What is a DSO in Dentistry?

Did you know that as of 2023, 13% of dentists in the United States are affiliated with a Dental Support Organization (DSO)? According to a report by the American Dental Association’s Health Policy Institute, this number has been steadily increasing, reflecting the growing trend of dentists joining DSOs for their numerous benefits and support systems.

Dental Support Organizations (DSOs) are becoming a significant force in the dental industry, providing a range of administrative and operational services to dental practices.

This article will explore what DSOs are, how they operate, the benefits and challenges they present, and their impact on the dental industry.

What Are DSOs?

A Dental Support Organization (DSO) is a business entity that provides non-clinical support services to dental practices. These services can include administrative tasks, human resources, marketing, financial management, and IT support.

By handling these aspects of the business, DSOs allow dentists to focus primarily on patient care and clinical duties.

Core Functions

The primary roles and responsibilities of DSOs include:

• Administrative Support: Managing day-to-day operations such as appointment scheduling, patient records, and office management.
• Human Resources: Handling recruitment, training, payroll, and employee benefits for the dental practice staff.
• Marketing and Patient Acquisition: Implementing marketing strategies to attract new patients and retain existing ones.
• Financial Management: Overseeing billing, accounting, and financial planning to ensure the practice remains profitable.
• Compliance and Legal Services: Ensuring that the practice complies with all regulatory requirements and providing legal support as needed.

Information Technology: Maintaining and upgrading the practice’s IT infrastructure, including electronic health records (EHR) systems and cybersecurity.

Over the past few decades, the DSO model has evolved and expanded, with many DSOs now providing a comprehensive suite of services to dental practices.

Today, DSOs are a significant force in the dental industry, with many dental practices choosing to affiliate with these organizations to take advantage of their resources and expertise. The growth of DSOs reflects broader trends in healthcare towards consolidation and the centralization of administrative functions to improve efficiency and reduce costs.

Structure and Operations of DSOs

Organizational Structure

The typical structure of a Dental Support Organization (DSO) includes several key components designed to provide comprehensive support to affiliated dental practices. These components usually consist of:

Executive Leadership: The executive team, including the CEO, COO, CFO, and other high-level executives, sets the strategic direction and oversees overall operations.

Administrative Departments: Teams responsible for managing the day-to-day administrative tasks such as scheduling, billing, patient communication, and office management.

Human Resources: A dedicated HR department that handles recruitment, training, employee benefits, performance management, and compliance with labor laws.

Marketing and Patient Acquisition: Marketing specialists who develop and implement strategies to attract new patients, enhance patient retention, and build the practice’s brand.

Financial Management: Accountants and analysts who manage budgeting, financial planning, accounts payable/receivable, and financial reporting.

Compliance and Legal Services: Legal professionals who ensure that practices comply with healthcare regulations and provide legal advice and support as needed.

Information Technology (IT): IT teams maintain electronic health records (EHR) systems, cybersecurity, hardware and software support, and technology upgrades.

Clinical Support: Some DSOs also have clinical directors or consultants who provide guidance on best practices, clinical protocols, and continuing education.

Operational Models

DSOs can adopt various operational models depending on their goals, size, and the level of support they offer. Some common operational models include:

Centralized Model:

In this model, all administrative functions are centralized at the DSO headquarters. This approach maximizes efficiency and consistency across all affiliated practices but may limit the autonomy of individual practices.

Decentralized Model:

Each practice retains more control over its operations while still receiving support from the DSO. This model allows for greater flexibility and customization to meet the specific needs of each practice.

Hybrid Model:

A combination of centralized and decentralized approaches. Core functions like HR and finance might be centralized, while marketing and patient relations could be managed locally.

Affiliate Model:

Independent practices affiliate with the DSO but maintain their ownership and operational control. The DSO provides support services as needed, typically in exchange for a fee or a percentage of revenue.

Equity Partnership Model:

The DSO takes an ownership stake in the practice. This model aligns the financial interests of both parties and often leads to deeper integration and collaboration.

Examples of DSOs

Several well-known DSOs have established themselves as leaders in the dental industry. Some notable examples include:

Heartland Dental: One of the largest DSOs in the United States, Heartland Dental provides comprehensive support services to over 1,000 affiliated practices.

Aspen Dental: Known for its extensive network of practices nationwide, Aspen Dental offers a wide range of administrative and clinical support services.

Pacific Dental Services (PDS): PDS supports over 800 practices with a focus on innovative technology and patient-centered care.

Smile Brands: Operating multiple dental groups, Smile Brands offers extensive administrative and operational support to its affiliated practices.

Dental Care Alliance (DCA): With over 330 affiliated practices, DCA provides a full suite of support services, including marketing, HR, and financial management.

Economies of Scale

DSOs use economies of scale to cut costs and boost efficiency. They pool resources and centralize services to get better rates from suppliers, reduce admin costs, and make operations smoother. Benefits include:

• Bulk Purchasing: Buying dental supplies and equipment in large quantities gets them discounts.
• Centralized Services: Managing billing, HR, and marketing in one place reduces costs.
• Shared Resources: DSOs invest in advanced tech and expertise that single practices might not afford, sharing the cost among many.

