State Regulators Are Cracking Down on DSO Deals: What It Means If You're Evaluating an Offer

A Wave of Regulatory Scrutiny

Aspen Dental's recent multi-million dollar settlement isn't an isolated event — it's part of a broader pattern of state and federal regulators taking a closer look at how DSOs structure their relationships with practice owners and associates. From data-sharing violations to fee-splitting concerns, enforcement actions against large DSOs are becoming more frequent and more costly.

Legislation Is Moving Too

It's not just enforcement actions. States are actively legislating in this space. California's SB 351 tightened restrictions on private equity involvement in medical and dental practices. North Carolina's Session Law 2026-41 ended state review of DSO management arrangements — a change that cuts the other way, showing how unevenly this regulatory landscape is developing state by state.

What This Means If You're Evaluating a DSO Offer

None of this means DSO deals are inherently risky, or that you should avoid one. It means the structure of a deal — how patient data is handled, how management fees are calculated, whether the arrangement could be read as fee-splitting in your state — deserves more scrutiny now than it did even two years ago. A deal that was standard practice in 2023 may not hold up as cleanly under today's regulatory environment.

Questions Worth Asking Before You Sign

Has this DSO, or its management company, been the subject of any state or federal enforcement action? How does the agreement handle patient data sharing with marketing or analytics partners? Does the fee structure comply with your state's corporate practice of dentistry and fee-splitting rules? Is the deal structured in a way that would survive a change in state law like North Carolina's?

The Bottom Line

Regulatory risk in a DSO deal isn't hypothetical anymore — it's showing up in real settlements and real legislation. Having someone review the deal with this landscape in mind, not just the standard checklist from a few years ago, is worth the conversation before you sign. Learn more about evaluating DSO deals and practice transitions.