With large group practices on the rise, dentists seeking employment must keep one key question in mind: Who owns the company — a dentist or a corporation?
Dentists — especially new graduates — who are examining career possibilities have a dizzying array of options and practice models to choose from in today’s marketplace. Terms like “DSO” and “corporate dentistry” are common, and knowing the characteristics of each is vital in choosing a career path. The biggest difference between practice models is whether a dentist is an owner or an employee. If a dentist does not own the company, the next question is, who does — who is calling the shots?
The term “corporate dentistry” conjures up branded dental practices seen in strip malls across the country. What the term generally refers to, however, are models where a nondentist-owned dental services organization (DSO) purchases practices and assumes operational, but not clinical, control of multiple practices. The practices may or may not have a common brand name. Many of the largest DSOs are owned in significant part by private equity firms.
On the other side of the coin are dentist-owned group practices — both small and large. Small group practices typically consist of one or a few practice locations covering a localized region, while large group practices can choose several organizational models. While large group practices may contract with a DSO to coordinate business support functions across multiple locations, ownership is clearly with the dentists. Dentists can also form their own DSOs and retain ownership.
One of the perks of dentistry is that dentists are free to choose their own career path. Decades ago, the singular endgame of dentistry was owning a private practice, and the first step on this path was often becoming an associate. But that’s not necessarily the case with today’s dentists. Some take this path, but some start out working in less traditional practice models to gain experience and then move into private practice ownership. But some may never transition to private practice, choosing instead to work in corporate dentistry or a group practice for the duration of their career.
Craig S. Armstrong, DDS, MAGD, has followed the changing landscape of dental employment over his 30-plus-year career.
“It’s interesting to see the morphing of the desire of some young dentists to graduate and go into practice with the idea that they may never own a practice,” Armstrong said. “The obvious driver of a lot of their decisions is finances.”
Even if practice ownership isn’t a dentist’s dream when starting his or her career, the varying practice models mean they could transition to ownership if they change their minds — or they could choose any number of intermediate options.
Corporate Dentistry vs. DSO
Armstrong was a member of the 2013 AGD Practice Models Task Force, which released a whitepaper titled “Investigative Report on the Corporate Practice of Dentistry.” The task force sought to understand the range of organizational models. It characterizes “corporate dentistry” as practices under the umbrella of DSOs that are owned by private equity firms. Dentists employed by the corporations are just that — employees. With limited exceptions, they will never have an ownership stake in the practice. The report states that “the outside equity firm’s interest is in maximizing the enterprise value of the acquisition in order to make it attractive for sale. The management company drives production expectations; controls the vendors used, the quantity of supplies and the equipment used; and may have final approval on hiring decisions.”1
The report also describes alternative existing models for dentist-owned large group practice operations. The models described were a DSO with internal management or a dental management services model (DMSO) without outside equity ownership. The key difference between these two models is whether the company handles the business side of ownership internally (DSO with internal management) or if it contracts it out to another company (DMSO). Other key differences include:
1. DSO with internal management. This model can also be called a dentist owned and operated group practice (DOO).
- Dentist owners are the sole shareholders of the DSO, and they may elect a board to recommend internal management guidelines and protocols.
- No business services agreement.
- Functions like a professional association.
- Production goals (revenue or number of patients seen) are set by the dentist owners.
- Dentist owners have control over employment decisions, equipment use, supply purchases and other business decisions.1
2. Dental Management Services Model (DMSO) without outside equity ownership.
- No internal management, but has a business services agreement with a single third-party management service organization (MSO).
- The MSO may be owned by one or more individuals, who may or may not be dentists, but it cannot be by an equity firm.
- Productivity goals are driven by the MSO, not the DSO.
- The profitability of the company is based upon business services agreement fees, which vary based on each practice’s revenue stream, but are not tied to any Wall Street valuation in preparation for sale — as would be the case in corporate dentistry.1
Although the report states that no model is “better” or “worse” than another, Edgar M. Radjabli, DDS, who served alongside Armstrong on the AGD Practice Models Task Force, has observed a shift toward the “DSO with internal management” structure.
“My opinion is that model is the best incarnation of a DSO in that it provides autonomy to the dentists themselves without the pressure and influence of outside equity ownership and while streamlining management and systems within the group,” said Radjabli. “In recent years, we have seen many solo or small-group practices affiliate under this type of model, and that trend is likely to continue. On the other hand, I’ve observed less interest by solo dentists in joining or working for the other two types — DMSOs with or without outside equity ownership — because of the issues and concerns raised in the white paper.”
