Practice Modalities and Transitions. Current Dilemmas and Future Challenges. Dr. Terry Pracht Dr. Perry Opin was commentator for the session. Graduating orthodontists have to decide whether to start a sole practice, buy into an established practice, or associate with a management service organization (MSO). They must also decide on what insurance plans they will accept for the payment of patient fees. Senior orthodontists must also make decisions about the sale of their practices and their retirement. The doctor-patient relationship is more complex now with third party dental insurance companies and fourth party MSOs. The MSO companies originated in the 1990s during a time of rapid growth in the U.S. stock market. These companies offered attractive deals to graduating and senior orthodontists. When they became public companies traded on the stock market, their initial public offerings appear to have been overpriced. Their appeal to orthodontists was that the company would handle the financial and management works in a practice, allowing the orthodontist to concentrate on the treatment of patients. Senior orthodontists who joined an MSO would typically receive 20% of the value of their practice in cash, and be given 80% of their practice value in stock. The stock value could rise if more orthodontists joined the MSO. At present, only about 10% of the actively practicing orthodontists are in MSOs. Because recruitment of orthodontists was difficult and because the U.S. stock market had a significant decline in 2000, most of the MSO stocks fell to very low prices, with some companies going bankrupt. Many orthodontists who sold their practices to MSOs have suffered great financial losses. A more basic question for orthodontists is whether or not a public corporation can operate on the norm of providing the best quality of orthodontic care, or will the norm be ruled by the bottom line philosophy of Business Corporation? If an orthodontist needs help in organizing the business and management aspects of a practice, he/she can hire a consultant to help solve these problems. The future of orthodontic practice looks excellent with prospects for a platinum age for the specialty. At present there are 8900 orthodontists in the U.S. and Canada. Through retirement the number of active orthodontists will decrease until 2015. The U.S. birthrate went from 3 million/year in the 70s and 80s to 4 million/year since 1989. This means that young graduating orthodontists have a great opportunity to create thriving practices. Because retiring orthodontists outnumber graduating orthodontists, the sale of a practice will be more difficult in the coming buyer's market. Prices of practices must decline, and small solo practices may need to combine with other solo practices to become marketable. Seniors should consider financing the sale of the practice themselves. Finally, all orthodontists should have a medical savings account, and obtain MSA qualified medical insurance.