North Carolina Eliminates Pre-Approval Requirement for Dental Management Arrangements
Legal Alerts
7.24.26
Effective July 7, 2026, North Carolina eliminated the long-standing requirement that dental service organizations (“DSOs”) submit management arrangements to the North Carolina State Board of Dental Examiners (“Board”) for review and approval prior to operating in the state. This deregulation will lower costs and streamline future transactions for DSOs in North Carolina, but it does not eliminate other Board requirements and guidelines for DSO transactions.
Under the original regulatory framework, the Management Arrangement Rule (21 NCAC 16X.0101) required both the DSO and the dentist-owner of an affiliated practice to submit the management agreements to the Board for review and approval prior to execution. Over the past several years, the Board also required submission of any transaction documents connected to a potential DSO affiliation. This process created delays for DSOs, investors, and doctors in the state, as well as great uncertainty for those not experienced in dealing with the pre-approval process and the Board’s guidelines for transactions.
The Board met on July 17, 2026, and confirmed that any management arrangements that are currently under review with the Board will be closed with no further action required.
The Board May Still Investigate Existing Management Arrangements
Although DSOs will no longer be required to submit management arrangements to the Board for pre-approval, the Board retains its authority to investigate any alleged violations of North Carolina’s Dental Practice Act pursuant to a valid complaint, including the ability to review any existing management agreements.
Practical Implications for DSOs, Investors, and Dentists
The Act restates the core elements required for every management services agreement:
- Must be in writing and signed by all parties;
- Sets forth all material terms of the management arrangement;
- Describes all types of services to be provided by the DSO and the time periods during which the DSO will provide those services; and
- Sets forth aggregate compensation or precise methodology for calculating such compensation.
Furthermore, the Act does not on its face eliminate other long-standing prohibitions and guidelines established by the Board, such as the prohibition on succession agreements, the ban on percentage-based fees in management agreements, as well as other guidelines regarding the acquisition of assets of a dental practice.
Next Steps
The Act’s removal of the pre-approval process allows DSOs to execute future management arrangements without delay. However, given that the other management arrangement rules remain in place, DSOs and investors should proceed with management arrangements that comply with the state Dental Practice Act, the management arrangement rules, and prior guidelines outlined by the Board. Dykema has extensive experience structuring and executing compliant dental management arrangements in North Carolina. If you would like legal counsel on your dental management arrangements or M&A transactions, please contact Dykema as soon as possible.
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