By Dr. Tyler Scott, WCI ColumnistAs part of my application to dental school, I was required to submit a signed paper showing that I had completed 100 hours of shadowing in dental offices as a way of demonstrating my commitment to the field and providing some real-world context for what I was attempting to sign up for.
I completed some of those hours with a younger dentist who was about eight years out of school in the major metropolitan area of Salt Lake City, some with various specialists along the Wasatch Front, and just a handful with an older dentist in the quiet and cold Cache Valley of northern Utah. While my time in the busy offices of the specialists and the younger doctor made me more excited to be a dentist compared to the relative inaction of my time up north, it is the sage words of that rural doctor, wizened by nearly 40 years of practice, that left the biggest impact on me as I started my dental journey.
On my way out of his office in the late fall of 2007, signed paper in tow, he put his hand on my shoulder and, with a tone of compassion and concern, he delivered a prescient warning:
“You are a fine young man, and I have no doubt you will succeed in this vocation that has been so good to me. But I can’t let you leave without telling you the winds of change are building for dentistry. By the time you are my age, I fear there will be precious few old men like me owning and operating their own practice and doing it on their own terms. The fiery corporate engine that built this modern world and whose flame consumes those that impede it is approaching on the horizon. They have already absorbed many of our medical brethren, and I believe it is inevitable they will likewise consume us in due time. This doesn’t mean dentistry can’t and won’t be a wonderful path for you. Just don’t think it will look the same tomorrow as it did yesterday and keep a good head about you when the heat starts to build.”
I had absolutely no idea what he was talking about or what to make of this foreboding tale offered up out of nowhere by Dr. Gandalf The Gray, DDS.
Well . . . now I know, and all dentists know, exactly what the sagacious doctor was talking about. He was forecasting the precipitous rise of private equity into the dental landscape, a phenomenon with which our friends practicing medicine are already familiar. He was talking about the rise of the DSO.
Before we get into the nuts and bolts of the DSO world, let me be clear about my intentions for this column. This is not intended to be a comprehensive or complete analysis of the complex world of DSOs or the myriad variables any given dentist would consider when it comes to doing business with them. I am confident that most of you practicing dentists know much more about this than I do, and I defer to your knowledge and experience. Further, I welcome your participation in educating me and our peers based on those learnings and lived observations.
In short, I want to frame this conversation from a place of DSO neutrality. Despite Doc Gandalf’s warning, my goal is to neither advocate for nor dissuade from the consideration of partnering with or selling to a DSO.
What Is a Dental Service Organization (DSO)?
According to the American Dental Association, a DSO (Dental Service Organization) is an “entity that dental practice owners contract with to manage the administrative, marketing, and/or business sides of that dental practice.” In other words, a DSO is a company that says to a dentist: “Hey, we know you would rather do a root canal and a crown that you are really good at instead of dealing with HR, payroll, marketing, billing, and all the business stuff that you aren’t so good at or just hate. Let us buy into your practice, and we will handle all that stuff for you so you can just focus on being a great clinician.”
That is the right pitch to the right person.
It is an open secret that, by and large, dentists don’t enjoy and are not particularly good at the business side of dentistry. And who can blame us? Dental school provides zero meaningful business education despite saddling new graduates with monstrous student loan debt which alone requires a high financial IQ to navigate. Generally speaking, the predatory nature of the financial world with its legions of commission-based salespeople masquerading as financial advisors are all too happy to prey on this demographic of uninformed and unprepared business owners.
It can be scary out there in the business world for new and old dentists alike. It is no wonder that DSOs are on the rise with their very pragmatic value offering of removing the day-to-day administrative burden from dentists should they prefer to just focus on the oral health of their patients—an area that they know and understand and in which they excel.
More information here:
Why More and More Dentists Are Going ‘Out of Network’ — And Why That’s Actually Good News
A Dental Career Reimagined — I Thought I’d Be Rich But I Found Wealth in Another Way
How Does a DSO Work?
When I say a DSO is a company, let’s refine that understanding. A DSO is really a private equity venture. Unburdened by the rigor and constraints of traditional lending from a bank (the historical norm in dentistry is a new dentist buys a practice from an old dentist by borrowing money from a bank), the investors in the DSO can simply buy equity in existing practices and implement their own business practices immediately.
The owner dentist gets a big chunk of money and relief from business-related stresses, and they get to keep practicing as an employee in a familiar setting. The dentist’s new employee salary is usually “market rate” based on local/regional averages, but there are often some strings attached to the timing or amount of the initial payout and/or the ongoing salary based on a contractual expectation that the practice maintains—or even increases—their production for a period of time after the sale. Most DSO contracts require the dentist to continue working in the practice for at least three years.
The DSO gets an equity share in an established cash flow-positive business and obtains varying levels of control over how the business is run going forward (every DSO and DSO contract is different). The equity position of the DSO is a majority share in most cases. Some states mandate that a licensed dentist be the majority owner, which occasionally requires the original owner to retain a 51% holding, but most DSOs work around this by having a licensed dentist as a shareholder and thus, speciously claiming that a dentist is the majority owner.
You can see why this is so appealing to the private equity world. You get ownership in and control over a historically inelastic industry without having to train, build, or borrow to get there. It is a plug-and-play investment that has both tangible property (real estate and equipment) and goodwill (the established patient base).
You can also see why it is so appealing to the dentist. They get a large infusion of cash, they get to drop a huge source of their professional headaches, and they get an (allegedly) guaranteed paycheck just workin’ the 9-5.
How Fast Are DSOs Growing?
Depending on where you look and who you ask, somewhere between 13%–23% of all dentists are currently working for or are affiliated with a DSO, giving them a current market size of ~$139 billion. Five years ago, the market share was ~5%-10% less than it is now.
The largest DSOs have been growing 13%-14% annually, and the overall growth rate is expected to be 17%-18% compounded annually each year between 2024-2030. The market share is expected to be over 30%-40% by 2030 with a market size of $454 billion-$761 billion.
There are somewhere between 100-200 DSOs backed by private equity right now. The largest controls more than 1,000 practices with the smallest owning only a few. You have probably seen or been treated at some of the big ones: Aspen Dental, Heartland Dental, Pacific Dental Services, Western Dental, Smile Brands, MB2 Dental, Affordable Care, or Dental Care Alliance.
While some of these, like Aspen Dental, are obvious to the public because they operate under the DSO-branded name, most patients being seen by a DSO don’t know it. You may say, “Oh not me, I’ve been seeing Dr. Anderson for years, and she owns and operates her own practice.” Well, that could be true. Or perhaps it just used to be true, and in fact, Dr. Anderson sold to a DSO a few years ago and continues to operate under the same practice name.
The point is that they are already everywhere, and they are growing fast.
More information here:
Is Dentistry Worth It? Comparing It to Being a Pediatrician, a Planner, and a Plumber
Why Are DSOs Growing So Rapidly?
To understand where this rapid growth is coming from, it’s important to acknowledge the economic forces that have been affecting dentistry recently.
- Increasing overhead costs associated with staffing, infection control, and the technologies and materials that patients have increasingly come to expect.
