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Can a Non-Dentist Own a Dental Practice in Florida?

At Jones Health Law, we receive a lot of inquiries from non-dentists who are looking to own and operate dental practices. Dental offices that are placed in high-traffic areas with good management, a diverse patient population, talented healthcare professionals, and robust marketing and advertising efforts can generate significant revenue even with declining reimbursement rates from insurers. According to the American Dental Association, the average gross billings per dentist for owner dentists in 2017 was $718,790 for a general practitioner and $1,058,630 for a specialist. With numbers like that you can see why a non-dentist might want to open a practice comprised of several dentists and dental hygienists. However, non-dentists must be very cautious about structuring their relationships with the dentists.

Under Florida law, no person other than a Florida licensed dentist, nor any entity other than a professional corporation or limited liability company composed of dentists may:

  1. Employ a dentist or dental hygienist in the operation of a dental office.
  2. Control the use of any dental equipment or material while such equipment or material is being used for the provision of dental services, whether those services are provided by a dentist, a dental hygienist, or a dental assistant.
  3. Direct, control, or interfere with a dentist’s clinical judgment.

As per statute, a non-dentist must not directly employ a dentist (i.e. W-2 employee) but they may work with the dentist as a 1099 independent contractor. The non-dentist cannot pay a dentist a salary or commission. The dentist may create their own wholly owned professional corporation while the non-dentist may provide their services through an LLC or other taxable organization. No employment contract may exist between the dentist and the operator but an independent contractor agreement may be necessary. Any dentist who is employed by a non-dentist may face disciplinary action.

The non-dentist who is providing the office space and equipment cannot control the use of dental equipment while such equipment or material is being used for the provision of dental services (emphasis added). This means that while the dentist is operating dental equipment the non-dentist cannot barge in and place restrictions on how the equipment or material is being used once a patient is being treated. For example, if a dentist is treating a patient and that treatment was expected to last 30 minutes but is now at the 45-minute mark the non-dentist cannot physically manipulate any dental equipment or tell the dentist that she has to finish within the next 5 minutes because another dentist needs to use it. However, a lease agreement can place general restrictions on the operation and use of the equipment that is being leased to the dentist.

Most importantly, a non-dentist cannot interfere with a dentist’s clinical judgment by instructing them on a course of treatment to provide to a patient. All clinical decisions must be left to the discretion of the dentist. The purpose of this law is to prevent non-dentists from influencing or interfering with the exercise of a dentist’s independent professional judgment.

The relationship between the non-dentist and dentist will be a network of lease, rental, marketing, practice management and administrative agreements. Any dental equipment lease agreement between a non-dentist and dentist must contain a provision stating that the dentist expressly maintains complete care, custody, and control of the equipment or practice. Further, an agreement is void if the non-dentist exercises control over the following:

  1. The selection of a course of treatment for a patient, the procedures or materials to be used as part of such course of treatment, and the manner in which such course of treatment is carried out by the dentist;
  2. The patient records of a dentist;
  3. Policies and decisions relating to pricing, credit, refunds, warranties, and advertising; and
  4. Decisions relating to office personnel and hours of practice.

A non-dentist may enter into a management contract with the dentist’s professional corporation to provide administrative services, which may include maintenance of patients’ medical records but the control and ownership of those records do not belong to the management company. The dentist must have unfettered access to those medical records as needed.

While a non-dentist cannot dictate the dentist’s hours of practice the medical office space lease agreement may include office access hours. For example, a lease agreement may grant the dentist access to the medical office space between the hours of 8 a.m. to 8 p.m. but the dentist would set their hours of practice between 9 a.m. to 3 p.m. Further, only the dentist has control over the hiring and termination of office licensed personnel such as dental associates, hygienists, technicians, and assistants.

