By: Michael W. Davis, DDSJune 5, 2015
The first misnomer and misrepresentation which must be addressed is dental service organizations (DSOs). These are primarily business structures designed to circumvent state laws relating to ownership of dental practices. Most state statutes require only licensed dentists in their states may lawfully own a dental practice. DSOs falsely allege they restrict management to non-clinical areas.
In reality, the corporate entity DSOs own the dental practices they manage. Doctors in those practices are merely employees, whose employment may be terminated at the will of their employer, the DSO. The DSO fully controls the bank accounts of each and every clinic they manage, with accounts usually swept into Delaware banks at least bi-weekly. They establish monetary production quotas and bonuses for patient services. They establish the hours of operation and staff. They usually dictate office equipment, patient clinical supplies, and dental laboratories for patients. They supervise and control patient scheduling. They also dictate numbers of clinical protocols bypassing the doctor/patient relationship, such as mandating crowns over fillings, often unnecessary and more costly “deep cleanings”, antibiotic therapy into alleged “deep gum pockets”, etc.
Most “owner” doctors in these larger corporate practices are sham figureheads. They provide the corporate managers a layer of liability protection, for their unlicensed and unlawful practice of dentistry (see: Federal Fifth Circuit ruling 07-30430). These alleged “owner” doctors are not allowed to freely sell their asset of the dental practice, under their contract service agreements with the DSO. They aren’t as “owners” allowed discontinuing services with the DSO, and must retain the DSO’s services into perpetuity. In effect, the doctor owner(s) represent a façade of nominee ownership. The valid beneficial owner of the dental practices is obviously the DSO.