- Overall decreases in the patient utilization of dentistry. (It is true that 2021 and into 2022 was a good period with pent-up demand and patients having extra cash from COVID. But overall, patient visits are down compared to before the pandemic.)
- Increasing cost of undergraduate and dental education (which is largely unnecessary and indefensible for dental schools).
- Rising interest rates to borrow money for education, practices, equipment, and technology.
- Reimbursements from insurance that haven’t gone up in years (or even decreased) despite significant inflation. (On a related aside, a future column will examine the profound financial value of being a dentist compared to most other medical providers due to the theoretical ability to raise fees at the rate of inflation, a luxury most physicians don’t have or can’t control resulting in less and less “real” income each year.)
- Burnout and emotional exhaustion that lead to fewer patient hours and lower productivity.
These economic conditions affect dentists at different stages of their careers in different ways, but all conspire to fuel the growing DSO fire.
Why Do DSOs Appeal to Late-Career Dentists?
As dentists get toward the end of their careers, there are typically two things happening at the same time.
First, they are looking to simplify their professional life. They want to keep doing the procedures they enjoy with patients they have come to know over many years, but they want to do them without the ever-increasing burdens of EMRs, HIPPA compliance, employment law, sterilization testing, recertifying radiographic equipment, website management, etc.
Second, they want to get as much for their practice sale as possible, as this often represents a meaningful portion of their retirement nest egg. Increasing profitability and finding a well-qualified buyer starts taking up more and more bandwidth in their minds.
A DSO can help with both of these concerns. We have already covered how a DSO lifts an administrative burden from the dentist, but let’s look at the two ways a DSO can help maximize the sale of the practice.
The first way is that the DSO purports to increase profitability by reducing overhead, implementing more efficient processes, and increasing marketing. This can all raise the metrics used to evaluate a practice at the time of the sale and put more money in the retiring dentist's pocket.
The next way is that DSOs can often pay more than a traditional new dentist buyer for the practice, because the DSO doesn’t have to rely on a bank for financing in the way a “regular” buyer does. The private equity firm already has the cash on hand. This is very appealing to a selling dentist in the same way a homebuyer is more likely to sell to someone with a cash offer, especially if that cash offer is a higher price than the person relying on lending would pay even if they got the loan.
Why Do DSOs Appeal to Mid-Career Dentists?
The primary appeal to the owner dentist who is in the middle of their career is the immediate liquidation of locked-up equity and the promise of fewer admin headaches.
Many dentists in their late 30s to early 50s have several areas of their financial lives that would benefit from a large infusion of cash. They may have debt they are anxious to resolve in the form of student loans, practice debt, equipment loans, or building loans. They have kids who are about to go to college, and they have undersaved for their college funding goals. Many are looking to upgrade from their starter homes or make considerable renovations to their existing home. Others have woken up to how their delayed retirement planning has put them in a mathematical bind, and they now understand how a large lump sum investment into the market would aid in shoring up their retirement projections.
Many dentists in this group didn’t really understand the multitude of stressors awaiting them when they became small business owners over the last 10 years, and they have grown weary from the grind of spending increasing time “running and managing the business.”
Both of these motivators were evident when I informally polled my old OHSU classmates at our dental school reunion in the summer of 2023. In a room full of 40+ dentists mostly in their mid-30s to mid-40s I heard a lot of:
- “I am so sick of handling staffing. The teeth stuff is fine; it’s the people that are killing me.”
- “The practice is doing OK, but man, the rest of my life is so much more expensive than I expected. I’m just a lot more stressed about money than I thought I would be at this point.”
- “If I have to rerun another denied insurance claim for a procedure I did four months ago but still haven’t been paid for, I’m going to completely lose it.”
- “I swear, something is always broken. The autoclave, the website, the breakroom toilet, the air conditioner, the waiting room iPad, my hygienist’s pinky finger. It’s always something, man. There is no peace.”
The DSO offering to relieve some short-term financial stress and alleviate ongoing business tasks can be very appealing to this group of mid-career providers.
There is also a tax-planning strategy that can motivate practice owners to set up a DSO to support just their own practice. Many dentists do not benefit from the Qualified Business Income (QBI) deduction, aka the section 199A deduction, which is available to owners of “pass-through entities (i.e., sole proprietorships, LLCs, S Corps) because their taxable income is too high for the deduction and/or because dentistry is considered a “specified service trade or business” (SSTOB) and not a “qualified trade or business” (QTOB). Experienced readers will recall that only a QTOB qualifies for the QBI deduction when taxable income exceeds the limits ($191,950 for singles and $383,900 for joint filers in 2024).
Even though the clinical practice of dentistry is considered a SSTOB, the administrative services provided by a DSO (owned by the dentist) are not. A DSO is a QTOB, or at least it can be argued to be such.
Thus, the owner of a fairly large/successful practice may consider “carving out” the non-clinical portion of their practice and setting up a DSO as a pass-through entity (i.e. LLC). The practice would then contract with the new DSO and pay them as high a fee as is reasonably justifiable to perform administrative duties for the clinical practice.
Given that the QBI deduction is the lesser of either 20% of the DSO’s income or 50% of the W-2 wages, the DSO will need to pay its employees W-2 income. Any employee of the dental practice not providing clinical services is hired by and paid by the DSO on a W-2.
This gets very complicated very quickly, so if you are considering this, work closely with your tax professional. My point is that the QBI deduction (set to go away by the end of 2025) has been a motivating factor for some to give birth to their own DSO.
Why Do DSOs Appeal to Early-Career Dentists?
Young dentists can be drawn to working with DSOs for reasons that are both practical and generational. According to the ADEA, 18% of graduating dentists intend to work for a DSO as their first job as a new dentist.
Pragmatically, young dentists are the most indebted of any professional demographic in America. The average dental student loan debt will surpass $300,000 for the 2024 graduating class. That’s an average, so for everyone getting out with $150,000-$200,000, there is someone else with $400,000-$450,000 in loans at ~7% with no option to refinance for much less at today’s rates.
They are then buying into one of the worst housing markets of all time with the silent pressure to buy a home “suitable for a doctor and their family.” That’s another $700,000-$1.2 million, often with 0% down on a doctor mortgage with a 6%-8% interest rate.
It’s not uncommon for me to encounter young dentists online, in social dental circles, or as clients that have between $1 million-$2 million in debt, and that’s BEFORE they have bought into a practice. It’s not hard to imagine why this hypothetical 28-year-old with a new baby and unproven real-world clinical skills may be reticent to buy a practice the “old school” way which can easily be another $600,000-$1 million, depending on the practice and its location. Some also have the chance to buy the building for another similar amount.
Enter the DSO offering a steady paycheck, benefits, and sometimes even the option to buy into the larger DSO conglomerate with its promise of 15%-25% returns in the years ahead. That can be a very appealing point of entry or a long-term career plan for a new provider who has already taken on seven figures of debt at 7% just for the opportunity to work and to have an overpriced roof over their head.
