When it comes to selling a dental practice, many practice owners are faced with the option of selling to a Dental Service Organization (DSO). While this route can be appealing for some, it comes with its own set of benefits and challenges. In this post, we’ll explore the pros and cons of selling your dental practice to a DSO, so you can make an informed decision about the future of your practice.

What Is a DSO and Why Should Dentists Consider Selling to One?

A Dental Service Organization (DSO) is a corporate group that provides various business services to dental practices, such as administrative tasks, marketing, human resources, and financial management. By selling to a DSO, dental practice owners can focus on patient care while the DSO handles the business side.

Many dentists are drawn to selling to a DSO for several reasons, including financial incentives and reduced management duties. However, the decision isn’t straightforward, and it’s important to understand both the benefits and potential drawbacks before making a choice.

The Pros of Selling to a DSO

1. Financial Security and Stability

One of the biggest advantages of selling to a DSO is the financial security it can provide. Typically, DSOs offer a good purchase price for your practice, often based on a multiple of your practice’s earnings. This means you could receive a lump sum payment that provides financial stability for retirement or other future goals.

In addition to the upfront payment, some DSOs also offer continuing compensation through profit-sharing or equity in the organization. This means that even after selling your practice, you may continue to benefit from the success of the DSO.

2. Reduced Administrative Burden

Managing a dental practice involves a lot of administrative work—things like billing, payroll, staffing, and marketing. When you sell to a DSO, they take over these responsibilities. This can be a huge relief for practice owners who want to focus more on patient care and less on the business side of things.

DSOs handle the operational tasks, allowing you to concentrate on what matters most—providing excellent patient care. With the DSO managing day-to-day functions, you no longer have to worry about running a business, which can reduce stress and improve work-life balance.

3. Access to Better Resources and Technology

Selling to a DSO can also give your practice access to better resources, equipment, and technology. DSOs often invest in the latest dental tools and practice management software, which can improve the quality of patient care and streamline operations.

In addition, DSOs can help fund marketing and advertising, which can increase patient volume and the overall profitability of your practice. By joining a larger corporate group, you gain access to financial resources and expertise that may not be available to smaller, independent practices.

The Cons of Selling to a DSO

1. Loss of Autonomy

One of the major downsides of selling your dental practice to a DSO is the loss of control. As part of a larger organization, you may have to follow corporate policies and procedures, which could limit your ability to make decisions for the practice.

If you’re used to making all the decisions about patient care and practice management, this shift may feel limiting. While some DSOs allow practice owners to retain some level of involvement, others may expect a more hands-off approach, which may not appeal to everyone.

2. Cultural and Operational Changes

When a practice is acquired by a DSO, there can be a shift in the work culture and operational structure. DSOs typically have standardized processes for everything, from patient care to staffing. For some dentists, this can feel like a loss of the close-knit, personalized environment that comes with running a private practice.

Although some dentists may appreciate the efficiency and structure that a DSO offers, others may find the corporate approach too rigid. This can lead to dissatisfaction, especially if the dentist values the autonomy and flexibility of a private practice.

3. Impact on Patient Care and Reputation

Another potential downside is the effect on patient care and the practice’s reputation. Many patients choose their dentist based on personal relationships and trust. When a practice is sold to a DSO, patients may feel disconnected from the new corporate structure, which could affect patient loyalty.

DSOs are typically focused on efficiency and profitability, which can sometimes shift the focus away from personalized care. While most DSOs strive to maintain high-quality care, the corporate model can make it harder to maintain the personal touch that many patients value.

What to Consider Before Selling to a DSO

If you’re thinking about selling your practice to a DSO, it’s essential to consider several key factors before making a decision.

1. Choosing the Right DSO Partner

Not all DSOs are the same, and it’s important to find a partner that aligns with your values and goals. Look for a DSO with a solid reputation, financial stability, and a proven track record of supporting dental practices. The right partner will help ensure a smooth transition and support your professional and personal goals.

2. Understanding the Deal Structure

The terms of the sale are crucial. DSOs offer different deal structures, such as outright sales, partnerships, or equity buy-ins. It’s important to fully understand the deal terms, including the purchase price, ongoing compensation, and your role after the sale. Will you stay on as a dentist or transition to a different role? Clarify your future responsibilities to avoid any surprises.

3. Assessing Your Long-Term Goals

Selling your practice is a major decision that can have long-term effects on your career and personal life. Think about what you want for your future. Do you want to continue practicing, or are you ready for retirement? Selling to a DSO may provide financial benefits, but it may also change your role in the dental industry. Consider how this decision aligns with your personal and professional goals before moving forward.

Your Top DSO Dilemma Questions, Answered

Selling to a DSO offers financial security, less administrative work, access to better technology and resources, and more time for patient care.

After selling to a DSO, your role may change depending on the deal structure. You might continue practicing as an employee, take on a managerial role, or transition out of the practice altogether.

Selling to a DSO can impact patient relationships. Some patients may feel disconnected from the new corporate structure, which could affect retention. However, DSOs are generally committed to maintaining quality care.

Yes, selling to a DSO often means giving up some control over practice management and patient care. DSOs usually impose corporate policies and standardized procedures, which can limit your decision-making power.

Look for a DSO with a strong reputation, financial stability, and a shared vision for patient care. Ensure that the DSO’s values align with your own and that they offer favorable terms for your sale.

Weighing the Pros and Cons of Selling to a DSO

Selling your dental practice to a DSO can offer many financial rewards, reduced administrative tasks, and access to better resources. However, it also comes with potential drawbacks, such as the loss of autonomy, cultural changes, and impacts on patient care. This is why it’s important to carefully weigh the pros and cons before making your decision.

Before selling, make sure to choose the right DSO partner, fully understand the deal structure, and ensure that the decision aligns with your long-term goals. By taking the time to evaluate your options, you can make an informed choice that benefits both you and your patients.