As the dental industry evolves, more and more dentists are turning to dental service organizations (DSOs) as a way to help streamline their practices and increase their profitability. But with any business transaction comes risk and reward.
To ensure that your practice is getting the most out of its DSO transaction, it is essential to understand the importance of a solid business services agreement. In this article, we’ll explore the key elements of such an agreement and provide dentists with actionable tips on how they can maximize the rewards of partnering with a DSO.
Understanding the Purpose of Business Services Agreements
A business services agreement (BSA) is a contract between a dentist and a DSO that outlines the expectations and responsibilities of both parties. It serves as the foundation of any successful relationship between a dentist and a DSO, providing clarity on the scope and services of the arrangement. The BSA may also include obligations related to patient confidentiality, non-compete clauses, indemnification, insurance coverage, and more.
Description of the Services to Be Performed
The most important element of the BSA is establishing an understanding of how much control each party will have over certain aspects of the practice. For instance, some BSAs might grant exclusive control to the DSO over clinical decisions while leaving administrative details such as payroll and billing to the dentist. In other cases, both parties share responsibility for different aspects of the practice. Establishing this level of control ahead of time helps prevent misunderstandings down the road.
Breakdown of Fees and Payment Schedules
Another key element of any good BSA is setting clear financial terms regarding compensation for services rendered by either party. This includes not just fees for clinical work performed by dentists, but also for administrative tasks completed by the DSO’s staff. All fees should be reasonable based on prevailing market rates in your area and should be clearly outlined in order to avoid confusion or disputes later on in your relationship with the DSO. Most importantly, the fees charged by the DSO must be permissible under applicable state and federal law. State laws and requirements differ between states and this analysis must be performed by any attorney.
Conflict Resolution Clauses
In addition to compensation terms, it is essential that you understand the impact of any conflict resolution clauses in the BSA. The clauses address key issues, including: a) whether the dispute will be resolved by arbitration or through the local court; b) how many arbitrators will preside over the dispute; c) what types of disputes will be resolved in court or arbitration; d) what requirements must a party satisfy before commencing an action? These decisions are important and can have a significant impact on a party’s leverage in the event of a dispute.
Length of Agreement and Termination Rights
Finally, it is important that you consider how long your partnership with a DSO will last before signing any agreement with them. Our firm has advised on DSO transactions involving BSAs with fifteen years terms and limited termination rights for the clinician. It’s important that both parties agree on when their partnership will end so there are no surprises down the line if one decides to terminate prematurely or renew their contract after its expiration date has passed.
Need Help Understanding, Negotiating, or Crafting a Business Services Agreement?
By understanding all facets of a business services agreement before partnering with a DSO, you can ensure that it is an advantageous arrangement for you, filled with success rather than missed opportunities down the road.
With careful consideration ahead of time and clear communication throughout your partnership, you can maximize all benefits provided by partnering with a dental service organization—ultimately leading to increased profitability within your practice!
Wood and Morgan has represented over 8,500 dentists since 1984 and focuses its efforts on supporting the dental community with their business needs. If you have questions about crafting a business services agreement or partnering with a DSO, don’t hesitate to contact our dental attorneys at 800-499-1474.