Furthering the pragmatic appeal is the common refrain from new graduates that, “DSOs are really my only option. It doesn’t seem like private practices are really hiring many associates, and if they are, I don’t know where to find them. But the DSOs do a lunch-and-learn every month and make it easy to apply.”
DSOs also tend to offer significantly more CE benefits than private practice. If a DSO is offering a new dentist $15,000+ of covered CE a year, that is understandably a tough benefit for a private practice to match and is a very appealing value add for a new provider who knows dental school was just the beginning of learning real-world dentistry. Now, often this CE is the DSO's own “in-house” CE, which may have all sorts of problematic considerations. But the allure is still strong.
Young doctors are also commonly heard saying, “The opportunity for leadership at the DSO is really exciting.” Many DSOs have a so-called “lead dentist” at each location, and from there, dentists can grow into different regional positions that pay more and require less time working in the mouth. Critics paint this as a glorified dental MLM, as lead dentists hire more associate dentists and get to keep a portion of the associates’ collections. But new grads can find the idea of moving up the dental corporate ladder to be very appealing.
In short, it’s not uncommon to hear something like this from current and former DSO-affiliated dentists talking to the next generation at a dental convention happy hour: “If you can find the right one, they can be a great place to get a lot of CE while you figure out where to go next.” This begs the question: how do you find the right one? It's a question I’m hoping you can collectively answer.
There is also a generational component at play for young providers. Most of the Gen Z dentists I talk to are not looking to work full-time until they are 70 (yes, the average retirement age for dentists has crept up from 65 in 2001 to 69 in 2018). They have seen their peers take six-figure jobs working from home, flexible work schedules, and great benefits. They have seen the toll that burnout has taken on the Gen X and Millennial dentists ahead of them, and they have a stated desire to achieve a more thoughtful work-life balance.
In short, they are much more inclined to “work for the man” than previous generations. I’m sure that concerns and/or irritates the older generation of dentists reading this. I’m not endorsing it; I’m just reporting the trend.
If you feel inclined to offer up a multi-paragraph soliloquy in the comments about how you put your nose to the grindstone and boot-strapped your way to $1 million of collections in your fee-for-service practice, and, thus, you view dentistry as an unassailable path to wealth and a sustainable work-life balance for anyone that will just work as hard as you did with as much business acumen as you obtained . . . feel free to do so. It will likely be impressive and inspiring to many. I just fear that those anecdotal stories, inspiring as they may be, are not representative of the vast experiences of most dental graduates over the last 10 years, and it's not what awaits most new graduates. Instead, these stories can often serve to distract from the difficult decisions this current generation is facing as they enter this profession we can be so passionate about and so defensive of.
More information here:
Leaving Dentistry and Finding Happiness
What Are the Different Kinds of DSO Deal Structures?
DSOs are not all the same; several types of DSO-structured agreements suit different goals for the owning dentist.
100% Affiliation
This is simply where the dentist sells 100% of the practice to the DSO. The dentist may stick around and work in the practice focusing only on the clinical side for a few years or just step into retirement.
Joint Ventures
In a joint venture model, the dentist sells 60%-90% of the equity in the practice to the DSO. Typically, the dentist receives 70% of the sale price upfront (see the cons section below for more on how the sale price is established), and the remaining 30% is paid out over three years at 10% each year if predetermined profitability targets are achieved. If not, the dentist will get a prorated amount of that last 30% or not get it at all based on the terms of the contract (which most dentists do not read carefully or understand). In this model, the dentist typically retains clinical control over the practice. However, note that the dentist has given operational control over to the DSO but is still responsible for profitability targets to receive the remaining portion of the sale price over the next three years (more about this in the cons section below).
The DSO and dentist then proportionally share in the profits of the practice going forward. Sometimes, the dentist leaves after the mandatory three-year work-back period, and sometimes the relationship goes forward indefinitely.
Equity Roll
This arrangement is not a partnership; it is a group affiliation. The idea is that the owner dentist sells 100% of the practice equity and then “rolls” a portion of the proceeds to purchase equity in the broader DSO as an investment.
Sub-DSO
This structure can be thought of as a joint venture and equity roll blend. The practicing dentist who owns the business gets paid a large upfront payment, exits the transaction without debt, and maintains 40% ownership and profit-sharing from the broader sub-DSO portfolio.
Non-Captive DSO
In this arrangement, the dentist doesn’t sell equity at all. Rather they contract with the DSO for certain non-clinical support in exchange for 3%-6% of gross revenue.
Direct Investment with Private Equity
This is where the dentist doesn’t mess around with an existing DSO but rather becomes a founding member of a new one. The dentist who typically would have a fairly large/successful practice purchases ownership within an operating company. This direct investment can be a buyout with controlling interest transferred to the investor or it can be a minority growth investment.
Pros of DSOs
We have covered the appeal and potential advantages of a DSO as we have moved through the basic orientation already covered. To recap:
- DSOs provide the dentist the ability to focus on clinical dentistry and reduce/eliminate the administrative burden of running a small business.
- DSOs give dentists a chance to recognize partial or full liquidity of the equity in their practice. This can sometimes be at a higher price than they would have otherwise received, sooner than they anticipated receiving it, and/or receiving it with less hassle compared to more traditional buy-sell agreements.
- DSOs can represent an investment opportunity for the selling dentist as they become shareholders in the broader private equity venture.
Cons of DSOs
Anecdotally, I hear a lot more stories filled with regret, frustration, or outright rage when it comes to DSOs than I hear stories centering on relief, excitement, and gratitude. Internet forums; podcasts; clients; and my dental colleagues, classmates, and friends have left me with a wary eye toward this growing trend.
That may be simply because people are more likely to tell or remember a negative story than a positive or neutral one (the one-star review section of Google, Amazon, or Yelp will reveal how strongly and loudly people are willing to share a bad experience compared to the three-star review section where most people don’t take the time to share a “meh” experience). My hope is that dentists who have had DSO interactions will share those experiences in the comment section below: the good, the bad, and the in-between, so we can all get a better sense of how this is going for folks out there.
Whether my personal observations are reflective of the broader dental field’s interactions with DSOs, it’s worthwhile to take a minute to review some of the chief complaints that are shared and documented across the dentalverse.
Decreased Quality
Remember that higher profitability the DSO offered with more efficient processes? Well, one of those more efficient processes can be that the DSO gets to buy dental materials and equipment at a discount because it is buying in bulk for all of its practices. This can mean that if you have a filling material, dental lab, or brand of instruments you like, you may not get to keep using that stuff, and you may feel your clinical quality suffers as a result.
Decreased Customer Service
Many patients have started to notice and complain about how challenging it is to get ahold of their dental office. The overall trend of businesses hiding or eliminating their phone number to cut costs related to the expensive act of 1:1 communication with customers is finding its way into dentistry as corporate “efficiency practices” are implemented by DSOs. Patients looking for a phone number to call on the practice website are increasingly being routed to AI chatbots, centralized chat teams not located at the specific office the patient visits, or sent a page where they are “asked” (forced?) to email their question.
