Many dentists are just like you; they are either looking for their first job or they are looking for a new job and need to make a decision of whether to work at a private practice or the ever-growing Dental Service Organization (DSO) practices.
This article is not intended to debate the merits of private practices vs. DSOs but to outline how material issues of the associate contracts for private practices and DSOs differ. Each private practice and DSO is unique and may not fall in line with this analysis.
Below are three major issues that an associate should be concerned with when reviewing their contract:
1. Restrictive Covenant: In most states, the most important part of the contract is the restrictive covenant. Many dentists and professional advisors will say that restrictive covenants are not enforceable or effective. However, it should be understood that restrictive covenants in most states serve the purpose the owner of the practice intended, which is protecting his or her practice. In most circumstances, the original draft of a contract will state that you cannot work for a period of time within a certain mile radius of the contracted practice, the practice’s exiting affiliate offices and possible future offices. This language is overly restrictive, as it should only apply to offices in which you work. With private practice, this language does not matter if the practice only has one location, but could become impactful if there are multiple locations or if the practice opens new locations. With a DSO, it could be dozens of locations and in many instances you do not even know what locations are affiliates of the DSO. Therefore, if the above bolded and underlined language is not negotiated, your restricted area could be very large. In terms of DSOs, I have seen circumstances where the dentist was restricted via the interpretation of the language from working anywhere in the entire state due to the number of locations of that particular DSO.
2. Term of the Agreement: Almost all private practice agreements initially state a one-year term with the option to terminate without cause by either party upon 30, 60, or 90 days’ notice. DSOs are trending in the direction of not allowing the associate to terminate without cause as a result of issues with turnover. There is often a very large penalty for breaking the contract early and quitting without cause, which is critical if you have goals of owning your own practice and might need to break a contract employment term.
3. Malpractice Obligations: As someone who is both an attorney who represents dentists in corporate transactional matters and someone who is married to a dentist, I believe picking your own malpractice carrier is very important. You want a malpractice carrier that will go to the mat for you, which often is predicated on the malpractice carrier being well-funded. Most private practices allow the associate to pick their malpractice carrier, but many DSOs choose the malpractice carrier for their associates. If the practice or DSO wants to choose the malpractice carrier for you because they are paying for it and you are unhappy with the carrier, you can request to choose your own and ask the practice to reimburse you for the cost of their preferred provider.
Remember that you should always advocate for yourself. You may not get what you are asking for, but a practice should allow you to ask and not make you feel like you are causing a problem by asking.
~Gary Baumwoll, Esq.
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