Ownership of Dental Practices & Registration Requirements for Dental Service Organizations in Texas

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Ownership of Dental Practices & Registration Requirements for Dental Service Organizations in Texas

In recent years, the question of how a dental practice can be owned and operated in Texas has been a hot button issue in court and with the legislature. To their credit, Texas legislators have worked to keep up with changing trends in the dental industry in ways that most other states have not. Specifically, in 2015, Texas decided to accommodate, but still regulate, the dental service corporations that were the crux of several legal challenges. This decision has created an exception to the historically strong prohibition against the corporate practice of dentistry in Texas.

Controlling the Ownership of Dental Practices
You are likely familiar with the large, corporate dental service organizations that take care of billing and other administrative tasks, but are run by non-dentists. This structure directly contradicts the laws of some states that require that dentists own and operate dental practices. Texas, like many states, wants to keep the control of dental practices with the dentists and does not want large corporations that focus on patient turnover rather than patient care to operate dental practices in a manner that influences a dentist’s professional judgment.

Prohibition on the Corporate Practice of Dentistry
With the exception of the 2015 changes, Texas law continues to enforce a strict prohibition against the corporate practice of dentistry. In fact, several recent court cases upheld this prohibition and resulted in the invalidation of contracts between dental service organizations and dentists. In those cases, the dental service organizations essentially controlled all the administrative work of owning a practice—from leasing equipment and filing insurance claims to managing practice funds—and left only the physical dentistry work to the practitioners. Those cases, combined with the very clear prohibitions against corporate ownership and control of dental practices in Texas’ laws and regulations, only further confirmed the law.

Separating the Administrative and Financial Responsibilities from the Clinical Responsibilities
For many dentists, there is a benefit to separating the administrative and financial duties from the dentist’s practice, and that does not always mean turning it over to a large corporate entity. Instead, a dentist might create a separate legal entity that protects assets and handles the administrative and business side of the practice. That separate entity may be owned in part by a trusted non-dentist business partner and, perhaps, partly owned by an enterprising dentist who wants to reap the benefits of a well-structured business, without having to do all the administrative work by his or herself.

Texas Law – Registration Requirements
In an effort to monitor and police these entities which provide “business support services,” the 2015 law requires such entities to register annually with the Texas Secretary of State. If an entity provides “two or more business support services” to a dentist, such as office space, billing, and marketing, that entity must disclose (1) who owns the servicing entity, (2) whether the owners are dentists or non-dentist; and (2) which dentists they provide such services to.

What Ownership Structure is Permitted for Dental Practices?
In some ways, by confronting the issue of dental service organizations head on, Texas has done a favor by answering the “what is permitted” question right in the statute. However, this is not true elsewhere. The question of what is and is not permitted when it comes to operating a dental practice can be a complicated one and largely depends on the state in which you practice. Moreover, the consequences for operating a dental practice improperly can be severe, so it is important to speak to an attorney who can help you navigate these legal requirements.

Categories: Blogs, Corporate Practice of Dentistry, Dental Practice Management Companies, Texas Law