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The dental industry has seen significant evolution over the past few decades, with the emergence of Dental Service Organizations (DSOs) being one of the most impactful developments. In a world where managing the business side of a dental practice can feel overwhelming, DSOs have stepped in to offer support, helping dentists focus on patient care. However, not all DSOs are the same, and understanding the differences between various models is crucial for dentists who want to maintain control of their practice while enjoying the benefits of group dental support.
In this article, we’ll explore the main types of DSOs, including traditional DSOs, dental partnership organizations, and dental partnership groups, comparing the pros and cons of each. If you’re a dentist who values autonomy and wants to maintain majority ownership of your practice while receiving business support, a dental partnership group may be the right fit for you. Let’s take a closer look.
1. Traditional Dental Service Organizations (DSOs)
A traditional Dental Service Organization (DSO) is like leasing your car to a rideshare company. You might still get to drive it occasionally, but the company makes the major decisions, and you lose a lot of control over how and when it’s used. In the context of dentistry, this means that while you continue to work in your practice, many of the key business decisions are made by the corporate dental entity.
How Traditional DSOs Work
Traditional DSOs typically acquire a significant ownership stake—or sometimes all—of a dental practice. They provide a full suite of business services, including marketing, human resources, financial management, technology support, and supply chain management. Dentists who partner with traditional DSOs can reduce their workload when it comes to running the practice, but they sacrifice a degree of control over their business.
Pros of Traditional DSOs
- Reduced Administrative Burden: Traditional DSOs handle the administrative aspects of running a dental practice, allowing dentists to focus more on patient care.
- Access to Resources: Dentists gain access to advanced technologies, group purchasing power, and robust marketing support that would be difficult to manage alone.
- Scalability: Traditional DSOs can help practices expand quickly by providing the financial backing and expertise needed to open additional locations.
Cons of Traditional DSOs
- Loss of Autonomy: One of the biggest downsides to traditional DSOs is the loss of control. Dentists are often required to follow the corporate dental entity’s policies, which may limit their ability to make clinical decisions that align with their philosophy.
- Practice Identity: Much like the leased car analogy, your practice becomes part of a larger fleet. It may lose its unique identity as the DSO imposes standardized practices, affecting patient experience and the culture you’ve built.
- Financial Impact: In most cases, dentists no longer own the majority of their practice. When recapitalization or an exit event occurs, much of the financial upside goes to the corporate dental group, not the dentist.
- W2 Employee: For those that sell the entirety of their practice, they then become a W2 employee. This means that they also forfeit the opportunities to write off expenses as the practice owner.
2. Dental Partnership Organizations (DPOs)
A Dental Partnership Organization (DPO) is like co-owning a car with a business partner. You both contribute to the car’s maintenance and make decisions together, but you still have to compromise. In the world of dentistry, this model allows dentists to retain partial ownership of their practice while receiving business support from the organization.
How Dental Partnership Organizations Work
DPOs operate as a hybrid model between traditional DSOs and independent practices. In a DPO, the dentist shares ownership with the organization, usually maintaining a minority stake. While the dentist retains more control than in a traditional DSO, major business decisions are made collaboratively, meaning the dentist may need to align their goals with those of the organization.
Pros of Dental Partnership Organizations
- Shared Responsibility: Dentists benefit from having a partner to help with administrative tasks while maintaining some degree of control over their practice.
- Business Support: Like traditional DSOs, DPOs provide comprehensive business support, including marketing, technology, and financial management.
- Flexibility: DPOs offer more flexibility in clinical operations compared to traditional DSOs, allowing dentists to make certain decisions about how they treat patients.
Cons of Dental Partnership Organizations
- Partial Ownership: Dentists give up a significant share of ownership to the organization, which means they also share in the decision-making process and profits.
- Alignment of Goals: Strategic decisions must align with the goals of the organization, which can sometimes lead to compromises that the dentist wouldn’t have made independently.
- Reduced Financial Upside: In a DPO, the dentist shares the financial rewards with the organization. While they retain some ownership, they may not receive the full financial benefit during a recapitalization or exit event.
3. Dental Partnership Groups (DPGs)
A Dental Partnership Group (DPG) is like owning your car but getting free maintenance, insurance, and access to a network of mechanics. You’re still in the driver’s seat, but you don’t have to worry about the day-to-day upkeep. For dentists, this means retaining majority ownership of their practice while receiving the business support of a larger group.
How Dental Partnership Groups Work
In a Dental Partnership Group, the dentist retains majority ownership—typically 51% or more—of their practice. The group provides administrative and business support, similar to what you’d receive from a traditional DSO, but the dentist remains in control of clinical and operational decisions. The key difference here is that dentists in DPGs maintain the autonomy and independence they desire while benefiting from the efficiencies of a group dental model.
Pros of Dental Partnership Groups
- Maintaining Majority Ownership: Dentists retain control of their practice, including clinical decisions, operational choices, and overall direction. The business still feels like your business.
- Business Support Without Sacrificing Control: While enjoying marketing, HR, and financial management support, the dentist remains the decision-maker, ensuring the practice’s identity and values stay intact.
- Financial Upside: When a recapitalization or exit event occurs, dentists in DPGs share in the financial rewards. Unlike traditional DSOs, where much of the upside goes to the corporate entity, DPGs allow dentists to directly benefit from the growth of their practice.
- Practice Identity: Because dentists in DPGs maintain control, the culture, patient experience, and branding remain consistent with the dentist’s vision. You don’t become just another cog in the corporate dental machine.
Cons of Dental Partnership Groups
- Alignment with the Group: While you maintain control, it’s important to align with the values and goals of the partnership group. This requires some flexibility in operations, though the core decision-making stays with the dentist.
- Ongoing Responsibility: Dentists still need to manage the clinical side of their practice, including patient care and staff leadership, which might feel burdensome for those seeking a completely hands-off approach.
Why Choose a Dental Partnership Group Over a Traditional DSO?
If you’re a dentist who values autonomy and the unique identity of your practice, a dental partnership group offers the best of both worlds. You get to maintain majority ownership of your practice and make the decisions that matter most to you, while also benefiting from the operational and business support that larger group dental models offer.
In a traditional DSO, you may find yourself with fewer decisions to make, but that can come at the cost of losing control of the practice you worked hard to build. Additionally, in a DSO or DPO, the financial rewards of a recapitalization or exit event often go to the corporate dental entity, leaving you with a smaller share of the profits. However, in a dental partnership group, you share directly in the financial success of your practice, meaning you reap the rewards of growth and expansion.
Consider a dental partnership group as your best option if:
- You want to maintain clinical and operational autonomy.
- You’re looking for business support without sacrificing the unique culture and identity of your practice.
- You want to share in the financial upside when a recapitalization or exit event occurs.
Conclusion
The dental landscape is changing rapidly, and DSOs provide a range of options for dentists looking to streamline their operations and grow their practices. While traditional DSOs and DPOs offer significant business support, they often come at the cost of autonomy and ownership. For dentists who want to maintain control of their practice while still receiving the benefits of being part of a larger group, dental partnership groups offer the ideal solution.
With a dental partnership group, you can stay in the driver’s seat, keep your practice’s identity intact, and enjoy the financial rewards of your hard work. If you’re considering your options and want to learn more about how our dental partnership group can support your goals, reach out today to explore how we can help you grow your practice—your way.