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The business of dentistry is becoming more complex, while some dental practices turn to dental service organizations (“DSOs”) for help with billing, marketing, and office management. These arrangements may be useful, but Washington dentists should understand the strict legal limits before entering into such arrangements.
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Compliance Considerations for DSO Arrangements in Washington

The business of dentistry is becoming more complex, while some dental practices turn to dental service organizations (“DSOs”) for help with billing, marketing, and office management.  These arrangements may be useful, but Washington dentists should understand the strict legal limits before entering into such arrangements.

A key Washington law is RCW 18.32.677, which protects a dentist’s independent clinical judgment.  In simple terms, a non-dentist or non-professional entity cannot control how a licensed dentist treats patients.  The law prohibits interference with decisions such as how much time to spend with patients, how many patients to see, what treatments to recommend, and when to make referrals.  A DSO cannot interfere with patient care – directly or indirectly.

Another important law is RCW 18.32.675, which generally limits who can practice dentistry or soliciting dental patients.  A DSO cannot hold itself out as providing dental care or operate as the dental practice itself, but it may own or lease office assets (excluding patient records), provide business support and management services, employ non-clinical staff, and receive agreed fees for those services.  To do so, however, the arrangement between the dental practice and the DSO must meet an applicable safe harbor under 42 C.F.R. Sec. 1001.952.

Dentists should also consider Washington’s anti-rebating law, chapter 19.68 RCW.  It broadly prohibits offering or receiving rebates or other valuable consideration in connection with patient referrals.  A violation of the law constitutes a misdemeanor and may result in disciplinary action.  Because “referral” has been applied broadly, DSO compensation models can create risk if they involve marketing or appear to pay for steering patients to a particular provider.

While a DSO can support a dental practice, it cannot direct patient care or create improper financial incentives.  Careful structuring at the start of an arrangement can prevent significant legal problems later.