Entrepreneurs and investors have long expressed interest in the business opportunities provided by the dental industry. Unlike other kinds of healthcare practices, dentists usually receive payment directly from patients rather than through insurance. However, can a non-dentist hold an ownership interest in a dental practice?
Although many states prohibit or restrict dental practice ownership to licensed dental practitioners, non-dentists may have other legal options for participating in the dental industry. Non-owners should consult experienced attorneys about their options before getting involved with a dental practice.
Understanding the Corporate Practice of Dentistry Doctrine
Some states reject the corporate practice of dentistry doctrine, prohibiting non-professional corporations and non-dentists from owning or controlling dental practices. States that do not follow the corporate practice of dentistry doctrine do so to protect the clinical independence of dentists. Prohibiting non-dentists from owning or controlling dental practices helps states better ensure that dentists do not have to tailor their clinical decisions to suit the preferences of non-dentist owners. Instead, dentists can deliver patient-centered care.
State-by-State Variations
Rules and restrictions for dental practice ownership vary from state to state. Some states have strict regulations on dental practice ownership, limiting ownership to dentists licensed to practice in those states. Other states take a more flexible approach to dental practice ownership, allowing non-dentists to have a stake in dental practices’ revenues. These states allow non-dentists to become owners in dental practice management companies or management service organizations. Non-dentists should check the rules in the state in which they seek to take a stake in a dental practice.
Management Service Organizations (MSOs) as a Legal Solution
A management service organization (MSO) provides a legal solution that allows non-dentists to participate in the dental industry. An MSO enters into an exclusive agreement with a dental practice to provide it with administrative and management services, handling all the non-clinical tasks of operating a dental practice.
MSOs can handle tasks such as office management, staffing of non-licensed personnel (secretaries, receptionists, bookkeepers), IT services, insurance, billing, payroll, and marketing/advertising. The dental practice itself remains under the ownership of licensed dentists, who remain solely responsible for the clinical aspects of the practice, including providing treatment, diagnosing patients, recommending care/treatment plans, preparing patient records, and hiring or firing licensed professionals (dentists, orthodontists, hygienists).
In most cases, MSOs cannot enter into fee-splitting or revenue-sharing arrangements with dental practices. Instead, MSOs must charge flat fees or hourly or daily rates for their services. Fees must conform to fair market rates and directly relate to the services the MSO provides to the dental practice.
Legal Risks and Concerns
Individuals face legal risks when participating in the dental industry as non-licensed dental practitioners through an MSO, including:
- Failure to Comply with Registration Rules – Some states require MSOs to register with the state when they enter into contracts with dental practices in the state.
- Unauthorized Practice of Dentistry – Non-dentists operating MSOs may face charges of engaging in the unauthorized practice of dentistry if they begin making clinical decisions when performing services for a dental practice.
- Improper Revenue Sharing – Compensation arrangements between a dental practice and an MSO cannot cross the line into revenue-sharing or fee-splitting arrangements.
These legal risks can lead to significant consequences for non-dentist owners of MSOs, including fines, suspension of business privileges, dissolution of the MSO, and, in the most serious cases, criminal prosecution.
Contact a Dental Attorney Today
When you decide to own a dental practice but you do not hold a dentistry license, you need experienced legal guidance to help you lawfully purchase or start a practice. Contact Mahan Law today for an initial consultation with a dental attorney to learn more about the requirements for non-dentists to own dental practices.
