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DSOs and the potential nightmare of parallel authority

Dec. 19, 2022
In this series, Dr. Roland Caire, Jr., explores the many facets of DSOs: the good, the bad, and the ugly. In this installment, learn what he means by "the frustration of DSO authority."

Editor's note: Part 2 of a five part series. Read part 1: Who's partnering with DSOs—and why?

I want to be clear at the start that I don't find fault with the DSO industry, per se. At its best, it can relieve dentists of a lot of stress and headaches. But, at its worst, it can be a source of stress and headaches.

As with the phrase “all politics is local,” the same is true with DSOs. Most of your satisfaction (or dissatisfaction) with any DSO will depend on the people who are closest—the ones you interact with on a daily or weekly basis. Let's start by looking at the common structure of DSOs and their relationship to dental practice.

The frustrating nature of parallel authority

With only a handful of exceptions, most states require a dental practice to be owned by a licensed dentist, and that owner is the only entity that can hire other licensed personnel. So a dentist (and often hygienists) can only be hired by the owner-dentist. They are the providers in a DSO arrangement, and no one else in the organization actually produces any income. The staff, meanwhile, are employees of the DSO. They may not produce any actual dollars, but they support the providers in such a way as to maximize the amount of production providers achieve. Ideally, the two groups would work together for mutual benefit.

Related content:

Part 3: The devil is in the details

Practice owners beware: 6 DSO tactics to watch out for

Unfortunately, life isn't always ideal. This sets up a situation where two groups are working together in the same office but answering to different authorities. This parallel authority structure can often lead to frustrating circumstances.

Most dental professionals will have some familiarity with the hierarchy of a private dental practice. Much like any small business, there is a dentist who oversees the clinical and business sides of the practice. The dentist is usually in the building every day and has a front-row seat to whatever may happen in the office. All employees, whether clinical or business, answer to the dentist. It's pretty simple. And it's the way small business has been operating for centuries.

The hierarchical structure of most DSOs, however, is similar to any corporate structure, not a small business model. There are those at the top—CEO, CFO, board of directors—who oversee an array of midlevel managers, who in turn oversee individual office managers, who in turn oversee the office employees. Generally, the further up the ladder you look, the less likely you'll find management with hands-on experience, meaning they've probably never actually worked in a dental office.

Their experience is in the corporate world; their experience is comprised of corporate management positions, not necessarily in dentistry or even health care. They often visit the offices to shake hands and smile, but even if there was a problem at the office level, they would defer to the lower chain of command. Like all the management levels, they know what's going on primarily through daily reports from the levels below them. They may mean well, but their main concerns aren’t, for example, personality battles in the office. The higher up the ladder you look, the more decisions are based solely on statistics because in the business world, you “live or die by KPI.”

In actual practice

So, how does this all work in actual practice?

Other than situations specific to overseeing treatment, the provider has no true authority over their clinical staff. Even if it relates to clinical treatment, the provider has no authority to reprimand or dismiss a staff employee. They are essentially “coworkers.” If the provider has some difficulty with a staff member, they can't do much more than report it to the employee's superior. If that superior refuses to do anything about the employee's behavior, there's not much the provider can do. They can report the difficulty to the owner-dentist, but there's not much the owner-dentist can do besides reporting it to the midlevel manager. The provider can also appeal directly to the midlevel manager, but this can cause resentment on the part of the office manager for “going over their head.” Which only leads to additional tensions. Confusing?

Even if the office manager or midlevel manager decides to act on the employee's behavior, they are bound by the corporation's HR regulations on how the action is handled. And I've seen some pretty confusing policies regarding employee reprimand and termination. Forms need to be filled out and approved. Notices have to be given. Schedules and specifics need to be followed. All that takes place privately, outside of the provider's view, so the provider has no knowledge of whether any progress is being made.

What if the office manager follows all the protocol and the employee is dismissed? The provider doesn't suddenly get a replacement; they have to wait for the office manager to go through the DSO's hiring protocol. And it's the office manager, not the dentist, who will have the final say on who gets hired. The provider could find themselves working with temporary staff or no staff at all for the period it takes to hire a new staff member using the company's protocol—which can take months, in my experience.

But, hey, what are the chances you'd have a problem with an employee? Or an office manager? Or a regional manager?

Well, in three years, I witnessed the following:

  • A dental assistant not following my directions because her office manager told her she didn't have to since she doesn't work for me
  • An office manager flaunting the fact that she doesn't worry about dress or grooming codes because she's been with the company long enough that “they can't fire her”
  • An office manager allowing employees to come in over an hour late with no repercussions
  • An office manager allowing employees to shop online while patients were waiting to be seated
  • A substitute office manager taking supplies from my office to another corporate office because “she needed them and doesn't have to answer to me”
  • An office manager telling a patient to “just call when they want to make a recall appointment” because she was busy on her personal phone
  • A regional manager telling me that she knew an office manager was lazy but wouldn't fire her because “she was too busy to replace her”

Sound like a nightmare? If any of this had happened in my 37 years of private practice, I could have immediately fired the employee or at least put them on notice. If I had been an associate in another dentist's office, the owner-dentist could have acted on it. But in the DSO structure things have to go through corporate channels.

Why would anyone stay in such a situation? Stay tuned; I'll get to that and more in upcoming articles. In the meantime, if you have any questions or comments, feel free to send them to me at [email protected].

Editor's note: This article appeared in the December 2022 print edition of Dental Economics magazine. Dentists in North America are eligible for a complimentary print subscription. Sign up here.

About the Author

Roland Caire, Jr., DDS, FAGD

Roland Caire, Jr., DDS, FAGD, is a practicing general dentist with over 40 years of experience. Aside from dentistry, he has extensive experience in professional music, theater, and visual arts. Combining those interests, he launched a YouTube channel to address dental questions with humor, wit, and a cast of motley characters. You can follow him there and on social media by searching for rcairedds. If you have any questions or comments, send them to [email protected].

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