April 20, 2018

Why Sell Your Dental Practice to a DSO?

Dental service organizations (DSO) have gotten a negative reputation because of their seeming corporate interest. Most dentists open their own practices to focus on the clinical side and patient care, which is why, in fact, a DSO might be a good fit. Here, we break down why this might be the case and who might benefit from selling to a DSO.

What is a DSO?

A dental service organization is an independent business support center that contracts with individual dental practices to manage non-clinical operations. Simply put, that means you get to focus on your patients and the clinical side of your practice with professional office management to handle the human resources, billing, staffing and all the other aspects that come along with owning a business.

Types of DSOs

DSOs can acquire as few as five practices in their group or as many as 45. So, depending on the burdens of the practice you are willing to let go of, there’s a DSO that will pick up those tasks. Say you still want full control of all clinical decisions related to your practice of dentistry but don’t want to deal with payroll — there’s a DSO for that.

Who should sell to a DSO?

DSOs fit the dentist who craves a work-life balance. Working 32 clinical hours instead of six days a week with early mornings is appealing to both the younger and older generation. Plus, the money made doesn’t go toward various expenses like when owning your own business. In fact, with multiple practices under one roof, equipment and supplies are usually sold for a better deal. For those looking to ease into retirement, working for a DSO can offer an abbreviated schedule rather than the added stress of a transition to another dentist.

Valuation of a DSO

Typically, a DSO’s valuation of a practice comes out higher than an individual’s. Not only will your practice value for more if selling to a DSO, but you also have the option to stay on and earn a salary, unlike with a straight buy-out. Not to mention, DSOs already have financial backing versus the unknown of the underwriting process when an individual buyer is being financed through a bank.

The future of DSOs

Currently, the American Dental Association estimates that 7.8% of dentists now belong to a DSO. DSOs have gained momentum over the last decade thanks to a new generation of dentists, and it is believed that DSO penetration can reach 30% of the dental market by 2021.

What’s next?

Contact the experts at Professional Transition Strategies to learn more about the different transition options for your dental practice.