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Washington State Dental Association

WSDA Fights back: Corporate Practices

 For decades, many of Washington’s dentists have expressed concern, angst, and frustration over the corporate dental practice model. These emotions have arisen over concerns about quality of care and the often clandestine nature of these entities. Many dentists, including several who have worked for corporate dental organizations as associate dentists, do not completely understand their ownership structure, business relationship with the management group, and ultimately where the buck stops. Without transparency and clarity, there are very legitimate questions about whether corporate practices operate legally in Washington state.

Corporate practices:how they differ 
Not all corporate practice models are the same. Many dentists see grouping together as a way to potentially cut overhead, increase flexibility in their schedule, and offer patients unique services that they could not otherwise afford to offer in a solo practice setting. WSDA does not see any issue with licensed dentists organizing themselves into a group practice or a single licensed dentist owning several dental offices. The Association does have concerns with non-dentists acquiring ownership stakes in dental practices whether overtly or more subtly. More specifically, the Association has concerns when contracts between dentists and non-dentists extend beyond normal consulting and clerical services and are structured to give corporate entities indirect ownership that allows them to control the flow of funds, business expenses, and office operations. All dentists should be aware of these issues and carefully review any contract they sign.

DQAC’s interest in corporate practices
Over the past several years the Dental Quality Assurance Commission (DQAC) has also taken great interest in the corporate practice model and has conducted frequent discussions regarding the regulation of corporate dental practices and the new complexities that have arisen with the model. In addition, DQAC established a Corporate Practice Committee to further analyze the relationship between corporate entities and dentists. 
DQAC has invited corporate stakeholders to their Corporate Practice Committee meetings on several occasions. During these meetings, representatives from numerous corporate practices made presentations to commission members explaining their business model, internal quality control measures, and record keeping protocols, among other pertinent practice details. 

A recurring topic that has been discussed at Corporate Practice Committee meetings is the issue of dental records and who was responsible for maintaining those records. Commission members are concerned that associate dentists in corporate practices could be at risk for disciplinary action if they were unable to access patient records being controlled by the corporate entity. Additionally, DQAC has concern over their ability to access patient records in disciplinary settings if the records were in the possession of a non-licensed individual such as a corporation. The Corporate Practice Committee has already dedicated a significant portion of their meetings over the last several months looking for a practical solution regarding record maintenance. DQAC is still in the process of updating the records rules to be workable in practice settings with multiple dentists while preserving the current language that allows dentists and regulators to obtain patient records when necessary.  

In spring of 2014, DOH staff drafted a series of scenarios representing ownership and fact patterns relating to corporate and group practices encountered by DOH over the last several years. The matrix they assembled provided DOH and DQAC various approaches that could be considered for disciplinary cases involving corporate dental practices. The matrix demonstrates the range of options available to address corporate and group practice issues under existing Washington law and cites relevant statutes and case law. WSDA is hopeful that the full commission will support the adoption of this matrix and that the creation of this matrix is an indication of the DOH’s willingness to ensure that existing corporate practice entities are in compliance with existing state laws relating to dentistry.

The DOH matrix does not provide a scenario that would excuse the treating dentist from their responsibility for providing quality care and complying with law. The concern surrounding the large number of young dentists entering corporate practices is that they are signing contracts without a full understanding of state laws pertaining to dentistry and practice ownership. According to DOH, actions and policies of the employing corporation can be a mitigating factor for a dentist facing disciplinary action, but those policies will not fully absolve the dentist of wrongdoing. Dentists looking to enter into corporate practice settings should review their employment agreement and corporate policies before they begin working for a company and engage legal counsel if there is any portion of their contract that they do not understand. 

In a presentation to DQAC last September, Pacific Dental Services, one of the more recent corporate groups to set up practices in Washington, expressed their support for modifying several sections of Washington’s Dental Practice Act (RCW 18.32) and dental rules (WAC 246-817). One suggestion they support is the deletion of subpart 3 of the Definition of Dentistry (RCW 18.32.020) which states that anyone who “owns, maintains, or operates an office for the practice of dentistry” is according to the statute practicing dentistry. 

