FTC Staff: Proposed North Carolina Dental Services Law Would Likely Reduce the Benefits of Competition for Consumers

Federal Trade Commission staff, in response to a request from North Carolina Representative Stephen LaRoque, stated that a bill proposed in the North Carolina legislature would likely deny consumers seeking dental services in North Carolina the benefits of competition, including the potential for lower prices, expanded access to dental services, and greater choice.

North Carolina House Bill 698 would give the North Carolina Board of Dental Examiners significant new regulatory and oversight authority over Dental Service Organizations (DSOs), which contract with dentists to perform non-clinical, business management functions, allowing dentists to focus more on patient care and less on administrative tasks. According to the FTC staff letter, the Bill would prohibit currently-used DSO management agreement provisions and give the Board exclusive authority to review and approve all DSO management agreements in North Carolina. The Board could apply these new restrictions and oversight powers to prevent DSOs from entering the state, and to dismantle DSOs now operating in the state by refusing to approve management agreements when they come up for renewal.

"Given that the Board already oversees health and safety issues as part of the licensure regime that governs all dentists in the state, and given that DSOs focus solely on non-clinical aspects of dental practice, it does not appear that the Bill would enhance the Board's ability to ensure patient safety," the FTC staff comment stated, noting that underserved communities, including 78 of the state's 100 counties, may be particularly affected if DSO efficiencies cannot be realized. "Therefore, we urge you to consider whether the Bill's restrictions and grants of regulatory power to the North Carolina Board of Dental Examiners are necessary to protect consumers" or whether they risk "merely protecting those dentists who do not choose to use DSOs against competition from those who do."

"In the absence of DSO-specific safety concerns," FTC staff urged the North Carolina legislature to consider the potential anticompetitive effects of H.B. 698 and reject the Bill.

The comment is part of the FTC's ongoing efforts to promote competition in the health care sector, which benefits consumers through lower costs, better care, and more innovation.

The Commission vote approving the staff comment was 5-0. It was sent to North Carolina Representative Stephen LaRoque on May 28, 2012. A copy of the letter can be found on the FTC's website and as a link to this press release. (FTC File No. V120007; the staff contact is Patricia Schultheiss, Office of Policy Planning, 202-326-2877.)