Dental Support Organizations

Dental Support Organization Attorneys

What Is a DSO?

A DSO, or a dental support organization, is an entity that contracts with dental practices to provide administrative, marketing, and/or other business management services for the practice. DSOs do not perform any clinical services. Instead, the services they provide are strictly associated with the business operational aspects of a dental practice.

DSOs are becoming an attractive option for dentists, as they can dramatically reduce the start-up costs associated with starting a new practice. Some DSOs also offer networking, continuing education, and mentorship opportunities.

Common examples of DSO models include:

  • DSOs with internal management – dentists within the practice are the sole shareholders in the DSO (also called dentist-owned and operated group practices, DOOs).
  • DSOs without private equity ownership – DSOs without private equity ownership are owned by one or more individuals who may or may not be a dentist. Their revenue is based on the fees earned from providing practice management services.
  • DSOs with private equity ownership – these function very similarly to those without private equity ownership but are partly or wholly owned by a private equity firm and are usually focused on maximizing the value of the DSO to make it more attractive for acquisition.

Keep in mind that the two DSO models with third-party ownership have revenue interests that are not necessarily aligned with the clinical interests of the practice.

What to Consider Before Signing a DSO Contract

First and foremost, consider seeking legal advice before moving forward with a DSO. A healthcare attorney can review the DSO agreement to ensure it complies with state and federal laws and regulations, including Texas’ Corporate Practice of Dentistry doctrine.

Here are some questions to ask before entering a management services agreement with a DSO:

  • Who owns the DSO? Is it private equity-backed or owned by an individual or individuals?
  • Which services are included in the services agreement? Some arrangements are for limited services and others bundle a comprehensive group of services.
  • What is the length of the agreement?
  • How can the agreement be terminated (and what are the potential costs and consequences)?
  • How are the DSO fees calculated?
  • Who ultimately decide the treatment of the patient?
  • Can you use any vendor to order supplies? Are there caps or limits on the volume or type of supplies?
  • Can you use the dental laboratory of your choosing?
  • How will patient records be handled? Which party is responsible for HIPAA compliance? Note: In Texas, state law mandates that the dentist maintain ownership of dental records.
  • Who makes hiring and firing decisions for non-clinical staff? Note: The dentist must maintain supervision and management of clinical staff or be in violation of the prohibition against the Corporate Practice of Dentistry.
  • If the agreement is terminated, can you solicit and employ personnel previously employed by the DSO?
  • Are there any contracts or agreements with other parties affiliated with the running of my practice? Can you and your attorney and/or accountant review them?
  • If you wish to sell your clinical assets at some point, does the DSO have first right of refusal?
  • What is the process to resolve complaints or disputes between the dentist and DSO?

You should also ask for references and conduct due diligence on the DSO before entering into any agreement.

The Texas State Board of Dental Examiners (TSBDE) Monitors DSO Arrangements

In 2015, the Texas legislature passed a law requiring Dental Support Organizations to register with the state annually and provide “the name and business address of each dentist in this state with which the dental support organization has entered into an agreement.”

The Secretary of State shares this information with the State Board of Dental Examiners, allowing them to monitor which practices are receiving services from a DSO.

As a result, it is imperative for licensed dentists to ensure that contracts and arrangements for business support services comply with state law and TBSDE rules and regulations, especially the Corporate Practice of Dentistry doctrine.

What Is the Corporate Practice of Dentistry Doctrine?

The Corporate Practice of Dentistry doctrine is a legal principle that prohibits corporations or non-dentist entities from owning or operating dental practices. This doctrine holds that the practice of dentistry is a professional service that should be provided by licensed professionals who are subject to ethical and legal standards.

In Texas, a person may not practice dentistry without a valid license issued by the Texas State Board of Dental Examiners. The Texas Dental Practices Act sets forth several categories of activities that constitute the practice of dentistry. For example, a person who owns, maintains, or operates a business which engages another person to practice dentistry – under any type of contract or arrangement – may be considered as engaging in the practice of dentistry.

Some management services agreements require production or revenue goals that could limit a dentist’s time with patients. Other agreements may require the dentist to give up control over employment decisions, equipment use, supply purchases, and other business decisions. These DSO models may be in violation of the prohibition against the Corporate Practice of Dentistry doctrine.

Further, the Texas Dental Practices Act has been broadly interpreted to prohibit trilateral contracts between the DSO, dental practice, and individual dentists that seek to circumvent the prohibition on direct employment relationships between dentists and non-dentists.

Whether you are a licensed dentist or non-dentist DSO owner, our health law attorneys can review the proposed organizational structure and DSO management agreement to ensure that your practice is legally compliant.

DSOs & Fraud Investigations

Because DSOs are profit-driven entities, especially those owned by private equity firms, they can be vulnerable to fraud, including Medicaid fraud. As such, dentists considering entering contracts with DSOs need to vet the DSO thoroughly. Speak to referral sources and look for past or pending litigation or regulatory actions. An over-emphasis on profit over patient care can harm patients and result in disputes or investigations.

Potential issues associated with the profit-focused nature of DSOs include:

  • Overtreatment of patients
  • Misleading advertising practices
  • Medicaid fraud
  • Malpractice

Ignorance of regulatory failures committed by the DSO is no excuse. The Texas State Board of Dental Examiners has explicitly stated that dentists who own practices that contract with DSOs will be held fully responsible for any regulatory violations. Because DSOs are non-dentists, the Board cannot hold them responsible for violations.

If you are a dentist dealing with a fraud investigation associated with the DSO you are contracted with, reach out to our law firm for help. These investigations should be taken seriously. Medicaid fraud (and other public benefits fraud) is a particular problem. Fraudulent or illegal acts committed by a DSO under contract with you can lead to delayed payments, audits, recoupment, Medicare or Medicaid exclusions, civil penalties, and criminal liability.

Work with Texas DSO Attorneys to Protect your Dental Practice

DSOs offer many potential benefits, but the specific benefits of working with a DSO will vary depending on the organization and the terms of the agreement. A qualified DSO attorney can help you understand and negotiate the terms of the agreement and ensure that your rights and interests are protected – today and in the future.

Reach out to Hendershot Cowart P.C. to learn more about Dental Support Organizations and to get the guidance you need.

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