CainWatters: To DSO or not to DSO? That depends on what type of DSO we’re talking about.

A guest blog by Cain Watters and Associates.

Even though corporate DSOs (Dental Service Organizations) are growing at a rapid rate, the demise of the private practitioner is in no way imminent. According to the ADA, only 7.4 percent of US dentists are affiliated with a DSO. Many of those are young, recently graduated dentists who don’t believe they are in a financial position to start their own practice. There are also those dentists who simply don’t want the headache of managing the day to day operations of their own practice.

“Dentists go to school to study dental medicine not business,” says David Forbess, CPA and CWA financial advisor, “yet, they are expected to run a million‐dollar plus business right out of the gate.”

When it’s put that way you can understand why more and more dentists are going the corporate route. However, the entrepreneurial spirit is alive and well in the dental industry. In a survey of our CWA Digital News Monthly readers, almost 40 percent say they actually enjoy the business side of dentistry. Nearly 60 percent said they would not consider joining a corporate-owned DSO. That said, new changes to the tax code have many considering a third option ‐ creating their own DSO structure.

As David explains, “Code 199A states that a non‐service business can exclude up to 20 percent of income from taxes. Since a DSO moves the management functions (HR, payroll, supplies, marketing and advertising) of a practice to a separate company, this part of the business qualifies as a non‐service area. We’ll know definitively by this fall, but based on our understanding, this could be huge for a certain segment of dentists.”

Which segment of doctors are prime candidates? David explains that and advantages to starting a DSO, click here to read the full blog.

About the blogger

Cain Watters & Associates LLC is an investment advisor registered with the Securities & Exchange Commission. Information provided does not take into account individual financial circumstances and should not be considered investment advice to the reader. Request form ADV Part 2A for a complete description of CWA’s financial planning and investment advisory services. There is no assurance that other client actual results will be similar to information presented. Estimated future results may not be obtained due to economic, business and personal circumstances. Cain Watters & Associates LLC and Tectonic Advisors are affiliated firms.

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