Where phone options do exist, patients are encountering ever-maddening phone trees that in no way resemble having “Becky-the-nice-front-desk-lady” pick up the phone to which they are accustomed. Even dentists trying to do a “doc-to-doc” consult can spend 5-10 minutes navigating an automated phone system which continually pushes them away from the dentist and back to the front desk or “trunk” of the phone tree where they are given the office hours, address, fax number, and option to “conveniently pay an existing balance by using your touch-tone keypad.”
Change in Benefits
Remember how you didn’t want to handle HR, payroll, and benefits anymore? Turning that over to a DSO often means you and your staff are getting a new benefits package. Maybe this represents an improvement, or maybe your staff wants to burn the building down because they just saw their medical premiums jump 30% and they lost their favorite doctors.
Also, if you were an owner with a profit-sharing 401(k) and you had become accustomed to maxing out your contributions at the 415(c) limit each year ($66,000 in 2023 and $69,000 in 2024), having that limit drop to $23,000 in 2024 as a “regular” W-2 employee could represent a major change to your retirement planning and certainly to your tax bill. Similarly, your access to an HSA may go away, as could your staff’s access to fringe benefits like free or reduced treatment in the office.
Trading Admin for Clinic Time May Result in More Clinic Time Than You Realize
Remember that three-year workback period where the dentist is responsible for the profits of the practice? You got 70% of the sale price upfront, but the DSO is holding back that 30% and may be asking you to carry the note. What if there is a recession, what if you get sick/disabled, what if there is a pandemic? How is your profitability going to look in those scenarios? What if changes to staff pay and benefits result in an exodus? How will your profits look using new filling materials, new labs, new dental assistants, and new hygienists?
Also, the DSO often adds a 5%-15% management fee for its implemented admin services that reduces your net income. You must “maintain” your presale profitability, but with the added management fee, you actually have to increase your production to keep pace and make sure you get that full 30% for which you were planning.
Sales Price Can Be Difficult to Understand
Often dentists are pretty excited when they see the price being offered for the equity in their practice. I have heard things like, “They are offering above market price,” or, “I’m going to get over 100% of last year’s collections.” Maybe that’s true; maybe you didn’t read and understand the fine print.
It’s not unusual for DSOs to make an offer based on a popular pricing method in the private equity world known as EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization). EBITDA is not always calculated the same, and it can be manipulated by the DSO in ways that don’t exactly favor the dentist. Remember, while you were in your first year of dental school learning the Krebs cycle for the 33rd time and finding eosinophils in a microscope, these people were working on Wall Street in hedge funds and corporate law offices. It’s important to keep that in mind in these moments. Some dentists believe they sold their practice for 4-6x of EBITDA, but in reality, the DSO manipulated the math based on the note the dentist will be carrying and the management fee. Thus, the actual sale price is nowhere near what the dentist was led to believe.
Loss of Autonomy
This is implied in everything we are talking about, but it’s worth saying out loud. You didn’t want to be a business owner making all the decisions, and that’s exactly what you will get. You are now an employee with limited or no decision-making authority. That reality cuts both ways: less deciding and less control. It is not uncommon to hear about dentists who just bail on the last 30% of the sale agreement because the lived reality of working for someone else wasn’t the greener grass they dreamt it would be.
More information here:
Freedom from Student Loan Debt: A Dentist’s Story
The Bottom Line
My primary motivation for writing this column was to create a page to aggregate some basic information about DSOs and, more importantly, create a forum for discussion. I wanted there to be a useful search result when a future dentist types DSO into the search bar on this website where they can learn from what you have to offer.
While I am certainly skeptical of some of the business practices I have read about and observed, the truth is that I am agnostic on DSOs. Perhaps more accurately, I feel pragmatic about them.
This is a thing. It’s going to be a bigger and bigger thing every year, so we have to wrap our heads around how they work and start talking as a group about what the impacts and implications will be.
For example, do you know any pediatricians who are finishing residency, hanging a shingle, and running a fee-for-service individual practice? How about any solo pharmacists running their own pharmacy? Yeah, me neither, but I do see a lot of CVS and Walgreens around, and when I take my kids to the doctor, I notice it’s operated by an enormous regional medical conglomerate, not by ole Dr. Fred.
We don’t have to imagine what this will probably look like for dentistry 20-40 years from now; the history of modern medicine sheds a great deal of light on what some of the outcomes are likely to be.
It’s still early in the DSO era, but as Doc Gandalf once told me, the winds of change are blowing harder every day and the corporate flame is cresting on the horizon. Dentistry certainly won’t look the same tomorrow as it did yesterday, and it’s time to keep a good head about us as the heat builds ever warmer.
Do you have experience with a DSO or other private equity? Is this good or bad for the future of dentistry and medicine?
My experience has been mostly negative. I think quality suffers when dollars are the driving factor. I can understand the boomer trying to retire and seeing something shiny instead of the traditional doctor to doctor buyout.
While we may not be business minded due to all the time learning the field and not finance…I’ve seen some real idiotic moves on behalf of DSOs in regards to purchasing, servicing of equipment, payroll etc. Basically things that as a solo or small group practice you wouldn’t waste your money on. But to scale, they write off these efficiencies as being drops in a larger bucket.
Like the article started, the practice landscape just continues to change, and I don’t think for the better.
Thank you for reading and sharing your experience.
I’m curious what you think other concerned dentists can/should do to mitigate the negative impacts of this growing trend.
Should the ADA be lobbying for tougher standards and regulations on who can own and operate a practice?
Should CODA (Commission on Dental Accreditation) be requiring personal and/or business financial coursework for dental schools to keep their accreditation?
Should we just accept the eventuality of this change and be asking our physician friends how to create the best possible outcomes based on their experience over the past decades?
What ideas do you and others have to ensure patient and provider outcomes are favorable during this transitional time in the dental landscape?
Great article!
I have worked for two of the “big ones” on your list and plan to stay in my current position for my entire career. I have no interest in owning my own private practice, ever. I’m a millennial and I’ve been out of school for a decade. I’m fairly compensated for my work, I love the non-clinical support of the DSO, and I love most of all walking out of the office at the end of the day and immediately transforming into husband and dad, without needing to be doctor or boss until the next morning. I prescribe and perform the dentistry I believe in and feel good about, and nobody ever questions or pushes me to do otherwise. My patients are happy. My team is happy. Of course, it’s not perfect, but I AM HAPPY!
I find great value in the provided CE and have learned and grown a ton with what I’ve learned and what I’ve been able to practice. I have been able to buy into the DSO and have seen appreciable growth in my investment that I expect to continue to grow quite well over the arc of my career. I believe that the eventual value of my equity position will far exceed what selling a private practice as an older dentist would have netted me, even before considering the negative impacts of decades of private practice ownership on my health and opportunity costs to spend my time doing other things than running a business. It’s risky to be heavy in relatively illiquid shares of my own company, but I am confident and feel solid about the rewards that this will bring to my portfolio.
