GPO or DSO? A guide to the two models for dental practices

Dental practices have more options than simply operating completely independently. For practices looking to reduce costs, improve efficiency, or prepare for growth, there are several ways to gain access to additional resources and expertise.

Two models that often come up are group purchasing organizations (GPOs) and dental service organizations (DSOs). Both can give dental practices access to resources and economies of scale, but they serve very different purposes.

A GPO typically helps practices gain purchasing power while allowing them to remain independently owned and operated. A DSO, on the other hand, provides broader business and operational support across practices and may involve a change in ownership or control.

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Understanding the difference can help practice owners determine whether either model makes sense for their goals or whether a different type of support would be a better fit.

Key takeaways: GPO vs. DSO for dental practices:

• GPOs provide collective purchasing power and opportunities for savings while allowing dental practices to remain independently owned.
• DSOs offer broader operational support, but may require practices to give up some control over business operations.
• The right choice depends on your practice’s goals, growth plans, operational needs, and desired level of independence.

What is a GPO?

A group purchasing organization (GPO) brings practices together to leverage their collective purchasing power. Instead of negotiating independently with vendors, participating practices can gain access to pricing and terms negotiated on behalf of the larger group.

For a dental practice, this can apply to a wide range of products and services, including:

• Dental supplies
• Equipment
• Technology
• Lab services
• Office supplies
• Other practice expenses

The basic idea is straightforward: when more practices purchase through the same network, the group may have greater negotiating power than an individual practice would have on its own.

Potential benefits of a GPO

For practices that want to remain independent, a GPO can offer several potential advantages:

• Lower purchasing costs. Negotiated pricing may help reduce the cost of commonly purchased products and services.
• Vendor discounts. Participating practices may receive access to discounts or preferred pricing that would be more difficult to negotiate individually.
• Negotiated contracts. A GPO can handle some of the work involved in negotiating vendor contracts and terms.
• Access to preferred vendors and resources. Practices may gain access to a network of vendors and services selected or negotiated by the organization.
• Greater purchasing power without selling the practice. Perhaps most importantly for independent owners, a GPO can provide some benefits of scale without requiring a change in practice ownership.

Of course, the potential savings and benefits will vary from practice to practice. Purchasing volume, existing vendor relationships, membership requirements, and fees can all affect whether a GPO makes financial sense.

What is a DSO?

A dental service organization (DSO) provides business, administrative, and operational support to dental practices. DSOs can operate and support multiple locations, centralizing certain functions so individual practices don't have to manage every aspect of the business on their own. The specific structure and services offered can vary from one DSO to another, but support may include:

• Dental billing and collections
• Insurance verification
• Credentialing
• Human resources and recruiting
• Marketing
• Finance
• IT and technology
• Purchasing
• Compliance
• Administrative processes

Centralizing these functions can give practices access to specialized teams and systems that may be difficult or expensive to build independently. For example, instead of each location maintaining its own billing, HR, IT, and marketing resources, a DSO may provide centralized teams that support multiple practices.

Related: DSOs on the rise: What’s driving more dentists to sell their practices?

That can create efficiencies and consistency across locations, but depending on the arrangement, it may also mean giving up some control over business operations.

Potential benefits of a DSO

A DSO relationship can offer a much broader range of support than a GPO.

• Centralized administrative expertise. Rather than relying entirely on an in-house team, practices may have access to specialists in areas such as billing, HR, finance, IT, and marketing.
• Potentially greater operational efficiency. Centralized systems and standardized processes can reduce duplicated work and create more consistent workflows across locations.
• Support for complex business functions. Functions such as dental billing, credentialing, recruiting, technology, and compliance can require specialized knowledge. A DSO may provide teams dedicated to these areas.
• Resources for multi-location growth. For practices planning to acquire additional locations or build a larger group, centralized infrastructure can make it easier to support growth.
• Less administrative work for dentists. When business functions are handled by dedicated teams, dentists and clinical leaders may have more time to focus on patient care and the clinical side of the practice.
• Access to systems and processes. A larger organization may have technology, reporting systems, workflows, and expertise that would be difficult or expensive for a single practice to develop independently.