REGULATION

New Colorado rules pose a risk to the DSO model

Colorado’s push to restrict DSOs could have nationwide implications.

What happened: The Colorado Dental Board has adopted rules that restrict how DSOs can operate in the state, creating significant new compliance requirements for groups and dentists operating in the state.

• The Association of Dental Support Organizations (ADSO) is challenging the rules in court, arguing that the Board exceeded its authority.

The details: The new rules, adopted by the Board as part of its implementation of the 2025 Dental Practice Act sunset legislation, are scheduled to take effect January 1, 2027, and impose a sweeping set of new restrictions on how DSOs operate in the state.

• These restrictions include barring DSOs from being the “proprietor” of a dental practice, requiring that they be owned by dentists unless a statutory exception applies, and requiring dentists to retain specified oversight when financial management is delegated to a DSO.

• The Board also ruled that DSOs cannot lease property to a practice and cannot provide the practice’s clinical materials or equipment. This, the rule says, would make the DSO the “proprietor” of the practice, which is prohibited.

• Dentists themselves could face disciplinary action if they work in a practice that breaks these rules, including loss of their license.

Why it matters: The rule strikes directly at a basic piece of DSO economics and could leave dentists in the state already affiliated with DSOs on the hook for assuming expensive leases and the cost of capital equipment, which, particularly these days, can run into the millions of dollars. 

• “Now you go to a licensee and say, ‘Hey, if you want to continue practicing, take on this multi-million dollar commitment for this lease. Sign on it,’” Smile Brands CEO Steve Bilt said on a recent episode of the The Dental Economist Show, explaining the potential consequences of the rule. “If you want to continue practicing, you've got a million dollars of equipment sitting in your dental office. You now have to take on the commitment for that. An untenable situation for most people.”

Zoom out: The rules could also make Colorado a less attractive place for DSOs to invest, according to Bilt, which could translate into less access and higher prices for patients.

• “Every day I have to pick where to allocate very limited amounts of capital,” said Bilt. “If you say, ‘We're going to make this state very unfriendly to your capital,’ then it just goes elsewhere.” 

What’s next: Even for DSOs not heavily exposed to Colorado’s rules, Bilt warns that rules set in one jurisdiction “can create dominoes elsewhere,” with other state dental boards modeling their own rules off Colorado’s example.