A dentist may enter into an agreement with a non-dentist to receive “Practice Management Services.” The term “Practice management Services” is defined to include consultation or other activities or services offered by someone other than a Florida licensed dentist regarding one or more of the following types of products or services:

  1. The suitability of dental office space, furnishings and equipment;
  2. Staff necessary to operate a dental practice;
  3. Regulatory compliance expertise and services;
  4. Methods to increase productivity of a dental practice;
  5. Inventory and supplies required to operate a dental practice;
  6. Information systems designed to produce financial and operational data on the dental practice;
  7. Marketing plans or advertising to increase productivity of a dental practice;
  8. Site selection, relocation, design or physical layout of a dental practice, or
  9. Financial services such as accounting, bookkeeping, monitoring and payment of accounts receivable, payment of leases and subleases, payroll or benefits administration, billing and collection for patient services, payment of federal or state income tax, personal property or intangible taxes, administration of interest expense or indebtedness incurred to finance the operation of the dental practice, or malpractice insurance expenses.

Non-dentist management fee must be for fair market value and directly related to the goods and services provided without taking into account patient referrals. The dentists should not pay a percentage or portion of ifs gross or net profits to the non-dentist corporation.

Finally, dentists are prohibited from entering into non-compete agreements for the provision of dental services with any entity which is not itself a licensed dentist, or which is not licensed or otherwise permitted by law to provide the services which are the subject of the agreement not to compete.

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It should be noted that I am not your lawyer (unless you have presently retained my services through a retainer agreement). This post is not intended as legal advice, it is purely educational and informational, and no attorney-client relationship shall result after reading it. Please consult your own attorney for legal advice. If you do not have one and would like to retain my legal services please contact me using the contact information listed above.

All of the information and references made to laws, rules, regulations, and advisory opinions were accurate based on the law as it existed at this time, but laws are constantly evolving. Please contact me to be sure that the law which will govern your business is current. Thank you.

Healthcare Provider Marketing and Management Arrangements

Healthcare providers interested in entering into marketing or management arrangements with companies must structure these arrangements in such a way that they don’t violate any federal or Florida healthcare laws. Providers should avoid entering into any marketing and management arrangements, which gives the impression that they offered, paid, or solicited cash, or any other type of remuneration in exchange for referring patients to that provider. Failure to do so may result in an Anti-Kickback violation if the arrangement does not fit squarely within an Ant-Kickback Statute Safe Harbor.

Safe harbors that might be available to a healthcare provider, depending on the terms of the marketing or management arrangement, include, but, are not limited to the (1) referral; (2) personal services and management contract; and (3) referral arrangements for specialty services.

Providers may want to consider establishing relationships with lead generation companies for advertising purposes, rather than referral arrangements with marketing companies because they typically face less scrutiny than the latter.

Any payments made to the marketing and management companies must be for fair market value for the services that will be provided. Payments to the management and marketing companies must not fluctuate based upon the expectation or referrals or business that will be paid in whole or in party by a federal healthcare program.Percentage-based arrangements are looked at unfavorably by regulators and face significant scrutiny. Therefore, it is always safer to agree to fixed-fee or flat-fee (non-variable) compensation for management and marketing services.

Many providers believe that if they are not paying the management company directly that they are safe from potential liability. That is simply not true. Especially if the marketing or management company is also the owner of a healthcare clinic that benefits from the arrangement. These types of relationships look highly suspect. Providers must not enter into any contract with a practice management company if that management company receives any financial incentives form the referring provider for increasing outside referrals for designated healthcare services.

This informational article provides a brief overview of factors to consider prior to entering into these types of arrangements. However, there are many additional factors to consider. At Jones Health Law we careful scrutinize all potential marketing and/or marketing arrangements that our clients are contemplating. We counsel our clients on structuring the arrangement in such a way that it fits within an Ant-Kickback Statute Safe Harbor or an exception to the Stark Law (i.e. “Fair market value compensation” or “indirect compensation arrangement”). Further, we analyze whether the proposed arrangement could potentially violate any additional Health Law, business law, or agency rules. Additionally, we will help you draft a marketing and management agreements that best suits your needs.

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