For years, selling a practice to a dental service organization (DSO) was largely a private transaction between a dentist and a buyer. That concept is changing quickly.
In May 2026, California's attorney general reached a settlement with Aspen Dental, a private equity (PE)-backed DSO, over allegations that it violated the state's rules on the corporate practice of dentistry. The deal included $2 million in penalties, restitution for certain patients, and significant restrictions on how the company could structure relationships with affiliated practices -- including limits on replacing practice owners, termination provisions, and certain forms of operational control.
It is not an isolated event. It is part of a broader shift in how states are treating dental transactions, and it has real implications for anyone thinking about a DSO sale in the next few years.
The old rule, and why it's changing
Marshall Strisik.
Every state prohibits corporations from directly owning a dental practice -- only a licensed dentist can own the clinical entity. That's why DSO deals have always used a two-part structure: a professional corporation (PC) that a dentist owns on paper and a separate management company (the DSO or the dental management service organization [MSO]) that contracts with the PC to handle everything nonclinical -- billing, staffing, marketing, real estate, and compliance.
This structure has worked for two decades because state regulators mostly stayed out of the details of how much control the management company actually exercised. Enforcement intensity has always varied by state, and California has long maintained a stricter corporate practice posture. What is new is the combination of tighter rules on management company control and active enforcement against PE-backed platforms.
What's actually changing
A growing number of states are rewriting the rules on what management companies are allowed to control. Separately, more states now require dental and broader healthcare transactions to be reported to a state agency or attorney general before closing, often with a waiting period before the deal can proceed.
California is both writing and enforcing these rules, as the Aspen Dental settlement shows. Illinois has now enacted House Bill 5000, which broadens the attorney general's reach to capture private equity ownership layers above the management company and makes the state's healthcare transaction notice requirements permanent. Other states — New York, Oregon, Washington, and several others — have already adopted or expanded preclosing notice and review regimes. The patchwork is expanding quickly.
Most solo and small group practices still fall below the transaction size or provider count thresholds that trigger formal review in the majority of these states. But if you are part of a larger group, or the DSO acquiring you is doing a roll-up of multiple practices, that math changes.
Why this matters even if you're not selling tomorrow
If you are a practice owner who has been approached by a DSO -- or you are actively negotiating a deal -- this trend affects you in a few concrete ways:
- Timeline risk. A transaction that requires attorney general notice and a waiting period takes longer to close. If your deal terms assumed a fast timeline, build in a buffer.
- Structure scrutiny. Deal terms that give the management company broad authority over clinical staffing, patient scheduling, or treatment protocols are now more likely to draw regulatory attention. If your DSO's contract reads like it is running your clinical operation rather than just your business operation, that is worth a second look -- both for your own comfort and because it is exactly what regulators are now watching for.
Geographic variation. Where your practice is located matters more than it used to. A structure that is routine in one state may draw scrutiny in another. If you are comparing offers from multiple DSOs, or your DSO operates in multiple states, ask how they are adjusting deal structures state by state.
This cuts both ways. Increased regulatory attention is not necessarily bad news for sellers. It is pushing DSOs toward cleaner, more transparent structures, which can mean fewer surprises in due diligence and less ambiguity about what you are actually agreeing to.
What to do about it
You do not need to become a regulatory expert to protect yourself. A few practical steps:
- Ask your DSO directly how their deal structure has been reviewed for corporate practice of dentistry compliance in your state. A DSO that is paying attention to this will have a clear answer.
- Read the management services agreement for control provisions, not just compensation terms. Who has final say on hiring clinical staff? Who sets treatment protocols? Who controls patient records? These are the questions regulators are now asking.
- Build extra time into your transaction timeline if your state has (or is considering) a notification and waiting-period requirement.
- Have independent counsel review the deal, not just the financial terms but the governance structure -- separate from anyone representing the DSO's interests.
The bigger picture
This regulatory shift is still unfolding, and it will look different state by state for the next few years. But the direction is clear: States are paying closer attention to who really controls a dental practice after a DSO deal closes, and they are willing to enforce it.
For practice owners, that is not a reason to avoid a DSO transition; it is a reason to go into one with your eyes open, asking the right questions, and making sure your deal is built to hold up to scrutiny that did not exist a few years ago.
Marshall Strisik is the founder of DentalContractsPro.com. He is a healthcare attorney and consultant with two decades of experience advising dentists through DSO acquisitions and practice transitions. Marshall routinely works with new graduates on their first employment agreements.
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.
