Professional Transition Strategies
Professional Transition Strategies
A practice transition is not as simple as some doctors may believe. If not done correctly, it can be a very costly experience. Discover what to do in order to create a successful transition.
Professional Transition Strategies

Advantages and Disadvantages of Selling to a DSO

Advantages and Disadvantages of Selling to a DSO

2/28/2018 11:36:37 AM   |   Comments: 0   |   Views: 309

Some of the main components to running a successful dental practice are excellent patient care, a professional environment, and friendly and competent support staff. But, there are a lot of other factors to take into consideration. Factors such as location, insurance acceptance, marketing, Human Resources, filing, and goodwill in the community. But with the main focus being excellent patient care, most dentists don’t have enough time or know how to run the business side of a practice. Sure, staff can help run the day-to-day operations, but at the end of the day, responsibility falls onto the dentist/owner. This is one of the reasons why dental service organizations (DSO) have become a reliable resource for dentists.

Keep reading to learn about the advantages and disadvantages of selling to a DSO.  

What is a DSO?

Dental Service Organizations, or abbreviated to DSOs, are independent business support centers that contract with dental practices in the US. They provide critical business management and support non-clinical operations. In short, they take care of the business things on the back end of dentistry. All DSOs are different and range in size from 4 to 900+ practices.

Advantages and disadvantages of selling to a DSO

If a dentist is near the end of his career, looking to take some of the burden off of his practice, but not ready to retire, selling to a DSO might be right for him. A good DSO helps make the day-to-day operations easier so you only have to focus on the clinical decisions. They also can be a great resource with collections, supplies at reduced costs, strategic marketing, and increasing profitability.

And if a dentist is approaching retirement, DSOs provide several benefits over selling to an individual buyer. Not only are DSOs willing to pay more than private buyers, they cash out with a higher evaluation, and allow dentists to work the same or reduced schedule after the sale. Further, not only does this accelerate transition time, selling to a DSO takes some of the unknown out of the planning.

But, DSOs aren’t just beneficial for retiring doctors. Doctors between the ages of 40-60 who plan to practice for another 15-20+ years can sell to a DSO. For example, we worked with a doctor who was in his late forties and plans to continue practicing dentistry for another 15+ years. He is a great clinician, just not very business savvy. Therefore, he is looking for a DSO to handle the business side of things.

However, there cons to such situations. Not all DSOs are well managed and operated. Some DSOs have been known to pressure dentists to work more than necessary. And if a DSO isn’t managed properly, the clinics contracted with them will not see lower costs or increased efficiency.

One of the biggest disadvantage of selling to a DSO is autonomy. When you sell, you are no longer the employer — you are the employee. Quite a few dentists dislike being part of a corporation that regulates their hours and workload.

You have options

Overall, there are several advantages and disadvantages of selling to a DSO. But, it is important to know that you have options. Options such as selling to an independent buyer, simply slowing business down, bringing in a partner or associate, or selling to a DSO. While selling to an independent buyer is a great way to ensure you get a good price for your life’s work, it can take time. Slowing business down could cause income to drop. And bringing in a partner or associate is a lot of work and is only successful about 20% of the time. Selling to a DSO is simply another option.

Overall, there is a right option for you. If you are thinking about selling to one of the 400+ DSOs in the US, you need to be sure it’s the right one for your practice. When we have worked with DSOs in the past, they always comment that it makes it easier to have a middleman. Similar to a person-to-person transition, working with a transition company facilitates the process from both sides.

So, if you are thinking about selling to a DSO, let Professional Transition Strategies help! Please feel free to contact us at anytime.

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