pitfalls of a DSO?

A. The biggest disadvantage of selling to a DSO is loss of autonomy. When you sell, you are no longer the employer — you are the employee. And you are bound to be a part of a larger corporation. Your hours and workload are regulated. Additionally, dentists generate more money over the lifetime of a career while owning their practice vs. selling their practice to a DSO.

Q: What are the potential benefits of a DSO?

A: DSOs provide several benefits to a practice. You get centralized practice support, the latest technology, professional education and training, along with greater buying power for your organization.

Q: What’s the best way to vet a DSO?

A: Once the prospective DSO has answered all your questions, you can do several things to get a complete picture of the organization. You can ask other dentists about the performance of the DSO. You can also find and work with a qualified broker or team specializing in dental transitions. These two moves will help you better decide on selling to a DSO.

Q: What’s the best way to negotiate an agreement with a DSO?

A: Once you’ve done your research, you’ll want to review the terms of the agreement with a transition expert. You will then be in a position to negotiate with the DSO. Partnering with an experienced ADS broker can make all the difference.

Q: How is the value of a dental practice determined?

A: Determining the value of a dental practice is an involved process that considers multiple factors. Two of the most important factors are cash flow and profitability. Other factors include comparison of similar practices in your area, patient base, and the current economy. Read more about dental practice valuations here.

Q: How to find a dental broker?

A: Finding a transition specialist is easy. Search ADS brokers from our current practices for sale, or visit our dental broker directory to find brokers practicing near you.

Q: What is ADS?

A: ADS is a network of independently owned dental practice brokers across the United States committed to standards of transparency and professionalism in their work. The brokers have years of experience negotiating DSO transitions. ADS is the country’s most trusted source for dental professionals seeking practice brokers and consultants.

Q: Can any dental practice broker join ADS?

A: ADS members must have a minimum of 5 years of experience in practice brokerage. Most members have more than 25 years of experience. Before joining ADS, prospective members undergo a rigorous interview and criteria review process.

If you have more questions about Dental Service Organizations, ADS, or a practice transition? We’ve got answers. Contact us today.