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A DSO structure is one common way to place non-dentist capital and permitted nonclinical operations outside the entity delivering licensed dental care. It does not authorize a lay company to control clinical care. Some states authorize other ownership or entity paths subject to conditions, and a dentist-owned, single-state practice with no outside equity may not need a separate support company at all.

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The decision in one table

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Four questions that decide it

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1. Will a non-dentist own equity or exercise control?

The threshold question. Many states restrict dental-practice ownership, proprietorship, employment, or specified control rights to licensed dentists or qualified entities. If non-dentist capital is involved, determine whether it must sit in a support company or whether the state authorizes a registered entity, licensed owner, minority interest, institutional owner, or another path. Regardless of form, reserve the professional decisions the state assigns to licensees. If the answer is no, and will stay no, the structure may be unnecessary overhead.

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2. What does your state say?

CPOD is fifty-one separate bodies of law, and the spread is wider than medicine’s:
  • Many states restrict lay ownership or proprietorship, but the operative text may regulate ownership, employment, holding out, facilities, contracts, or specific control rights differently.
  • Some states authorize defined alternatives: entity registration, non-dentist-owner licensure, minority lay interests, specified institutional owners, or an ordinary-entity path with reserved professional control. Each condition matters; use the state table rather than a permissive/strict label.
  • Several states regulate a dental business role directly. Texas and Kansas regulate specified support companies, Nevada registers a dental business manager, Arizona registers a business entity offering care, New Mexico licenses a covered non-dentist owner, and Colorado’s DSO provisions are scheduled to become operative in 2027.
  • Fee structure is part of the state answer: Nevada, New Jersey, New York, and North Carolina expressly restrict specified revenue-dependent formulas; Maryland’s permitted-support pathway uses a separate predetermined-fixed-compensation rule.
  • The rules are moving. California’s SB 351 reached dental practices in 2026; Colorado and Kentucky rewrote their rules in 2025–2026. See the legislation tracker.
Look up your state before you go further: DSO laws by state, then the state’s own CPOD page.

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3. Do you intend to operate in more than one state?

Professional-entity authority and dental ownership rules are state-specific. Some states permit a foreign professional corporation or PLLC under stated conditions, while others make a new in-state entity the workable route. A five-state plan requires separate entity, owner, license, payer, location, and accounting decisions for each state. It does not automatically require five PCs. A support company can often remain one entity and foreign-qualify as required, although dental-specific registration and asset-control rules may attach in each state. Multiple practice entities do not by themselves make that company a DSO as a matter of law; the label describes the functions it actually performs. See One PC per state.

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4. Will you raise capital or sell?

In a dentist-ownership state, outside investors commonly invest in the support company rather than the professional practice. Permissive or licensed-owner states may offer other paths. Diligence should reconstruct the state-law ownership and control analysis, agreement enforceability, fee rule, actual fee payments, role-specific filings, and payer and patient obligations. The OCA cases show that some unlawful contracts can be void and restitution can fail, but the result depends on the governing law and claims.1 If a raise or a sale is plausible within three years, build the structure correctly at formation. See How investors read DSO financials.

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The honest counter-cases

The DSO structure is not free, and it is over-applied: You are a solo or small-group owner-dentist in your own state. If you are the licensee, you own the practice, and no outside money is coming, a single professional entity is simpler, cheaper, and equally compliant. Most dentists still reach ownership this way; the data says ownership is delayed, not abandoned.2 You are testing an idea. Formation, an MSA drafted by dental healthcare counsel, and a stock transfer restriction will run into the tens of thousands of dollars before you see a patient. Validate demand first, as an associate, or in partnership with an existing practice. Your business does not deliver or control care. A vendor selling software, laboratory, staffing, or RCM services may not need a practice entity, but its contracts and operations still must not cross state lines on ownership, clinical staffing, records, coding, fees, advertising, or other reserved functions. Your state authorizes another path and you satisfy it. Arizona’s entity-registration regime and New Mexico’s non-dentist-owner licensing regime are examples with different applicants, duties, and limits. An authorized single-state shape may not port to the next jurisdiction. See Alternatives to the DSO model for the full set of other shapes.

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If the answer is yes

Start the tutorial

Zero to First Paid Claim walks a fictional dental group through all eleven steps, from choosing a state to reading the first remittance.

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Sources

  1. In re OCA, Inc., 552 F.3d 413 (5th Cir. 2008); Packard v. OCA, Inc., 624 F.3d 726 (5th Cir. 2010). Annotated at DSO & dental case law; state rules and pinpoints at DSO laws by state.
  2. ADA Health Policy Institute, Practice Ownership Trends in Dentistry: A New Look at Old Data (June 2025).
Last modified on August 21, 2026