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What is a DSO & How Can They Help Your Dental Practice?

The business administration side of your dental practice can be one of the most challenging, rewarding, and simultaneously distracting duties you’ll have.

Most dentists want to focus on perfecting their skills and improving their patient relationships so that patients have good reasons to stay. But new patient outreach, patient recall, and scheduling can become a considerable challenge, and it can overwhelm any practice, whether part of a Dental Service Organization or a solo practice.

What is a DSO?

DSOs are administrative businesses that can partner with or provide contractual services to dentists. There’s a lot of room for balance between independence and interdependence. Some offer a true partnership with dentists, with each taking on liability and risk for losses. 

Other DSOs conduct business administration services for dentists who retain ownership or all professional corporation equity. Some DSOs own the equipment and rent it to the dentist, while other dentists own the equipment and have DSO staff work in the office. So a DSO can be a broad term with many arrangements possible.

What are the Pros and Cons of Working with a DSO?

group of dentists in white and aquamarine scrubs smiling at camera

Pros

DSOs can make patients’ lives easier by enabling two nearby dental practices to work together rather than in competition. Each general practice can opt to refer patients to one another based on geographics, or any other complementary preferences.

A DSO is a great way to secure your legacy. In passing the marketing and administration off to a dedicated unit of the business, dentists can master dentistry without being pulled in different directions.

A DSO allows more collaboration between its dentists far and wide, so the best practices can flourish and encourage dentists to strive for excellence, to the benefit of all involved.

Cons

Affiliation with a DSO will involve upfront contracts and significant partnership lawyer consultation (or lawyers specializing in professional corporations’ shareholder agreements), depending on how the DSO likes to do things. There will be a lot of what-ifs to sort out before you can reap the benefits, so it’s a bit of a barrier to entry.

Where failure to sort things out contractually between the dentist and the DSO occurs, problems arise. There have been cases in the US of illegal fee-splitting, non-dental ownership of a dental practice, other issues — and even situations where the DSO provided no real services to the dental practice!

Of course, the business side of the operation involves profit. Depending on the terms, very effective business administration might cost a portion of professional corporation equity or a percentage of ownership.

If DSO wishes, they may ask for as much as 15% off the 33-40% profit margin most Canadian dental practices enjoy. That figure might be worth the services provided to some, but it might not be worth it to others.

Solo Dental Practice or DSO?

Choosing the path forward really depends on what you want to do to foster a growth strategy. It only makes sense to grow business by gathering new patients. That means building your brand values and communicating them effectively through the ideal mix of promotional strategies.

If you’ve seen or heard dentists’ advertisements on radio or television, you might think that’s your ticket to a monopoly, but you have to consider how the costs of production and airtime can really add up. When there are many solo practices in competition, the demand for airtime goes up. If DSOs take off in Canada, dentists will have more promotional bargaining power to keep the price of airtime from inflating. Banding together could be a great way forward for Canadian dentistry.

Better Recall is Good for Either Solo or DSO Practices

In the end, patient retention is a way of ensuring that your annual patients gained isn’t offset by lost ones. Recall is an excellent option with either choice, but it requires a thorough system for managing patients, their schedule, your schedule, and all communications between yourselves.

Tried, tested, and true patient recall streamlines your practice either way. DSOs offer a lot of benefits, but it’s up to the practice and the DSO to decide how to share the costs!