Another great thing about working for my particular DSO is having a network of thousands (!) of other doctors who are just an email away. There’s a great culture among the doctors that gets people the information they need in the moment from “Omg, XYZ just happened and the patient is in the chair, HELP!” to “Hey, what implant brand is this?” as well as some lively conversation about how to make treatment decisions, how to lead your team, and how to best care for your patients. The DSO model is not for everyone, of course, but I am very happy and fit very well here.
My dad is also a dentist and owned a multi-office private practice with his dad for the first 10 years of my life. I remember him “burning the midnight oil” as he used to say, running the business from home after hours. He always seemed exhausted. I have vivid memories of his dot matrix printer with the holes on the sides of the paper humming on Thursday nights before payroll the next day. He and grandpa sold in the late 90s and, I tell you, I noticed his health, stress, and parenting presence change all for the better. He maintains selling to the DSO was the best business decision he ever made, and now, as I’m able to pour more of myself into my family life as a perk of partnering with a DSO, I’m able to see the benefits to home life more acutely.
Wonderful, I’m so glad your experience is going well and I’m so grateful you took time to share that perspective here.
What advice would you have for a dentist looking to join a DSO to ensure they have a likewise positive experience?
What are the researchable/knowable qualities of your DSO that you think are most responsible for your enjoyment; in other words, how can an “outsider” know if they are getting into a good one like you are in?
What questions should a new dentist be asking the DSO they are interviewing with to increase their chances of finding a similarly good fit?
On a personal note, I totally resonate with you on having a dental job where you can just leave at the end of the day and transform in husband/dad without thinking of work anymore. I loved this feature of my time in public health. I am so grateful for my new career that allows me to work from home but with that comes the loss of “leaving” work behind.
Thanks for sharing your story.
I’d have them shadow the practice they will be going into so they can talk with the doctor and the admin team in a normal workday setting. I’d also have them read some Google reviews of the office they are slated to go into to see how happy the patient base is; it can be great to join a thriving office that’s growing, it can be a drag to pick up where another doctor didn’t have a great experience.
I’d also ask the doctors/admin how long they have been working at the DSO and what’s changed since they’ve been there. Of course, everyone’s experience with a DSO is going to be different and I have been blessed to work with great people in all the roles around me. Like the commenter below, I also believe I work at the best one (maybe it’s the same one?) and there are many happy doctors and admin staff who make 5, 10, 15, 20+ year careers in this company and that longevity (of course it isn’t universal) speaks volumes about the experiences at the DSO.
Thank you for your comment! I’ve been researching extensively as the DSO I’ve been working for is offering to allow me to “partner” into an office at 49%. I’ve had a solid experience so far and enjoyed the learning/ CE opportunities and have made close friends within the organization. Yes, there are politics at play and I don’t always love the fee schedules, but I’ve been lucky to be productive still. Wondering the best plan for our family as I want to start growing our family and worry that taking on a traditional private practice role is difficult. It’s also been very hard to find an available office for sale, which feels discouraging. Have enjoyed getting to read this discussion on pros/ cons and can definitely relate being a few years out.
I second the comment above. I think it was a great and informative article about DSOs. I believe I work for the best one. I have had a similar experience to satisfied DDS. I have also heard horror stories from others. I have worked for a DSO for a decade. Have been out of school for 12 years and my first two years were in private practice as an associate. I always believed my future would be private practice until I started in the real world. I hear negative experiences about all different avenues of dentistry. My hope for dentistry is that we can all accept the paths that we each decide is best for our situation, and stop telling each other that we are doing it wrong. We are very blessed to have different options still and I hope it stays that way.
Cheers and amen to this statement – “My hope for dentistry is that we can all accept the paths that we each decide is best for our situation, and stop telling each other that we are doing it wrong.” The vocation is best served and patient outcomes are best when the dentists feel happy, whole, and fulfilled in their work. However and wherever that fulfillment comes from should be celebrated.
I’m heartened to hear your experience is going well. I have the same questions for you that I posed to Satisfied DDS above and would curious to hear any thoughts you have on those topics.
An additional question arc for you:
As it relates to the horror stories you have heard – are there any consistent themes you have noticed in those horror stories? What have you heard, noticed, or believe makes a DSO “a bad one”? How can one know if they are headed for a good situation or bad situation?
The reason I have stayed with my company is because they are very hands off. I make every decision for the practice. (I.e. what insurances we accept, what supplies are used, what labs are used, hiring and firing, etc) I treat my practice as though I started it myself. And they allow me the space to do that. I do get this allowance because I have a very successful practice. I imagine if I did not they would be more hands on. The horror stories I have heard have mostly to do with doctors that do not feel they have any control in their practice. Someone tells them how the practice is going to run and what patients and procedures are on their schedule. This goes for private practice and DSOs. If you do not have a voice in a practice you will never be there for the long haul.
I think satisfied dds made good recommendations on what to look for when deciding on a practice. I would also ask about who is making all the decisions for the practice. My company’s motto is “doctor led” and “do the right thing for the right reason” they will always support us taking care of our patients by making decisions that are best for the patients.
I do not think any situation is perfect. Just take the best care of the patients and if it’s not perfect find another situation that works better for you.
I am a solo doctor (with 2-3 NPs) five years out of fellowship. I bought my practice from another doc 2 years out of fellowship with a bank loan. It took some searching but this was exactly the opportunity I wanted to find when I was looking for jobs out of fellowship. After owning and running the practice for 3 years I can say it’s been challenging but very rewarding both professionally and financially. I feel very, very blessed to have the job I have. I work 8-5, then do another 45 min of work after kids go to sleep. I don’t work on weekends or holidays. My income is easily in the top 99% of my specialty but I don’t work more than average hours. PE people have approached me a few times with the 70% now, 30% later, 5-7 EBIDTA sales price offer which seems standard. I will not sell though and later on I’ll bring on a partner then sell to them when I want to cut back. I’m on team “do not sell to PE!”
You the man. PE has pilfered medical and dental fields too much. I don’t fault a doc selling or a doc wanting a guaranteed paycheck. We didn’t go to school for all those years to work for some MBA frat bro.
DSO do not offer better work life balance. Extremely common for them to make docs work weekends, Saturdays, and evening hours. They do get cheaper materials and supplies which lowers overhead but limits the choice of materials that docs can use. My biggest gripe with DSO is that they disregard regulations and aren’t helpful with staffing given the staff g shortages. So you could be stuck working in an office with unsterilized instruments, failed waterline tests, and stuck with whatever staff who are willing to stay on working. Office manager becomes your boss and you have little say in how the office is run. Lots of poorly run offices due to the fact that private equity makes lots of short term decisions as they often don’t keep offices long term and plan on re-selling them typically in about 5 years. DSO willl even buy offices just to close them and take their patient base (eliminate competition) which is not good for patients. The term private equity is more descriptive than “DSO” as to how they actually operate as businesses. Most DSO fail to deliver or live up to their promises and it can be really sad a couple years after a retired doc sells their practice to see it close completely or decline in quality. Lacks the pride of ownership that comes with private practice.
Reading some of these responses makes me glad I didn’t drink the DSO kool-aid.
