Editor's note: Part 3 of a 5-part series.
Parts one and two of this series were about reasons for dentists to join forces with a DSO, and the structure of a DSO and how it relates to the dentist or provider. Here’s a closer look at the touted benefits—the good—of associating with a DSO and how they play out in real life, which is sometimes the bad.
Again, it’s not an indictment or exposé. DSOs have a place in the dental market, and most are trying to do their best. Weighing pros versus cons, I’m still happily associated with a DSO. Hopefully, DSO administrators won’t take this as a public condemnation, but instead recognize areas where improvements might be made for the betterment of the system.
The strongest reason for affiliating with a DSO is to relieve dentists of the burdens of office management. After all, that’s DSOs’ reason for being. Here are some of the advantages I’ve observed in the realm of management and how those play out in practice.
This is an advantage with no downside. Companies with more than 50 employees are required to provide health-care coverage for their staff, and all DSOs fit into that category. If you’ve ever paid for private health insurance, you know how much you can save having an employer pick up that tab, both for the dentist and the staff.
My wife and I both had preexisting medical conditions prior to the Affordable Care Act, so it was nearly impossible to find insurance, and those policies I could find were accompanied by exorbitant premiums. For most of my time in private practice, I paid all of our health expenses in cash and only carried catastrophic coverage. Over 37 years, I spent millions for minimal protection. When the ACA began, I could finally get and afford coverage. But the costs steadily climbed, and every year I would have to research new options. When I began working with a DSO, my insurance was paid for, and I only had to make a small additional contribution to cover my wife.
Also in this series:
As well, most DSOs offer a variety of other benefits including life insurance, disability insurance, employee discounts with outside vendors, and retirement contributions. In a private practice, the dentist is responsible for many of these, for themselves as well as their employees.
Taxes, taxes, taxes
Income tax, state tax, use tax, sales tax, occupational tax, property tax, payroll tax … dentists pay a lot of taxes! And with every tax, there’s paperwork. But when you’re associated with a DSO, the paperwork is all handled for you. And other than your income tax, which is usually deducted from your paycheck, the taxes are paid by the DSO. Barring any complicated outside capital and investments, you might not even need to pay a CPA to file your income tax forms. So to me, the tax benefits have no downside.
In private practice, I had a love/hate relationship with hiring staff. On the one hand, the time and money invested in advertising positions, reviewing résumés, interviewing, hiring, training, supervising, disciplining, and firing was emotionally draining. On the other, I love meeting new people, I love teaching new skills, and I am constantly entertained by what some candidates will try to do to get hired.
DSOs are responsible for hiring and managing the staff, both clinical and administrative, so the dentist doesn’t have to be involved in any of the process. However, the downside is the dentist also has no say in who gets hired or fired. And when the employees realize that, it can affect respect and compliance. Then the dentist can be dependent on the DSO management to discipline their employees.
Most DSOs have specific HR protocols and processes for hiring and firing. This is generally a good policy that protects all involved, but the lack of flexibility can make a difficult task even worse. While a dentist in private practice can eliminate an employee at will, in a DSO relationship, they are dependent on a process and the willingness of management to follow that process.
Marketing and a steady flow of new patients
You might not remember a time when you could graduate from dental school, put your name on an office door, and watch patients start coming in. That’s because it’s been quite a while since that was the norm. When I first graduated, the state board didn’t allow advertising, and it even regulated the size of the sign on your door and the typeset used for your name. You could have an ad in the yellow pages, but it couldn’t say much other than your name, address, and phone number. Chances were that many of your patients came to you because there wasn’t another dentist for a mile or more away.
That’s all changed. There are often two or three dentists in the same block, and competition for patients is pretty intense. So it’s nice to have a DSO take over the responsibility of providing a filled appointment schedule. They all promise that; sometimes they do it—and sometimes they don’t.
At the first DSO office I worked at, the office manager asked me how many patients I’d like to see in a day. I told her 12 to 20, depending on the level of production. She delivered, and my days passed so quickly that I hardly noticed the eight hours. The office had a great active patient base and internal marketing via referrals. This was mostly because, although the dentists at the location had changed often, the staff (and especially the office manager) had been there for over a decade and had formed relationships with the patients.
But the office I later relocated to had such a small patient base that I sometimes treated only two patients a day. I had a staff of four, but they were all relatively new to the location. So we definitely weren’t paying all of the bills. I think the management thought I could do miracles at the new office based on my production at the first office, but production requires patients. Their external marketing mainly consisted of referrals from insurance policies.
I’d be happy to report that the subsequent offices where I’ve worked had much better patient numbers, but that isn’t the case. I’m seeing more than two patients a day, but nowhere near the number I saw at the first office. All in all, I was much better at marketing my private practice than some DSOs are.
For many dentists, the time and energy involved in administrative tasks is a drain on their personal time. With a DSO, there’s a feeling of freedom in finishing your last patient of the day and walking out the door, leaving the rest of the business responsibilities to someone else.
However, in some cases, that feeling can be offset by the number of hours you may be required to work. One of the DSOs I worked with required providers to work an eight-hour day, five days a week, as well as one Saturday every month with no time off or vacations. When I asked what would happen if I needed time off for sickness or vacation, I was told I would have to make up that time somewhere else by working longer hours or more Saturdays. That doesn’t leave much time for “life” in the equation.
Most DSOs use a retail model: being open more hours will lead to more patients coming in and more production. But that’s only partially true. If an office is open seven days a week, but there are few patients on the schedule, there’s not much production going on for the time invested.
Compliance with regulations
Believe me, after 37 years of private practice, I was happy to surrender the responsibility of complying with the ever-changing world of government regulation. I no longer had to worry about keeping training manuals updated, and there were no more forms or reports to fill out.
Except that I was still responsible. Because even though the actions of compliance may be undertaken by the DSO, in most cases the responsibility for complying stays with the licensed practitioner. Noncompliance can lead to fines and possible suspension or revocation of licenses, so you still have to be aware that compliance is actually happening.
Editor's note: This article appeared in the January 2023 print edition of Dental Economics magazine. Dentists in North America are eligible for a complimentary print subscription. Sign up here.