Basic Organizational Chart of Chain Dental Clinics in the US

by Michael W. Davis, DDS

Private Equity Firm

(Beneficial Owner of Dental Clinics)
PE firms are established as first lien creditor or mezzanine financier for accounting purposes &
not owner, to shelter profits from lawful taxation. Their directors and managers are
responsible for every aspect of the dental clinics, which they beneficially own. They control
the board of directors of the DSO. They ultimately select the DSO managers.

DSO (Dental Service Organization)

A DSO is initially the beneficial owner of dental practices, prior to sale to PE firm. This entity
allegedly only manages the non-clinical aspects of the dental practices via Management
Service Agreements (MSA). Yet, they oversee clinical production quotas and bonuses, control
clinic bank accounts, control clinic staffing, control nominee dental clinic owners on who the
Nominee Dentist may buy & sell the dental practice, dictate clinic hours & staffing, and
establish & control patient supplies, equipment, scheduling, clinical protocols and
laboratories. Once purchased by a PE firm, they become a subordinate management arm to
the PE firm. Office Managers, employees of the DSO oversee the clinic operations for the DSO.

Nominee Dentist Owner

Employee Associate Dentists

(This is a sham or figurehead dentist owner)

This position is often required to circumvent state statutes on
dental clinic ownership. These doctors are retained for potential
dental clinic liability damages (administrative, civil, or criminal
law). Yet, they wield no real power or control. They may not
freely sell what is alleged to be their asset; the dental practice.
They have no control over what is alleged to be their clinics
finances. They are contractually obligated (via the MSA) to
retain the services of the DSO into perpetuity. They are fully
subordinate as employees or shell entities, to the DSO and
receive a management fee for each clinic for which they claim
ownership.

These are doctor employees fully subordinate

to DSO managers, who are often unlicensed to
practice dentistry. This may or may not include
subordination to a nominee dentist owner, who
is also an employee & subordinate of the DSO.
They generally have little contact with the
ultimate Private Equity Firms directors. Thus,
the PE firm is afforded layers of liability
protection, although they are the ultimate shotcallers.)

Patients
Because of patients lack of expert information and training in the dental
profession, they are highly vulnerable. In the doctor/patient relationship (a
lawful contract) doctors are ethically and legally required to place patient
interests above all others, inclusive of undisclosed third parties (interests of
DSOs). Patients are generally fully unaware of their doctors conflict of
interest. A lack of full and open disclosures, layers of conflicts of interests,
and a series of misrepresentations further compromise the patients standing
in the doctor/patient contract.