Those issues stem from situations where the dentist isn’t in full control of treatment decisions. When describing the DMSO with outside equity ownership structure, the report authors wrote, “The drive to maximize enterprise value is inherently at odds with the provision of quality of care, and it is unclear how to bridge this gap for the benefit of both over a sustainable long-term future.”1
The American Dental Association (ADA) Health Policy Institute (HPI) examined the differences in employee satisfaction between two large group models. It surveyed dentists who either worked for a DOO (owned by dentists) or a dental management organization affiliated group practice (DMOA). HPI defined a DMOA as a practice that contracted with an MSO, and the MSO could potentially have outside equity firm ownership (corporate model). HPI surveyed 183 dentists who worked for a DOO and 655 who worked for a DMOA. Both types of dentists felt similarly stressed at work, were equally satisfied with care delivered and reported “similar levels of satisfaction with working hours, schedules and overall work-life balance.”2
However, dentists working for DMOAs reported lower salaries and were less likely to agree with the statements: “Knowing what I know now, I would make the same decision to go into dentistry,” and “My current practice situation is what I envisioned when I chose to become a dentist.” Their experiences working for DMOAs were emotionally draining and negatively affected how they felt about dentistry.
The Employment Landscape
Today, about 10% of dentists in the United States are affiliated with a DSO, according to Marko Vujicic, PhD, chief economist and vice president of the ADA HPI. ADA considers a dentist to be working at a DSO-affiliated solo or group practice “if at least one location they practice in is a member of the Association of Dental Support Organizations (ADSO) or part of American Dental Partners, Western Dental Services Inc. or Kool Smiles.”3
Over three years of data collection, Vujicic has seen about a 1% increase in dentist involvement in DSOs each year, though he suspects that’s likely an undercount. Although dentists of all ages, career levels and backgrounds are joining DSOs, young dentists are sparking the growth.
“There is a significant difference in growth according to dentist age,” Vujicic said. “Among dentists under 35 years of age, our data show that 18% are in a DSO.”
Christopher Badgley, executive director of the ADSO, shares Vujicic’s view that DSOs are on an upward trajectory.
“It remains the fastest growing segment within dentistry, while sole proprietor practices continue a fairly rapid decline,” said Badgley. “The cost of operating medical or dental practices is daunting, and without the ability to negotiate on behalf of a large number of practices to receive reduced prices — whether for hard goods or services — it is difficult to compete in the long run. Additionally, competition for available talent, especially at the associate level or for hygienists, is stiff.”
“Dentistry, according to our research, is really the last field to not yet have reached that threshold of 50% nonowners,” Vujicic said. “We are at about 25% of dentists being non-owners today. But what is important to know is that the trend in dentistry is clearly moving toward more employee dentists. And, if anything, this is just going to accelerate.”
“One of the things I hear a lot is that dentists do not want to go the way of medicine in terms of this trend away from practice ownership,” Vujicic said. “But the data clearly show they are.”
ADA HPI data show that, in 2005, 84.2% of dentists in private practice were owners. In 2017, that number had dropped to 77.5%, still well above 50%.4
Medicine also offers a cautionary example. As physicians faced pressures to consolidate in the face of dominant insurers and hospital systems in the 1990s, physician practice management companies funded by private equity firms emerged at a rapid pace. However, ten years later, eight of the 10 largest practice management companies had declared bankruptcy. They failed because, instead of streamlining costs, they added more administrative overhead.5
DSO Pros and Cons
Like any employment arrangement, working in either a corporate- or dentist-owned business has its benefits and drawbacks. Each is different, which is why it’s important for dentists to familiarize themselves with each model, including the key questions to ask during the contract negotiation process.
“I have heard from many who have entered the DSO model that it has been everything they are looking for,” Armstrong said. “And, from others, not so much.”
For dentists fresh out of dental school, taking on the costs of practice ownership when they have a mountain of student loan debt isn’t often feasible. Both corporate and large group dentistry offer young dentists a steady paycheck from the get-go. As the cost of dental school continues to rise, these models will likely be the employment options many graduates seek out.
William G. McBride, DDS, MAGD, has worked at Midwest Dental since 2011. Midwest Dental is a DSO owned by a private equity firm.
“I knew toward the end of dental school that I would work for a DSO,” McBride said. “I was interested in mentorship, continuing education (CE) and financial support. I looked into several companies and chose Midwest Dental because it had a more personal feel.”
McBride said companies like Midwest can offer benefits to dentists at any point in their career. “There is a misconception that DSOs are most beneficial for dentists at the beginning and end of their careers,” McBride said. “I see more dentists, including myself, making this model their career.” McBride said Midwest affords him a work-life balance, something he wanted to establish from the beginning of his career.
“I can give my patients my full attention and spend less time before and after patient care hours dealing with many of the administrative duties that come with running a private dental practice,” McBride said. “The focus should be on the provision of quality care, not debating how it is delivered.” For older dentists, relieving the burdens of private practice management — human resources, insurance headaches, marketing — draws them toward considering affiliating with a DSO or large group practice. This allows the dentist to continue practicing dentistry without the business responsiblities.1
Armstrong was approached by a large DSO interested in purchasing his practice. Although he went through the evaluation process, he said selling wasn’t the right decision for him at the time.
