clouds on horizon
of DSO industry
Michael W. Davis, DDS
ALL INDUSTRIES GO THROUGH FOUR LIFECYCLE PHASES:
introduction, growth, maturity, and decline. This is basic to modern economic
1 It holds true for nearly every industry, from automotive manufacturing
to restaurants, and potentially to dental service organizations (DSOs).
MACRO & OP/ED
Over the past two decades, the DSO
industry at large has experienced explosive
growth. However, during this period there
have been notable DSOs that have failed.
Allcare Dental Management, which operated
multiple clinics in 13 states, filed for Chapter
7 liquidation bankruptcy in 2011.2 Church
Street Health Management, also known as
Small Smiles Dental, ceased operation not
because of profitability problems, but because
the Office of Inspector General of the US
Department of Health & Human Services
stepped in. The office determined the DSO
was unable to comply with a mandated
corporate integrity agreement for the lawful
delivery of dental Medicaid services.
Developments in financing have also
affected DSOs. In late 2016, East West Bank
(EWB) disengaged from its dental lending
platform for group practices and DSOs.
than 100 group practices and DSO borrowers
are financed through EWB.
4 These types of
borrowers will now need to seek alternative
means for future financing. Similarly, Opus
Bank discontinued its dental lending platform
in late 2016.5