The simple answer is that anyone can own a TSO.
A TSO is a management company. It supplies business support services to the licensed professionals who deliver the care. (SEE my previous article on What Is a TSO?). The only licensed required for a TSO is a business license. The relationship between the entities looks like this:
Essentially, the professional(s), e.g., dentists, hygienists, hire the TSO to perform business tasks. The contractual agreement between the entities is documented in a management services agreement (MSA). Since one of the values of TSOs is that the expense of professional management services can be spread across several professionals, it would be unusual to see less than 5 – 6 FTE professionals involved in the arrangement.
“So, why use a TSO? Can’t the professionals hire staff to do the management tasks?”
Certainly, the professionals can hire businesspeople directly, but then, they must manage the businesspeople and be involved in all business decisions. Anyone who has practiced clinical dentistry knows how difficult it is to focus the necessary energy and time on both the delivery of care and managing the business. Even those who can excel in both will reach a limit. It is not unusual for a clinician/manager who owns or operates 4 – 5 practices to focus less time on clinical delivery and more time on managing. Ironically, this is a bad business decision. The value of a licensed clinician delivering care is typically much higher than clinician who spends his or her time managing. Hence, you see the value of a TSO. Let the clinicians focus on the delivery of care. Let the business professionals focus on making the business succeed.
Now, let’s get back to the question.
Can a hygienist own a TSO, and by extension, why would they want to?
There are at least 3 reasons:
- The first is that she or he will likely have a good overview of the business. So, why the hygienist might not get involved in day-to-day business activities, she or he will likely have a good vision of where the ship needs to sail.
- The second reason is that the hygienist will have much more insight than a non-professional into the customer, or patient, persona. Constructing a business mission around the customer experience is always an excellent place to start.
- A third, and very important, reason for a hygienist to own a TSO is that the company has stand-alone value. Like any business, a TSO will have a valuation that is some multiple of its cash flow. In other words, a TSO can raise capital based on the company’s valuation, and/or the owner(s) have an asset that they sell and cash out.
To date, no hygienist owned TSOs, but it is inevitable that some entrepreneurial hygienist will take the lead. It’s an excellent opportunity for career and financial growth, and it can create a valuable asset that might fund a comfortable retirement, which is not currently an option to most hygienists.
