July 27, 2026
A significant regulatory shift took effect in North Carolina on July 7, 2026, when the state eliminated a long-standing requirement that dental service organizations (DSOs) submit management arrangements to the North Carolina State Board of Dental Examiners for review and approval before operating in the state. As Dykema explains in its analysis of the change, the deregulation is expected to lower costs and streamline transactions for DSOs in North Carolina, though it does not remove all Board requirements and guidelines.
What the Old Rules Required
Under the previous framework, the Management Arrangement Rule (21 NCAC 16X.0101) required both the DSO and the dentist-owner of an affiliated practice to submit management agreements to the Board for review and approval before those agreements could be executed. Over the past several years, the Board had also required submission of any transaction documents connected to a potential DSO affiliation. That process created delays for DSOs, investors, and doctors, along with considerable uncertainty for parties unfamiliar with the pre-approval process and the Board's transaction guidelines.
What Changed on July 7, 2026
The elimination of the pre-approval requirement means DSOs can now execute management arrangements without waiting for Board review. At its July 17, 2026 meeting, the Board confirmed that any management arrangements currently under review will be closed with no further action required.
The Board's Investigative Authority Remains
The removal of pre-approval does not strip the Board of its enforcement powers. The Board retains authority to investigate alleged violations of North Carolina's Dental Practice Act in response to a valid complaint, including the ability to review existing management agreements. DSOs should not interpret the end of pre-approval as a signal that management arrangements are beyond regulatory scrutiny.
Requirements That Still Apply to Management Agreements
The law restates core elements that every management services agreement must include:
- The agreement must be in writing and signed by all parties.
- It must set forth all material terms of the management arrangement.
- It must describe all types of services the DSO will provide and the time periods during which those services will be provided.
- It must set forth aggregate compensation or a precise methodology for calculating that compensation.
Beyond those structural requirements, several long-standing Board prohibitions and guidelines remain in place. These include the prohibition on succession agreements, the ban on percentage-based fees in management agreements, and other guidelines governing the acquisition of dental practice assets. The new law does not, on its face, eliminate any of those restrictions.
What This Means for DSOs, Investors, and Dentists
The practical benefit of eliminating pre-approval is speed. Transactions that previously stalled while waiting for Board review can now move forward more efficiently. For investors and DSOs that found the pre-approval process unpredictable or unfamiliar, that uncertainty is now removed from the front end of a deal.
At the same time, the underlying rules governing how management arrangements must be structured have not disappeared. Management agreements still need to comply with North Carolina's Dental Practice Act, the management arrangement rules, and the Board's prior guidelines. The original analysis notes that DSOs and investors should proceed with arrangements that meet all of those continuing requirements.
Dykema attorneys Brian Colao, Zachary Hoard, Dean Gould, Natalie Skizas, and David Ko are identified in connection with this area of work.
Adapted from North Carolina Eliminates Pre-Approval Requirement for Dental Management Arrangements, originally published by Dykema on July 27, 2026.
Related professionals: Brian A. Colao, Zachary Q. Hoard, Dean Gould, Natalie Skizas.