Legal Considerations in Selling Your Practice to a DSO

Selling your dental practice to a Dental Service Organization (“DSO”) is a transformative step in your career, but it’s crucial to navigate the process with careful attention to legal considerations. In this brief overview, we’ll explore the key legal aspects involved in selling your dental practice to a DSO and provide valuable insights to help you achieve a successful transaction. Selling to a DSO can be very rewarding, both financially and in terms of stress (management becomes someone else’s problem and you can focus on your clinical work).

1. Due Diligence: Before entering into any agreement with a DSO, it’s essential to conduct thorough due diligence. This involves researching the DSO’s reputation, financial stability, and track record. Consider factors such as the DSO’s management team, growth strategy, and history of acquisitions. By understanding the DSO’s background and vision, you can ensure alignment with your own goals and objectives. As a part of this step, you need to shop your practice with multiple potential DSO buyers.

2. Negotiating Terms: Negotiating the terms of the sale agreement is a critical aspect of the transaction. Many of the key terms will be covered by a Letter of Intent or Memorandum of Understanding, which should itself be carefully negotiated with the help of your attorney. Sellers commonly have legal counsel draft or review the key transaction agreements. Key provisions to consider include the purchase price, payment structure, post-closing obligations, non-compete agreements, and provisions for patient continuity and care. Negotiating favorable terms requires careful consideration of your priorities and objectives, as well as a clear understanding of the DSO’s expectations.

3. Regulatory Compliance: Selling a dental practice involves navigating a complex regulatory landscape. It’s essential to ensure compliance with state laws governing the sale of dental practices, as well as healthcare regulations and laws on referral payments and self-referrals, including the federal Anti-Kickback Statute, Florida’s Patient Brokering Act (s. 817.505, Fla. Stat.) and Florida’s anti-kickback statute (s. 456.054, Fla. Stat.). Failure to comply with these laws can result in legal consequences and jeopardize the integrity of the transaction. Sellers commonly involve counsel on these compliance questions.

4. Patient Confidentiality: Protecting patient confidentiality is paramount throughout the sale process. Ensure compliance with HIPAA regulations and other privacy laws by implementing safeguards to protect patient records and sensitive information. Communicate transparently with patients about the transition and reassure them of continuity of care under the new ownership. By prioritizing patient confidentiality, you can maintain trust and goodwill during the transition process.

5. Post-Closing Integration: The transition doesn’t end with the sale closing. Collaborate closely with the DSO to ensure a smooth integration of operations. This may involve transferring patient records, coordinating staffing changes, and implementing new administrative processes. Effective communication and cooperation between both parties are essential to minimize disruptions and ensure a successful transition.

In conclusion, selling your dental practice to a DSO offers numerous benefits, but it also requires careful attention to legal considerations. Due diligence, negotiated terms, regulatory compliance, patient confidentiality and post-closing integration are the main legal workstreams in a DSO sale. Attorneys who handle healthcare law can support each stage of the transaction.

Related reading

• Buying Dental Practices at Scale: Platform Risk, Compliance Drift, and Repeatable Deals
• DSO vs. Private Buyer: Choosing the Right Exit for Your Dental Practice
• Buying a Dental Practice: Where Buyers Get Burned and How to Avoid It
• The Letter of Intent in Dental Practice Sales: Why Most of Your Leverage Lives Here
• Dental Practice Sales: Patient Credits and Unclaimed Funds

Practice area: Dental Practice Sale and Acquisition Attorney in Florida