Professional Development

Joining a DSO offers enhanced training and career growth. DSOs invest in their staff’s professional development to maintain high care standards and efficiency. Benefits include:

• Continuing Education: Access to ongoing training and education programs to keep dental professionals up-to-date with the latest techniques and practices.
• Career Advancement: Opportunities for growth within the DSO network, including leadership, specialist, and administrative roles.
• Mentorship Programs: DSOs often mentor newer dentists with experienced professionals to help develop skills and advance careers.

Challenges and Considerations

Loss of Autonomy

One significant concern for dentists contemplating joining a Dental Support Organization (DSO) is the potential loss of independence. When affiliated with a DSO, dentists may find themselves adhering to standardized procedures and protocols, limiting their ability to make autonomous clinical decisions.

This shift can impact the day-to-day operations, as DSOs often manage administrative functions such as office policies and staff hiring.

Additionally, the cultural fit between the dentist’s practice and the DSO can sometimes lead to conflicts or dissatisfaction, as the DSO’s values and practices might not always align with those of the individual practice.

Contractual Obligations

Joining a DSO involves navigating various legal and contractual obligations.

Dentists must carefully review contracts to understand the terms, including:

• duration of the agreement
• specific responsibilities
• exit clauses

Many DSO contracts feature non-compete clauses that restrict where and when dentists can practice if they decide to leave the DSO.

These agreements often include performance metrics that dentists must meet, which can influence their clinical and operational decisions.

Financial Implications

The financial aspects of joining a DSO are multifaceted and require careful consideration.

DSOs typically offer different compensation models, such as:

• fixed salaries
• salary plus bonuses
• percentage of production/collections

Dentists must evaluate which model best aligns with their financial goals and practice style. Some DSOs offer profit-sharing arrangements, providing dentists with a portion of the practice’s profits in addition to their base compensation, which can be financially rewarding but also comes with performance expectations.

In certain cases, DSOs might offer equity stakes or ownership opportunities, presenting additional financial incentives, risks, and responsibilities.

While DSOs can help reduce costs through economies of scale, dentists must balance these savings against any potential loss of income due to changes in compensation or operational control.

Impact on the Dental Industry

Market Trends

Dental Support Organizations (DSOs) are drastically altering the dental industry landscape, pushing toward a worrying trend of consolidating and centralizing administrative functions.

This shift threatens the independence of dental practices, forcing them into shared resources that prioritize efficiency over patient care.

As DSOs expand, they are transforming dental service delivery, focusing on scalability, sometimes affecting personalized care. The growing affiliation of dental practices with DSOs demonstrates the influence of these organizations, which often trade financial independence for a sense of stability.

Competitive Dynamics

DSOs offer several competitive advantages compared to independent practices but also have certain disadvantages.

On the plus side, DSOs benefit from economies of scale, allowing them to reduce costs through bulk purchasing and centralized services. This financial strength enables DSOs to invest in advanced technologies and comprehensive marketing strategies, enhancing their competitive edge.

However, independent practices often highlight their ability to offer personalized care and maintain greater autonomy over clinical decisions.

Independent dentists can tailor their services to meet the specific needs of their patient base without adhering to standardized protocols mandated by a larger organization. The challenge for independent practices lies in competing with the financial resources and operational efficiencies that DSOs can offer.

Balancing these dynamics, DSOs and independent practices each have unique strengths that appeal to different types of dental professionals and patients.

However, some patients may perceive DSO-affiliated practices as less personal, particularly if they experience high staff turnover or feel that the care is overly standardized.

The challenge for DSOs is keeping up with high standards of patient care and ensuring personalized service doesn’t fall by the wayside due to their expansive operational structure.

There’s a need for better communication and stronger patient relationships to address concerns and potentially improve patient satisfaction in DSO-affiliated practices.

Starting an Independent Dental Practice Like a Pro

While DSOs offer significant advantages, such as administrative support, cost savings through economies of scale, and access to advanced technologies, they also come with potential downsides.

Loss of autonomy, concerns about quality of care, and contractual obligations are critical factors to consider. It’s essential to weigh these pros and cons carefully and consider how they align with your professional values and goals.

If you’re contemplating whether joining a DSO might be beneficial for your practice, take the time to thoroughly research and understand all aspects involved:

• speak with colleagues with DSO experience
• consult legal and financial advisors
• consider your long-term career objectives

Professional Guidance

Starting and managing an independent dental practice doesn’t have to be daunting. With the right guidance and resources, you can create a successful and rewarding practice that reflects your vision and values.

Consider my consulting services, which specialize in helping dental professionals navigate the complexities of starting and growing their practices. We offer personalized advice on patient acquisition, competition, financial management, and legal challenges.

With our support, you can achieve your goals and build a thriving independent practice.