I am a private practice general dentist with me and 1 associate. In my area of Connecticut, over the past 7 years, 3 private offices within 5 miles of mine have been purchased by a well known DSO (which was founded by a DDS, not an MBA type). The 3 dentists who retired were the stereotypical early 60s while male.
The process became laughably predictable as each of the 3 offices followed the exact same pattern:
About 1 year after I learned of the sale, we would get a couple of inquiries from patients from that office. Note that we had never gotten patient transfers from this office before. Those patients would come in with the following (I am paraphrasing):
“Yeah, I was with Dr. Jones for 20 years, awesome dentist, but I think he’s going to retire soon. When I went in there last, there were all these new faces, and they kept on trying to get me to do gum stuff and sell me some expensive electronic toothbrush. I saw Doc from a distance but there was some new kid who saw me.”
The slow trickle would continue, and then it would become a tsunami, with my office getting on average 6 – 10 patients per month from that office alone. They all would say:
“Dr. Jones is gone, there’s been like 2 to 3 new doctors there, all the old staff are gone. I get bills every time when I used to not have to pay anything. It’s always something new. Last time I went in, I had to wait over 25 minutes to be seen. Dr. Jones never ran late. I am done with that office, I just want a place where I can see the same doctor and staff every time.”
And then the above process occurred two more times with two more offices. And, unfortunately, it will happen again. And again. And again.
I can’t speak for the pro-DSO posters above. But – from my experiences – this is Corporate Dentistry. It is bad for the profession and bad for the public.
Hey man great article! Did Doc Gandalf whistle some Scorpions when he was talking about the Winds of Change?? 🙂
unfortunately this seems to be a trend for medicine as well as dentistry. Very hard to navigate the administrative burdens of running a modern practice and deal with the debt levels associated with our chosen career paths. Hospital systems and private equity have seized the opportunity to take advantage by buying out practices but unfortuately in the long run eats in our autonomy as docs.
I do like how you mentioned the pros though. Luckily I don’t think it’s all bad, but as docs we must educate ourselves about DSO’s or other entities we sell to.
I have a few dentist friends who worked for DSOs, and they also confirmed the quality declined, morale, and service as well. Many of these conglomerates also indirectly drive down the income of dentists, as apparently say margins are thinner and already under pressure from Medicare reimbursements not keeping pace with inflation and costs of labor. How are so many dentists able to buy practices, service student loans, and still live it up?
Full disclosure, I am in medicine, I’ve been approached by private equity, but I’m still private practice independent. I have talked with several people that have sold out to private equity (both medical and dental).
The sense I get, is the majority of them continue to practice after they sell as they previously did ,other than some of the back office operations, which may be a welcome relief. Many of these private equity groups don’t want to run the businesses, they really just want to buy future cash flow.
Ultimately, it all just boils down to math. For example (based on friend’s experience), if you make $1mm/year, they re-salary you to $350k, give you 6x the residual amount that they will now take as their profit ($650k). The buyout is $3.9mm, of which 30-40% of that you are given the option (required in some cases) to roll over into equity in the PE group. As a PE, they are more than happy to pay 6x of what they expect to get every year in profits. That’s a 16.6% return annually on capital invested. They then structure the deal so you stay motivated to stay on and work hard. If you can grow their profitability even 3%/year, they’re sitting on a nearly 20% annualized return. After they’ve rolled up enough practices, their conglomerate of practices can then be sold to a larger PE group for 8-12x the same profitability, further goosing their returns, significantly. The initial seller does well as does private equity.
Most PE aren’t interested in struggling practices, they want high volume, high profitability practices so those that they can take a healthy profit cut from the seller’s original income and still afford to pay a new doc to take over in 3-5 years when the selling doc retires.
The big question lies in how do you replace highly motivated doctors to work just as hard as the selling doc for 1/3 of the pay as someone who doesn’t have PE taking their cut. As long as they can find such doctors the model will work. If not, that’s when we may start seeing the industry fall apart. Unlike manufacturing or other leverageable industries, the service industry, I believe, doesn’t work nearly as well because you’re dependent on producers who can walk out the door and earn 3x as much for the same amount of work.
To each his own. For some being an employee doctor with a lower income is the most desirable situation. For others, they may be willing to take on practice ownership risk and effort for significantly higher income.
The last section of your post – the part about replacing the same labor while PE takes its cut – is the most troubling part of this to me. I see this as another generational difference that is benefiting boomers and hurting millennials/gen Z.
Usually the DSO is going to hire a younger dentist who is saddled with huge educational debt to come in and replace the owner. The younger dentist has to maintain the same level of production as the more experienced owner who just retired. The younger dentist isn’t earning at the same level as the owner was, even for the same level of production. But they say, “I still get paid well and don’t have to take on another massive monthly payment.” Usually things like CE or disability insurance get thrown in as a “benefit” to sweeten the deal for the employee. But it’s definitely not as good a deal financially as it would be for them to have ownership.
It’s a way for the younger dentist to lower their risk. The main issue driving this trend is the debt burden on the younger generation of dentists and lack of buyers for boomer dentists nearing retirement. Even if the younger generation of dentists were better educated in finance, marketing or other business topics, most simply aren’t in a position where they feel comfortable taking out a loan to buy in until after they’ve been established. At that point, they either buy in with the DSO they already work for (the simplest path), or they have to potentially uproot and find a different practice to purchase, or a location to do a startup (probably least common). Another factor is that non-compete agreements may exclude them from buying a nearby practice if they like the area where they live and work already. More reason to just stick with the DSO.
For the older dentists, many planned on a big payout by selling the practice at the end of their career to support their retirement. Now, they find DSOs are the only buyers. Or if they can find a buyer, the offer may not match the valuation from a DSO.
Because of this, fewer younger dentists will have the opportunity to own their own practice. Or that opportunity will be delayed. I view it almost like compounding – the sooner you become an owner, the more valuable that ownership will be. Your return on investment extends over more years of income from the practice, and therefore is more valuable. Unfortunately the debt load and current valuations from DSOs have put that out of reach for many younger dentists, which will only accelerate the DSO trend.
These two comments are such valuable additions to the original post. Thank you both (Eyeballs and Endoguy) for taking the time to provide this perspective and add meaningful texture to this conversation. You have articulated my broader economic concerns about how the downstream effects of this private equity phenomenon may impact new dentists.
In short – school has never been more expensive, reimbursements have never been lower, and becoming a traditional owner has never be more difficult to obtain/sustain. Add to this the current challenges with housing and staffing, and the real-world question I am left with is, “Would you advise a college freshmen to pursue dentistry?”.
I would, of course, contextualize the recommendation as much as I could (“it can be a great option if you are very mindful about X, Y, Z….) but if pressed to give a straight yes or no answer to a 19 year old that could otherwise pursue engineering, software development, or a “high paying” medical speciality it would be difficult to give a confident yes.
I am curious what you and others would say to question right now.