Pacific Dental Services, like many corporate dental groups operating in Washington has testified before DQAC that their affiliated offices are owned by Washington licensed dentists.  WSDA has on several occasions asked to review business contracts between the corporate entity and licensed dentists and has each time been denied the opportunity to review those contracts. Pacific Dental Services employs dentists at various levels within their affiliated offices. Dentists designated as owners have a different contractual agreement than those employed as associates. Based on information revealed in lawsuits against corporate practices in states around the country, contracts with corporate dental groups often limit the dentist’s decisions on day-to-day office operations, ownership rights, and freedom to sell or transfer their interest or share in the practice. Without a complete understanding of the business relationship between the corporation and the dentist, WSDA is unable to fully advise members in areas of compliance and their legal responsibilities as licensed dentists.

Keeping a watchful eye
The WSDA Board of Directors has been extensively discussing the issue of corporate practice of dentistry for nearly two years. During its extensive discussion, the Board concluded that the state’s laws and existing case law was clear in prohibiting the ownership of dental practices by non-dentists (see page 28). In the spring of 2013, the Board decided the Association should work with state agencies to ensure that the existing state law was enforced. To this end, the Association sought to work with the Office of the Attorney General and the Department of Health.

In an August 2013 letter addressed to Attorney General Robert Ferguson, WSDA expressed its concern that some corporate practices may be operating in Washington state illegally. Furthermore, the letter cited extensive case law on corporate practice and echoed the concern that “ownership of dental practices by non-dentists could be an unwarranted intrusion on the dentist’s diagnosis and professional judgment.”  The letter prompted a meeting with WSDA and the Attorney General’s office to discuss the Association’s concerns in more detail. The Attorney General’s Office, while understanding of WSDA’s concerns, deferred to the Department of Health and its department with oversight over the unlicensed practice of regulated health professions. 

In November 2013, WSDA sent a letter to Secretary of Health John Wiesman which expressed the same concerns as the letter sent to the Attorney General. WSDA met with DOH staff in January 2014 and identified several corporate practices believed to be in direct violation of Washington law by having non-dentist owners. The Association recommended that the Department of Health’s unlicensed practice division investigate these practices in order to determine if they were in compliance with the law. WSDA left with the impression that at least one complaint had been filed against a corporate dental practice and that this complaint was in some stage of investigation.

In June 2014, the Department of Health’s Unlicensed Practice Program issued a notice of intent to issue a cease and desist order against Half Dental WA, Inc.  This corporate entity is a subsidiary of a Nevada corporation which owns dental practices in several states including one office in Washington. The Cease and Desist Order explains that Half Dental, an entity controlled by non-dentists, has the following controls on the dental practice in Washington state:

Half Dental maintains and supervises custody of all business records.

Half Dental performs all billing and collection and retains “sole discretion” over attempts at collection, the methods of collection and settlement of disputed charges.

Half Dental selects all “non-Dental Personnel” and controls the terms of their employment, including “rates of compensation, supervision, direction, training, and assignment of duties.”

Half Dental is not compensated with a fixed fee for service by a dentist. Instead Half Dental is compensated using a formula that reimburses it for its costs plus “an amount equal to the lesser of net Pre-tax Income or 30 percent of Net Revenues.” 

The dental office is leased by Half Dental from a third party along with the clinically-related equipment.
The Unlicensed Practice Program concludes that these actions establish an ownership interest in a dental office and therefore constitutes the unlicensed practice of dentistry.
WSDA’s leadership believes the state’s current law on dental practice ownership should be maintained and enforced. To ensure the enforcement of state law, the Board of Directors decided to file a complaint against a corporate practice entity. 

Making a move
After extensive deliberation, the Board of Directors decided to file a complaint against Pacific Dental Service with the non-licensed practice division of the Department of Health for practicing dentistry without a dental license. In this complaint, the Association states that an “investigation will reveal that PDS, through its web of contractual relationships with dentists and resulting power to influence the operation of the affiliated dental practices, effectively owns, maintains, or operates offices for the practice of dentistry, or otherwise is practicing dentistry in violation of Washington law.” Additionally, the Board decided to file a complaint with DQAC against a dentist with an ownership stake in PDS controlled practices in Washington state for aiding and abetting the unlicensed practice of dentistry in Washington state. WSDA is awaiting action on the filed complaints and will inform the membership of developments as appropriate.


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TAGGED: Regulatory