Getting in Sync: The Practical Challenges of Integrating Your Practice With a DSO

Respect My Authority: How Dental Practice Owners Can Preserve Clinical Autonomy After a Sale to a DSO Over the past several years, we have posted many articles on this blog discussing two particular topics: selling a dental practice to a dental service organization (DSO), and developments related to the corporate practice of dentistry by DSOs that stick their noses too much into a practice’s clinical operations and decision-making. At the center of the venn diagram linking these two issues is a concern that faces most dental practice owners when considering a sale to a DSO: how to maintain clinical autonomy and authority after a sale and prevent the DSO from interfering in this fundamental, non-administrative aspect of running a dental practice. While legislators and regulators debate about appropriate guardrails to put on DSOs to prevent their overreach into a dentist’s clinical responsibilities, it ultimately falls on the dental practice owner — and their counsel — to take the steps needed during negotiations to ensure that the documents governing the transaction include robust protections to preserve the dentist’s appropriate authority over clinical decisions. Are you interested in speaking with one of our attorneys? Click here to contact us now. Make Clinical Independence Explicit and Detailed in Writing One of the most important protections is an unequivocal contractual statement that clinical decisions remain under the licensed dentist's control. The purchase agreement, employment or professional services agreement, and other transaction documents should clearly distinguish between business decisions and clinical decisions. As with any contract, vagueness or lack of defined terms can plant the seeds of misunderstanding and conflict. Accordingly, a general promise that the dentist will maintain “clinical autonomy” without delineating what that actually means in practice is insufficient. The agreement should define what that autonomy means and identify decisions that cannot be dictated by non-clinical personnel, including, but not limited to: · Diagnosis · Treatment planning · Selection of appropriate treatment · Referrals · Patient communications concerning treatment · Prescribing · Use of clinical techniques and materials. Additionally, a dentist should consider provisions stating that treatment recommendations will be based on the patient's clinical needs and the dentist's independent professional judgment, rather than production targets, revenue goals, or other financial considerations. Establish Appropriate Limits on DSO Authority One of the main value-adds of selling to a DSO is that they typically assume responsibility for administrative services, including billing, scheduling, human resources, procurement, marketing, information technology, and facilities management. While many of these functions are easily distinguishable from clinical ones, there are areas where operational decisions could indirectly affect clinical care, such as scheduling policies, staffing levels, supply purchasing, laboratory arrangements, appointment lengths, and production incentives, all of which can have clinical implications. As such, the agreements should establish a clearly defined, workable boundary: the DSO manages the business, while the dentist retains authority over professional judgment. Compensation and Incentive Structures Can Pit Clinical Judgment and Business Objectives Against Each Other Compensation is another area that can create tension between a DSO’s business objectives and a dentist’s clinical judgment. Counsel should review an employment or services agreement to determine whether compensation formulas, production requirements, bonuses, quotas, or other incentives could pressure the dentist to recommend or perform treatment that the dentist would not otherwise recommend. That does not mean every production-based compensation arrangement is inappropriate. Rather, dentists should understand exactly how the formula works and consider contractual language confirming that compensation will not be contingent on making a particular clinical recommendation or on performing treatment the dentist does not believe is appropriate. One-Size-Fits-All Clinical Policies v. Individual Clinical Decisions Many DSOs have standardized policies that affect clinical practice which should be reviewed and addressed before closing. During due diligence and contract negotiations, practice owners and their counsel should understand the DSO's policies involving treatment protocols, referrals, supplies, laboratories, prescribing, infection control, scheduling, patient communications, and quality assurance. Such policies should allow appropriate clinical judgment where patient circumstances warrant an individualized approach, and the parties should establish how legitimate clinical exceptions will be handled. Clinical Autonomy Is Not a Set-It-and-Forget-It Issue The signing of documents at the consummation of a sale to a DSO may be the end of one process, but it is also marks the start of the actual, functioning relationship between the DSO and now-former practice owner. And that relationship can evolve over time in ways that can impact clinical autonomy. Another company may acquire the DSO; the practice could be transferred to another affiliated entity; and other management changes can alter or threaten the carefully negotiated dynamic reflected in the underlying agreements. Those agreements should address whether clinical-independence provisions survive such events and, where appropriate, whether they bind successors and affiliated entities. Selling a dental practice does not necessarily mean surrendering professional judgment. But clinical autonomy should not be left to assumptions, informal assurances, or legislators or regulators. It should be addressed explicitly in the transaction documents by sellers and their counsel. By doing so, dentists can reap the benefits of a DSO sale while retaining control over the one thing that no corporation or entity can or should: the practice of dentistry. If you are considering selling your dental practice to a DSO, please call Grogan Hesse & Uditsky at (630) 833-5533 or contact us online to arrange for your free initial consultation. We Focus on You So You Can Focus on Your Patients At Grogan, Hesse & Uditsky, P.C., we focus a substantial part of our practice on providing exceptional legal services for dentists and dental practices, as well as orthodontists, periodontists, endodontists, pediatric dentists, and oral surgeons. We bring unique insights and deep commitment to protecting the interests of dental professionals and their practices and welcome the opportunity to work with you. Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise dentists and other business owners in the Chicago area. Jordan grew up in a dental family, with his father, grandfather, and sister each owning their own dental practices, and this blend of legal, business, and personal experience provides Jordan with unique insight into his clients’ needs, concerns, and goals.

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