“It’s a difficult decision to sell your practice,” said Armstrong, who shared that in December 2019 he sold 50% of his practice to a young dentist whom he has known since she was in dental school. “For many of us, our patients are our families, our friends — people we have literally grown up with. They have entrusted us with their health. So, when considering selling, make sure that the decision you make is not strictly a financial one. You will sleep better at night knowing your loyal patients are being taken care of by someone who shares your value system.”
Private Practice Pros and Cons
As the popularity of DSOs grows among dentists of all ages and career stages, it begs the question: Why would dentists want to work in private practice? Although running a solo operation means wearing many business and clinical hats, Armstrong said he believes owning a private practice is still alluring to many dentists. However, he’s seen a shift in younger dentists taking a middle route — wanting to practice in small-group settings.
“The appeal of collaborating with others and the obvious benefits of cost-sharing in order to purchase costly technology is a very strong pull,” Armstrong said.
For younger dentists, owning a solo practice can be challenging because they must learn how to manage a business on top of how to be great dentists, Radjabli added.
“That can be difficult early on in their careers when they are still taking advanced CE and improving their clinical skills,” he said. “For many younger dentists, they may wish to join up with a partner, or an older dentist, where they can get some of the benefits of a larger group but without giving up autonomy or the higher revenue potential.”
Successfully Navigating DSO Employment
Armstrong strongly urges dentists to retain an employment attorney with dental experience to review any employment contract. Many new dental graduates are reluctant to reach out for legal help, only to find that they’ve significantly limited their options in the contract that they have signed.
“DSOs market very heavily to our dental schools and sponsor a lot of events, so dental students have some familiarity with larger companies and their general employment situation,” Armstrong said. “I encourage them to talk to others who are currently employed by these practices or those who have been employed by one and have moved on to a different employment situation. There are going to be many situations where an employee dentist is very happy with his or her choice, and certainly there are situations that have not worked out well for the young dentist.”
A dentist’s legal and ethical duty of care requires them to always provide care in the best interest of the patient, regardless of the practice model. The licensed dentist — and not the business entity — faces accountability for patient care.
“The DSO or the employing dentist in a private practice cannot force you to behave in a manner that is below the standard of care,” Armstrong said. “The dentist providing care to the patient is the one responsible for that care. We often hear that young dentists are pressured to do things they are uncomfortable with, which can happen in private practice or in a DSO setting.”
With that in mind, Radjabli said that the most important question to ask during the interview process is: “Who ultimately decides the treatment of the patient?”
“If the answer is anyone other than the dentist, then that’s a dangerous situation,” Radjabli said. “It’s the dentist’s license on the line, so if ‘treatment coordinators’ or managers can modify treatment plans and tell the young doctor, ‘You should do a crown here instead of a mesial/ occlusal/distal surface filling,’ that is unacceptable.” Unreasonable production expectations may also present a challenge.
Ultimately, McBride said that dentists should approach negotiating a corporate/DSO contract the same way they would approach a private practice contract. Perhaps corporate and private dentistry have more in common than some dentists would like to admit, he said. McBride’s experience has been positive in terms of clinical autonomy and his ability to provide quality care.
“Now, more than ever, there is enormous pressure on dentists to uphold the highest levels of infection control and patient safety,” he said. “As a profession, we must collaborate to provide excellent care to our patients, enable dentists of different backgrounds to have successful careers and maintain the integrity of our profession.”
Kelly Rehan is a freelance journalist based in Omaha, Nebraska. To comment on this article, email email@example.com.
Helen Jameson, JD, AGD director of dental practice and policy, also contributed to this article.
1. Brown, W. Carter, et al. “Investigative Report on The Corporate Practice of Dentistry.” Academy of General Dentistry, 2013, agd.org/docs/default-source/advocacy-papers/agd-white-paper-investigate-report-on-corporate-dentistry.pdf?sfvrsn=c0d75b1_2/. Accessed 6 July 2020.
2. Starkel, Rebecca, et al. “Job Satisfaction Among Dentists Varies by Type of Large Group Practice Setting.” American Dental Association, Health Policy Institute, 2015, ada.org/~/media/ADA/ Science%20and%20Research/HPI/Files/HPIBrief_0815_1.pdf?la=en. Accessed 14 July 2020.
3. “Dentist Profile Snapshot by State: 2016.” American Dental Association, Health Policy Institute, 2018, ada.org/en/science-research/health-policy-institute/data-center/supply-and-profile-of-dentists. Accessed 14 July 2020.
4. “Dentists’ Practice Ownership is Declining.” American Dental Association, Health Policy Institute, ada.org/~/media/ADA/Science%20and%20Research/HPI/Files/HPIgraphic_0418_2.pdf?la=en. Accessed 14 July 2020.
5. Luria, Neil, and Gregory Hagwood. “Private Equity May be Repeating Mistakes with Physician Practice Management Companies.” FierceHealthcare, 10 Dec. 2019, fiercehealthcare.com/practices/industry-voices-private-equity-may-be-repeating-mistakes-physician-practice-management. Accessed 14 July 2020