Alternatives to the DSO model

The DSO structure is common in outside-capital dentistry, but it is not the only lawful option and may be more complex than some groups need. This page covers other structures and the conditions that may make each one workable.

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The alternatives at a glance

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Staying an owner-dentist practice

The dentist owns the practice. Full stop. No DSO, no management services agreement (MSA), no stock transfer restriction. Independent practice remains a common path. Practice ownership fell from 84.7% of dentists in 2005 to 72.5% in 2023, and ownership among dentists under 30 fell from 25.4% to 8.8%. The ADA Health Policy Institute’s cohort analysis nevertheless finds recent cohorts reaching roughly 90% ownership by late career.¹ For many dentists, DSO employment is an early-career position followed by later ownership. Works when: the founder is the licensee, no outside equity is planned, and operations are in one state. Some founders adopt a two-entity structure because it is familiar in the industry, even when their current ownership and operating plan does not require it. That creates extra filings, books, intercompany pricing, and legal work. On the other hand, adding a DSO later may require moving assets and contracts and revisiting payer records. If outside capital or multistate growth is plausible, compare the cost of forming early with the cost and legal feasibility of restructuring later.

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The dentist-owned group, without outside capital

Between the solo practice and the DSO sits a real and underrated shape: a dentist (or several) who owns multiple offices outright and grows on retained earnings and bank debt. Dental practice-acquisition lending is a mature market. Lenders often value recurring hygiene demand and the operating history of established practices, although underwriting and guarantees vary. The dentist-owner retains the equity and is not subject to a fund timeline. When the licensed owner and practice owner are the same person, a friendly-PC arrangement is unnecessary. The constraints are structural. Growth is limited by cash flow, borrowing capacity, and any personal guarantees. Without a separate support entity, the brand and central team remain inside the practice entity, which can become cumbersome across states. Multistate growth also requires state-by-state analysis of professional-entity qualification and owner eligibility. See Do you need a DSO structure?. A later sale to a DSO is one possible exit, but not the only one.

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Direct lay ownership in a permissive state

A minority of states authorize some form of non-dentist practice ownership, which may avoid a friendly-PC or two-entity structure. The mechanics differ substantially:

• Arizona: registration. A.R.S. § 32-1213 lets a lay “business entity” offer dental services after registering with the board. It must disclose the responsible dentist for each office, officers, and a records custodian, and comply with branch and renewal requirements. The entity may not enforce a business policy that interferes with clinical judgment.²
• New Mexico: licensure. A “non-dentist owner” is a licensed category. NMSA 1978, §§ 61-5A-5(H) and 61-5A-5.1 require a board-issued license before a covered lay person or entity may employ dentists or contract to provide dental services. Operating without one is a misdemeanor.³
• Utah: no express ownership provision identified. The cited practice-act provisions do not state a general ownership or lay-employment ban. Confirm the entity, employment, and control path before relying on that absence.⁴
• Wisconsin: lay employment with guardrails. Wis. Stat. § 447.06 contemplates lay employers, protects professional standards in employment contracts, and bans minimum patient or procedure quotas.⁵
• Iowa: regulation of office ownership. Iowa Code §§ 153.16 and 153.18 regulate a non-dentist office owner’s name display and prohibit employment of unlicensed dentists rather than stating a categorical ownership bar.⁶
• Kentucky: lay ownership with clinical restrictions. KRS 313.075(1)(b), effective April 2026, lets a lay entity own and operate a practice using board-licensed personnel. Section 313.075(2) prohibits non-licensee control over clinical decisions, records, and supervision of licensed staff.⁷
• Maine: a proprietor pathway reflected in the act. The act addresses dentists compensated by non-dentist proprietors in 32 M.R.S. § 18371(1)(A), subject to other requirements including trade-name restrictions.⁸

This approach may not travel to a state with different ownership rules, leaving a group with multiple operating structures. Authorized lay ownership also comes with clinical-control, registration, disclosure, and other requirements that can change. Kentucky, for example, confirmed a lay-ownership path while also enacting clinical-control restrictions. Check each state at DSO laws by state.

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FQHC and nonprofit employment

Some states, including states with restrictive ownership rules, provide specific paths for nonprofit or safety-net dentistry. Nevada permits certain nonprofits, FQHCs, and 501(c)(3) charity clinics to own dental offices if they designate a licensed dental director. Missouri limits nonprofit dental corporations to specified patient populations. New Mexico exempts FQHCs and nonprofit community dental organizations from non-dentist-owner licensure.⁹ Works when: the mission centers on access, funding comes from sources such as grants and Medicaid, and the model does not require owner equity. A nonprofit has no equity owners, so it does not provide the investor return or sale path of a conventional venture-backed company.

