Maintaining Full Autonomy While Joining a Partnership

For doctors considering monetizing their practice value, the loss of autonomy is often a top concern. Some IDSOs provide full autonomy and others only clinical autonomy. A traditional DSO typically owns 100% of the practices it supports either through a purchase or via de novo practice starts. An IDSO differs in that it grows primarily through partnerships with successful dentists of all specialties. An IDSO becomes a doctor’s silent partner by purchasing 51% to 80% of an existing practice for cash up front at favorable tax rates. Doctors can secure their financial future while continuing to lead their practice as owners for years or decades. If they choose their IDSO partner wisely, they can have full autonomy, not just clinical autonomy.

Retaining Authority

A traditional DSO will usually homogenize purchased practices to meet its corporate model, including personnel, brand, and vendor changes. It may also dictate procedures performed and payers accepted. Doctors have complete clinical autonomy, but not full autonomy. As a DSO employee, doctors focus on patient care, and the DSO’s designated management team handles the administrative functions. This model can be very attractive to some doctors, especially those nearing the end of their careers.

The values doctors achieve when selling 100% of their practice to a DSO are typically similar to those in a doctor-to-doctor transition. Values are usually in the range of 60% to 100% of annual collections and doctors can choose how long they will remain with the practice, which often is less than 1 year. Selling to a DSO is an attractive option for doctors with a short career horizon.

Some IDSOs follow the DSO model of providing only clinical autonomy. Others provide doctors with full autonomy to continue to lead and manage their practice as they have successfully in the past. Doctors must choose wisely. The doctor in a carefully selected IDSO partnership retains authority regarding choice of team members and their compensation, supply/lab decisions, scheduling, and deciding what procedures to perform and which payers to accept. Doctors operate the practice as they did in the past but access the resources of a larger, silent partner to grow bigger, faster, and more profitably.

Initial practice values in an IDSO partnership can be far higher than a 100% sale to a DSO or doctor-to-doctor transition, sometimes exceeding 300% of collections. In addition, the doctor’s retained ownership can increase over time at a far faster rate than if they had retained 100% ownership. In late 2024, for example, a large IDSO sold an interest in its group to a European investor at a value of over $3.8 billion—a gain of about 12x its value only 7 years previously. For the IDSO’s hundreds of doctor partners, who had already achieved a high initial value, this created generational wealth in a relatively short period of time.

Valuable Support Services

Every doctor has different goals when considering an IDSO partnership. Once assured that they will retain full autonomy, the author’s firm’s clients will usually achieve at least five qualified bidders, with exceptional practices possibly receiving 10 or more qualified bidders. A properly managed bidding process not only increases value, but more importantly provides the doctor with multiple choices in partnership.

While a qualified IDSO will take over administrative functions, including banking, payroll, accounting, benefits administration, credentialing, and tax, legal, and IT support, other valuable support services may be available to partner practices. Because of the IDSO’s size, it will have leverage with payers. A few IDSOs have over 500 partner practices, and many have more than 100, in all 50 states. Some IDSOs are achieving reimbursement rates 10% or more higher than independent dentists while paying 25% less for supplies and up to 50% less for implants and clear aligners. IDSOs can also provide their team members better benefits at lower cost.

Additionally, many IDSOs have large in-house recruiting departments to help their partner practices hire team members nationally. Some also have marketing experts available to drive new patients into partner practices.

Continuing to Lead

In a typical IDSO partnership, the doctor will have a choice among a variety of structures, which may include retaining direct ownership in their practice, becoming an owner in the parent IDSO, or a combination of both. For most doctors, the most critical structure element is their retention of full autonomy during their subsequent years or decades in the practice. Today, many doctors under 40 are choosing this type of partnership as an opportunity to accelerate growth and expand. In many IDSO partnerships, doctors can access the capital and resources of their larger, silent partner to build new practices or acquire competitors without personal risk or a painful trip to the bank.

IDSOs are eager to partner with larger, growth-oriented practices—those that have at least $1.5 million in collections and consistent year-over-year growth. Any doctor at that level or above should understand IDSOs today. Practices not at that level yet should focus on growth. Timing a partnership is critical. If the United States finally enters a recession, as has been repeatedly predicted, practices with declining collections may be unable to partner with an IDSO at any value until their practice returns to growth.

An IDSO partnership may not be the right option for every doctor, now or in the future, but given the record values possible today, it is worth considering. Ultimately, larger practices will likely either join an IDSO, sell to a DSO, or compete with many of both in their community. Knowing all the options is prudent.

About the Author

Chip Fichtner

Cofounder and Principal, Large Practice Sales
(largepracticesales.com), which specializes in IDSO transactions for larger dental practices of all specialties