Hi all –
This is such an interesting topic. The exact same thing is happening in the world of podiatry. I am in a HCOL area, where young podiatrists graduate in a large amount of debt. Podiatrists are like dentists in that they are traditionally small independent practices – until the last 5+ years, just like dentistry. In my area, the older generation pods got an opportunity to sell out for a nice chunk of change by a local podiatrist that ended up selling to private equity, which is now a nation-wide entity. In my area, we call it the ‘Kaiser-ization’ of medicine. These practices are swallowed up, the older podiatrist retires, and a brand new grad comes in and tries to rinse and repeat. The practices are standardized, and corporate medicine has kicked in.
There are less and less podiatrists that are business owners now in my area. I’m one of the remaining few under the age of 60; it’s a little disturbing. I did the traditional thing 10 years ago; I bought a shrinking practice, built it up to a successful practice. I haven’t been been approached by private equity yet, which is fine by me.
I am totally in the same camp as Eyeballs and Endoguy. There is little more satisfying then building up your own practice, and treating patients the way you feel is best. I’m sad this trend is happening in all specialties, but I can understand why it’s happening. The days of manageable school debt and high insurance reimbursement is unfortunately long gone.
Jenny, thanks this perspective and for broadening this discussion to other “small business healthcare” arenas. Most of my friends are dentists or physicians, as are most of my clients, so I don’t have a good sense of how the trends described in this article relate to other fields.
I am curious where other medical vocations are on this private equity continuum/timeline; i.e. optometry, pharmacy, speech pathology, orthotists/prosthetists, midwives, audiology, independent PAs, PT, etc.
Thanks for speaking to what you have observed in podiatry, it sounds like many of the considerations are the same as for dentistry.
Such a great discussion!
I worked for a large group and a smaller 3 doc practice simultaneously for 5 years. Purchased a small practice and grew it for 32 years and just sold after considering all options. I am still working for the new doc 2 days a week to stay connected and ease gradually into retirement. I am 62.
My advice , for what it is worth:
Students:
Look at dental school costs and go less expensive if it is possible. Your CE going forward makes you the primo dentist you will be. Work part time as you educate to trim borrowing. I did US Army reserves. It was very interesting and I felt I was being of service. Absorb WCI material. Wish I had something like this available!
New Grads:
No scratch office. Work as employee for 3-5 years to hone your skills and learn from your peers, mentors and any business staff that will entertain your questions. Learn more about dentistry AND business processes. Make sure where you work has a high enough patient volume for you to develop speed and for you to be exposed to a wide variety of treatment decisions. My small group was helpful with learning business and seeing how to comport yourself as a practice owner, but the large group really tuned my dental engine. ” Live Like A Resident!” Keep records of your production! This is vital when you are looking for a lender when you purchase. Banker sees you have been producing 100K a month for your retail/DSO employer and you want to buy Dr Boomer’s practice producing 1.5 M. Banker happy! You happy!
Ownership Decision Point:
You can decide at anytime. I would suggest when you have comfortable clinical skills and some sense of the business you should purchase as soon as possible.
You should also purchase the real estate if you buy the practice.
Owning the practice and owning the building is challenging along with being the clinician. It is , however, SUCH A RUSH. Why? It feels like you create your entire realm of existence and can control and manipulate so many variables. It has been fascinating to me. I do not feel the business side is a negative. If anything, it has saved me from burning out with clinical dentistry alone. Let’s face it, after so many years the 83% of dentistry that is so repetitive can wear on you. This amount of involvement is very rewarding financially and puts some swagger in your step but comes with some extra hours. Truth is, as you do it more the time suck is less. 32 clinical hours and 4ish admin hours was my sweet spot. Yours will be different. I did also mention some of the admin was really entertaining to me as well. When your children move out someday that dental practice will still be there for you to nurture and enjoy.
DO NOT purchase if you get a headache reconciling your checkbook. Do not purchase if the thought of dealing with others as the boss gives you butterflies (leadership training helps).
Do not purchase if you think 36-40 hours a week would sink your work life goal.
Selling Age:
When you get to a bit beyond FI list your practice if you have reason. Keep the foot on the gas with production. List a bit early as to negotiate from a position of strength and reject lowballs immediately. No counter. If you want to work a bit more, list earlier that you can negotiate a sweet employee contract as well. Sell to a practicing dentist, no DSO per the above comments. If you want to work a bit more and are unable to get that with an individual doc, a DSO could be be the answer.
Research Topics:
What is the difference in age or practice years of FI between employee dentists vs dentists who have been owners the bulk of their careers? Which path is the fastest way to FI? FI is the ultimate work life balance situation because work is entirely optional.
What effect does owning the real estate have on the outcome?
Net worth of employee vs owner by age. I would anticipate the employee would have higher NW early because of the debt to be an owner. The owner possibly catches up and has the higher NW at practice end due to higher yearly earnings and sale proceeds.
IF this is actually true, how many practice years does it take to catch up?
Is there any difference in rates of reported burnout symptoms between the employee and the owner dentist? Does the stress of ownership negate the mental stimulation?
As for the student who is still deciding about dentistry, talk with many dentists at varying ages. Also do the same with the alternative professions on the list. Have THEIR professional organizations calculated average FI years or ending NW? There is more to it than a list of average annual salaries.
Many patients can be indifferent BUT it does give you a great feeling when you perform treatment that is sincerely appreciated. If that does not move the needle for the student, perhaps engineering would be a better fit.
Such thoughtful and practical ideas and counsel, thank you for this valuable comment.
At risk of over simplifying, what I am hearing you say and what I definitely agree with is, in essence “If you are 20 and considering dentistry, I can work out great. However, it is not guaranteed and the stakes have never been higher on making intentional and strategic choices. The need to get things right starts with school selection and continues all the way to selling your ownership position.”
From my perspective, it appears that past generations of dentists could still make their financial life work out well even if they made sub-optimal choices in some/many areas i.e. school choice, student loan strategy, practice purchases, insurance plan acceptance, where to live/HCOLA, etc. But now, it is increasingly critical that each of those choices are highly optimized or the financial outcomes can be severe.
I’m pretty sure that current pre-dental and dental students don’t realize that. I know the students I worked with at the dental school were oblivious to 90+% of these issues, they just wanted to “pass off their multi-canaled endo competency exam” and were only thinking 6-12 hours in advance with anything in their lives. When I ask them about their plans to deal with these very real issues the general response is, “I don’t know, I have no idea, but it will all work out right? I mean, it has worked out for everyone else, some of the wealthiest people I know are dentists .”
They seem to have no idea that the economics of their situation have essentially zero resemblance to the dental economics that preceeded them. I think that is a problem for the future of dentistry.
I’m on team Private Practice.
Yes, as an owner we have added stressors/challenges. However, being a small business owner is important to me. Providing a great service, building a good team, being a party of the local community are things I work on. Practicing dentist is fun, but doing all of it is more rewarding to me.
I’m in the SF/Bay Area and, for now, in-network with most PPOs. I work Mon-Thurs, take 3 weeks plus random other holidays and collect $1mil. Overhead varies from 65-75%, depending on equipment purchases and rent/building costs (I purchased the building). I’m not a super GP. I primarily do crown/bridge (limited anterior work). The only “extra” thing I do is ext/implants.