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Hospital dentistry’s narrow lane

Hospital employment rules for dentists are state-specific and often narrower than physician-employment pathways. Do not assume that a hospital may employ dentists under the same authority it uses for physicians.¹⁰ The available path is usually statutory and narrow. Missouri’s 2026 revision to § 332.081 allows hospitals licensed under chapter 197 to employ dentists for emergent dental conditions, oral and maxillofacial surgeons, and maxillofacial prosthodontists beginning August 28, 2026.¹¹ Nevada also excepts hospital employment under NRS 450.180 from its association-with-unlicensed-owner rule.⁹ A hospital-based model should be designed around the hospital’s specific statutory authority.

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Selling to an existing platform instead of building one

For a dentist-owner who wants capital, infrastructure, or an exit, the realistic alternative to building a DSO is joining one. The market is mature: by 2025, roughly 95% of tracked dental private-equity deals were add-ons to existing platforms rather than new platform formations.¹² Selling dentists may see an outright sale with an employment agreement, a joint venture that retains practice-level equity, or an equity roll into parent-company units. Transition advisers publish illustrative ranges for cash, rollover equity, earnouts, employment terms, and recapitalization timing, but the actual security and documents control.¹³ DSO economics explains the structures and their tradeoffs. Buyers can start with Acquire a dental practice. Honestly compared: selling trades control and upside for liquidity and someone else’s infrastructure. Building keeps both and costs years. The wrong reason to build a DSO is that selling felt like losing.

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Franchise-adjacent models

A brand owner may license its name, operating systems, and other support to independently dentist-owned offices for fees or royalties. Kansas’s dental-services-agreement statute expressly includes “dental franchisors” among the parties with which a practice may contract.¹⁴ Tradeoffs: a franchise generally provides less operational control than an MSA and adds FTC disclosure rules and state franchise laws to the dental-law analysis. A revenue-based royalty may also raise the same state fee-splitting questions as a percentage management fee. See Fee-splitting rules.

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Selling to practices, not patients

Sell software, revenue cycle services, staffing, or lab work to dental practices without delivering care. No corporate-practice implication, because no one is practicing dentistry. Staffing can still raise corporate-practice questions when the company controls clinical operations. Indiana, for example, defines being a dentist’s employer as practicing dentistry, subject to the statute’s terms and exceptions.¹⁵

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A decision path

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The honest summary

For a non-dentist founder or a dentist taking outside capital across several states, a DSO and professional-entity structure is a common path. The correct architecture still depends on the ownership rules, services, entity forms, and operating rights in each state. For everyone else, a DSO is frequently the wrong answer: the owner-dentist who wants one more office (bank debt is cheaper than equity), the founder in Arizona staying in Arizona (registration beats a two-entity structure), the dentist who mostly wants liquidity (a platform will pay for the practice today), and the company that never delivers care at all. Anyone urging the structure on you should be asked to explain what problem it solves for you specifically.

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Sources

1. ADA Health Policy Institute, Practice Ownership Trends in Dentistry: A New Look at Old Data (June 2025).
2. A.R.S. § 32-1213. Arizona Legislature.
3. NMSA 1978, § 61-5A-5 (text); § 61-5A-5.1 (text); penalties at § 61-5A-18.
4. Utah Code § 58-69-102 (clinical-only definition of practice). Utah Legislature.
5. Wis. Stat. § 447.06(1), (1g). Wis. Stat. ch. 447.
6. Iowa Code §§ 153.16, 153.18. Iowa Code ch. 153.
7. KRS 313.075 (2026 Ky. Acts ch. 131, § 12; eff. Apr. 13, 2026). Kentucky Legislature.
8. 32 M.R.S. §§ 18304, 18371. Maine ch. 143 compilation.
9. NRS 631.215(2)(g), 631.3452–.3454, 631.3465(3). NRS ch. 631. Missouri: Mo. Rev. Stat. § 332.081.3. Missouri Revisor. New Mexico: § 61-5A-5(I) (n.3).
10. Compare Berlin v. Sarah Bush Lincoln Health Center, 179 Ill. 2d 1, 688 N.E.2d 106 (1997) (hospital-employment exception for medicine), with the dental practice acts surveyed at DSO laws by state, which contain no equivalent general exception.
11. Mo. Rev. Stat. § 332.081.1 (as rewritten eff. Aug. 28, 2026). Missouri Revisor.
12. Private Equity Stakeholder Project, PE healthcare deals: 2025 in review (deal counts; PESP is an advocacy organization).
13. McLerran & Associates, Selling your dental practice to private equity (Aug. 2026).
14. K.S.A. 65-1471(d). Kansas Revisor.
15. IC 25-14-1-23(a)(10)–(13). FindLaw.