ADA Policy Statement 4.3 Page 1 of 2 November 21/22, 2002
AUSTRALIAN DENTAL ASSOCIATION INC.
POLICY STATEMENT
CORPORATE OWNERSHIP
AUSTRALIAN DENTAL ASSOCIATION INC.
POLICY STATEMENT
CORPORATE OWNERSHIP
1 Introduction
1.1 The Australian Dental Association [ADA] believes that the oral health needs of the
community are best met by a clinically efficient and ethically conducted dentist-owned
practice. This model provides community-based care with adequate opportunity for
continuity of care and patient records [single patient record]. It is possible to facilitate
quality and efficiency gains within the existing framework of dentist-owned practices, and
without the need for equity investment by non-dentists or corporate owners.
1.2 The existing dental workplace landscape includes non-dentist owned facilities for
provision of dental services, including health fund clinics and mutual organizations,
which, in the main, are not-for-profit entities.
1.3 Recent changes to some Australian State and Territory Dental Acts provide opportunities
for the ownership of dental practices by non-dentists and/or corporate entities.
1.4 The ownership of dental practices by entities other than dentists raises significant issues.
2 Community and Professional Interest Issues
2.1 It has been claimed that corporation's will deliver improved economies of scale,
improved patient focus and increased competition. The existing practice profile in
Australia already addresses these areas.
The introduction of an additional management layer and the need to give a return on
shareholder or owner equity -
! could compromise the individual dentist’s ability to practice patient-centered
dentistry, including the formulation of treatment plans and referral of patients,
! could compromise the ethical standards of an individual dentist and patient
treatment outcomes by requiring an agreed turnover, thus affecting the quality
and time needed to be spent with patients,
! could see the achievement of a return on shareholders’ funds or owners’ equity
being placed above the interests and needs of the patient, and
ADA Policy Statement 4.3 Page 2 of 2 November 21/22, 2002
! could result in the development of vertical and horizontal integration structures
and the resultant tendency to inappropriately refer patients and thus increase
the cost base to patients.
2.2 Rural and remote areas with lower population densities could be disadvantaged by the
loss of dentists deciding to work for corporations in larger population centres. This is of
particular concern where patients, because of age, access or equity reasons, would find
difficulty utilising dental services.
3 Primary Legal and Accounting Advice Required Prior to Selling a Dental
Practice to a Corporate Entity
The ADA strongly recommends that any dentist considering the sale of a dental practice to a
corporate entity should seek independent legal and accounting advice. Experience has
highlighted a number of risks when selling a practice to a corporate entity, especially where the
sale is for shares in that entity, or when the dentist contracts to continue to provide dental
services for a new owner.
„„„„„„„„„„„1.1 The Australian Dental Association [ADA] believes that the oral health needs of the
community are best met by a clinically efficient and ethically conducted dentist-owned
practice. This model provides community-based care with adequate opportunity for
continuity of care and patient records [single patient record]. It is possible to facilitate
quality and efficiency gains within the existing framework of dentist-owned practices, and
without the need for equity investment by non-dentists or corporate owners.
1.2 The existing dental workplace landscape includes non-dentist owned facilities for
provision of dental services, including health fund clinics and mutual organizations,
which, in the main, are not-for-profit entities.
1.3 Recent changes to some Australian State and Territory Dental Acts provide opportunities
for the ownership of dental practices by non-dentists and/or corporate entities.
1.4 The ownership of dental practices by entities other than dentists raises significant issues.
2 Community and Professional Interest Issues
2.1 It has been claimed that corporation's will deliver improved economies of scale,
improved patient focus and increased competition. The existing practice profile in
Australia already addresses these areas.
The introduction of an additional management layer and the need to give a return on
shareholder or owner equity -
! could compromise the individual dentist’s ability to practice patient-centered
dentistry, including the formulation of treatment plans and referral of patients,
! could compromise the ethical standards of an individual dentist and patient
treatment outcomes by requiring an agreed turnover, thus affecting the quality
and time needed to be spent with patients,
! could see the achievement of a return on shareholders’ funds or owners’ equity
being placed above the interests and needs of the patient, and
ADA Policy Statement 4.3 Page 2 of 2 November 21/22, 2002
! could result in the development of vertical and horizontal integration structures
and the resultant tendency to inappropriately refer patients and thus increase
the cost base to patients.
2.2 Rural and remote areas with lower population densities could be disadvantaged by the
loss of dentists deciding to work for corporations in larger population centres. This is of
particular concern where patients, because of age, access or equity reasons, would find
difficulty utilising dental services.
3 Primary Legal and Accounting Advice Required Prior to Selling a Dental
Practice to a Corporate Entity
The ADA strongly recommends that any dentist considering the sale of a dental practice to a
corporate entity should seek independent legal and accounting advice. Experience has
highlighted a number of risks when selling a practice to a corporate entity, especially where the
sale is for shares in that entity, or when the dentist contracts to continue to provide dental
services for a new owner.
Policy Statement 4.3
Adopted by Federal Council, November 21/22, 2002.
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