Background. While management service organizations are new to dentistry, they have existed in medicine for many years. The author examined why they developed and what happened to three of them during 1998 to provide dentistry with insights into the future of dental management service organizations, or DMSOs.
Methods. The author identified and examined the three largest physician practice management firms, or PPMs, as of early 1998. He monitored their stock prices and fiscal changes through 1998. He also tracked all publicly traded DMSOs for growth and evaluated their stock price changes.
Results and Conclusions. Economic pressures to control the cost of health care led to the development of organizational structures designed to increase the cost effectiveness of, and to control more variables associated with, health care delivery. The lure of vertical integration of health care delivery with the resultant control of multiple variables—including primary and specialty care, pharmaceuticals and hospitals—promoted the development of many PPMs and DMSOs, although many variables differ for dentistry.
Practice Implications. The realities associated with the loss of control in the corporate model, the lack of sufficient operating margins to support investor expectations and plummeting stock prices call into question the wisdom of universally embracing similar models for dentistry.