We’re in the process of going out-of-network. We’re focusing on customer service and explaining what OON means to our patients. From talking to colleagues, we may lose 20% of our patients. However, our fees will be 1.5-2x what the PPOs reimburse us.
If you’re thinking PP or DSO: Small business is not for everyone, know what you’re getting into. There are plenty of resources online and I’ve found many of your peers are an open book and are willing to help you set up shop.
My advice: Focus on providing excellent patient care. Over time, patients will recognize this and your practice will grow busier than you can imagine.
Good luck and I hope the young guns give PP a chance.
I hope young doctors take note that “pediatricians” and “pharmacists” – examples the author gives – no longer make very much money. Private equity is coming in and exchanging convenience for a lot of money ($$$$$$$$$$$) from the doctors. And then, when Private equity is done building and consolidating, they will sell to large boring corporates where doctors are just one of many employees with no real bargaining power for their income. Doctors today at least have a choice to sell or not to sell. Once a few generations of doctors continue to sell, just as pharmacists graduating from pharmacy schools today have no real option to be business owners and have a big upside – doctors may have no real option to become business owners. Bringing down prospect of future wealth…. with stable small paychecks….
Great article. I currently work for a “smaller” local DSO just in my home state. I work in 3 of the about 60 practices. Doctor owned. I was approached by a friend of a friend about being a PC owner for another small DSO in various states. It would require me to get licensed in each state. Each practice has a working doctor. It is essentially passive income for very little work once I get licensed. It will also open up doors for me in the future and progress my career beyond being a molar mechanic. I’ll be indemnified by the DSO so legal actions against me are very unlikely but board sanctions are a different story. Any thoughts on this opportunity? I’m very interested and really want to pursue it.
I’m not quite sure what is going on. Why does someone want to give you a chunk of profit without actually doing much but requires you to have a license?
Since the leadership of the company are not dentists, they need a dentist to be an owner of the company. This is called a PC owner. Many times this is the actual practicing dentist. However, it can also be any dentist with a license in that state. I would be a redundant umbrella PC owner for several of their practices in multiple states. That’s why I need to be licensed in each state so if something happens to any of their primary PC owners, they can still have the ability to practice in that state under my license. Pay is not significant. I’m mainly doing it for future opportunities.
I think the only hesitation I would have is that I would be contributing to the issue of non-docs owning practices. Hard for docs to own the practice if someone else does. Facilitating a work around to the illegal corporate practice of dentistry feels less than ethical.
Yeah….don’t do that. Certain state laws say a DSO/non dentist cannot own offices in your state. Very common to create a shell corporation (PC) and have a 25 year + contract with DSO. In other words the DSO donesn’t “Own” the office. But… obviously they do. There’s enough money involved that it will sort it’s self out with time but as an individual doc don’t put your neck out there for the DSO. The ortho who was doing this for Smile Direct got hung out to dry. I don’t know what you mean by imdemnified by the DSO. These are obviously shell corporations to get around state law, don’t put your name and livelyhood at risk for a little “passive income.” I had 10+ years at a DSO and was asked to do the same.
I have spend my entire career working for corporations. The first one was the U.S. Air Force, the second was Aspen, and now for DAG. So I have seen many pros and cons for corporate employment. There are things I liked about each but the devil is really in the details. Yes, they will always be thinking about the bottom line. Is it for everybody, no. But if you don’t want to run every aspect of the business and want to collect the benefits that corporate lifers like myself have become accustomed to, then maybe working for a DSO will be right for you. Overall my experience has been a positive one. I have heard too many bad things about working as an associate in a private office to ever feel like that would be right for me.
Great article! So timely. I had been in private group practice for 27 years. I went the traditional route for OMFSs right out of residency, joining as an associate, became a partner, bought into the practice, and then in 2023 sold the practice to a DSO. At that point in time, I was one of the “senior “ partners, and had the most to gain in a sale as has been elucidated by others in the article and comments. But, being in a group, all of us having equal shares and say so, my younger partners, people who were in their mid-30s to early 50s in age were more enthusiastic to sell than I was. Why was this? I think the idea that they could front load their retirement, fully fund their kids 529s was a very strong motivator. For example, if I received a $1 mil to invest towards my retirement at age 35, vs the $50K I really had at age 35 from making my 401K pre-tax contributions, I probably would have jumped at the deal too. I have worked very hard in private practice, and endured a lot of risk, but did very well financially. Over the years, my partners and I have been sued by a former business partner, have endured med mal issues, Board issues, third party insurance inquires, state insurance inquires , cyber concerns, staffing issues. It’s not 9-5, I didn’t leave my practice…ever. I was always gettable, Hawaii, Ireland, didn’t matter where in the world I was, if there were practice issues, I needed to be reachable. Life in the DSO is certainly less stressful, I’m 9-5 now, leave it at work, walk out the door on Friday, forget about it until Monday. My earnings, not like private practice, but neither is my stress. I love being my own boss, I loved private practice, but it requires you to be all in. I gave a up ton in return, never had kids, missed many (too many) family events, my personal relationships have definitely suffered. There’s only so much time in the day and bandwidth you have. I don’t say this to garner sympathy, I just want to point out the reality of modern private practice, it’s hard work. The risk/reward benefit ratio needs to be very solidly on the side of reward for it to be worth it.
I worked for a few DSO some years ago and one of the ones they say are doctor led was probably one of the worst ones. There was nothing that was doctor led except leading their paychecks and making sure the office is open and they can run their business. It was the worst experience in my life.
I had 2-3 hygienist under my supervision for a total of 8 columns all for myself. I was jumping from chair to chair and only got production on my own columns but 0 from hygiene. You have to buy into the practice to get a slice of hygiene and even then it is on the very low end. I often grew resentful of the hygienist because they had such a nice life only seeing 6-7 patients a day chatting it up with the patients and giggling all while getting paid the same money I was making for seeing a ton of other patients and doing real dentistry.
My salary was the lowest I have made and so overworked. Sure they provided benefits but they did not compensate for the amount of stress that I had. I hated going to work every day waiting for all the stressful patients and my paycheck was not even as good as it was at my previous job. These DSO really abuse the dentist and the profession is not doing anything to keep them away from ruining the profession. One of my colleagues burned his hand from so many crown preps he was doing at DSO only 5 years in. It is not worth it. I now stay away from any DSO especially stay away from ones that have a bunch of hygienist or any hygienist period as they will lower your production and just waste your time. Sure they refer cases and help with case acceptance but I can do that myself without the extra hassle and drama they come with plus no real benefit for myself as an associate to have them.
So, first of all, I hate I missed this article last year.
As a dental practice owner for 23 years and also teaches at UNC Dental School, I am a strong advocate for traditional private practice.
I have 4 simple questions for all of you:
1) Has the advent of DSO/PE care affected patients positively or negatively overall?
2) If one of your children chooses dentistry as a profession, would you encourage them to work for a DSO?
3) Do most DSO’s choose profit over patient care or the other way around?
4) For those of you old enough to remember the difference, do you feel that you receive better or worse care overall when going to a physician or pharmacy?