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How Does Homeownership Affect Your Ability to Buy a Dental Practice?
May 1, 2024

What Is an Invisible Dental Support Organization?

Dental practice equipment

 

By David Haynes, MBA

Dental practice ownership has evolved over the last few decades with the emergence of dental support organizations (DSOs), which are also called dental service organizations. These groups aim to relieve dental practice owners of the operational responsibilities of running a business, such as accounting, human resources, and marketing.

Invisible dental support organization (IDSO) is a recently coined term circulating the industry, but the concept is nothing new. Invisible dental support organizations buy a majority stake in a practice and then operate solely in the background. Practices maintain their branding, so patients and other community members may not even realize that the practice has a partner. Participating dentists benefit by receiving cash up front and support from the IDSO’s resources and network, while retaining ownership and the ability to make clinical decisions. Many popular DSO groups operate in this model; it’s becoming increasingly rare that a DSO takes over the identity and control of the practices it purchases.

You may have also heard of dental partnership organizations (DPOs). These groups assert that were created to address some of the issues DSOs can face, such as high doctor turnover and reduced job satisfaction. IDSOs and DPOs are essentially the same, as they both strive to give their partnership doctors greater clinical autonomy and more of the benefits associated with practice ownership.

For a large DSO to be effective, it can’t have its doctors on too many different platforms, so DSOs will often require their partnering doctors to use specific systems for the following:

  • Benefits administration
  • Payroll
  • Practice management software
  • Merchant processing
  • Retirement plans
  • Suppliers
  • Accounting systems
  • Billing/claim management

When considering DSOs, many doctors are only familiar with the large players in the market. The reality is that DSOs come in all shapes and sizes. We also see the following in the market today:

  • Boutique DSOs: Groups with 10 to 30 offices
  • Startup DSOs: New groups emerging onto the scene with less than 10 practices
  • Doctor DSOs: Multiple practices owned by a few partners or a single doctor

These smaller groups may not have systems in place for things like benefits, payroll and accounting. Practices that join smaller groups will be more likely to remain unchanged for a time, which may appeal to some dentists. But as the group grows, they will likely change their model to require all offices to utilize similar platforms.

Regardless of semantics, these groups are increasing their market share. You may have even received an offer from a group looking to buy your practice. We recommend you refrain from responding to unsolicited offers or attempting to negotiate a deal without proper representation. DSO transactions are complex, and you need a trusted advisor by your side to protect your interests.

While most of our clients sell their practices to a private buyer, we have seen more and more dentists go the DSO route in recent years. While we don’t advocate for one type of sale over another, we have spent years building relationships with local, regional and national DSOs, so we can present your practice to a variety of corporate groups that are interested in businesses like yours. Our team will help you review your offers and determine which group is the right fit for your long-term goals.

Contact us at 480-290-7720 to learn how we can help you maximize the value of your practice in a DSO sale.