Purchasing a dental practice is likely one of the largest investments you will ever make. Naturally, most buyers hope to find the “perfect” practice where they can seamlessly step in and continue operations exactly as they are. While that sounds ideal, the reality is that the perfect practice rarely exists and when it does, it is often priced at a premium.
The key to making a successful purchase is identifying both the opportunities and the challenges before signing the offer. A thorough evaluation allows you to make informed decisions and create a strategic plan for future growth and success.
Here are several important areas to consider when evaluating a practice purchase:
The active patient count can vary significantly depending on the software system and the parameters used to calculate it. A more accurate metric is determining how many patients have had a recall exam within the last 12 months. This provides a clearer picture of the patients actively participating in the hygiene program, which forms the foundation for diagnosing future treatment and generating ongoing production.
Reviewing referral patterns is also critical. If the current practice refers out procedures that you are comfortable performing yourself, there may be an immediate opportunity to increase production and expand services within the office.
You should also evaluate the systems for hygiene coordination and treatment coordination. Pay close attention to outstanding treatment plans and overdue hygiene patients who are not currently scheduled. High numbers in these categories often indicate opportunities to improve systems, increase patient retention, and fill the schedule more effectively.
Lab expenses can reveal important insights as well. If lab costs are below 6% of production, there may be room to increase major restorative treatment, as the industry benchmark is currently closer to 8%. Reviewing the types of major restorative procedures completed over the previous 12 months can help identify gaps in treatment diagnosis or patient acceptance.
When analyzing new patient numbers, it is important to understand how those calculations were determined. Practices that perform recurring comprehensive oral exams may produce inflated numbers if procedure codes alone are used. Instead, focus on how many patients were truly “added and seen” as new patients.
If the practice does not currently have an active marketing strategy, this may represent a significant growth opportunity. A well-executed digital marketing campaign targeted to the local community can help increase patient flow and strengthen long-term growth.
Another key area to review is open time within the schedule. Unfilled appointment time directly impacts production, and improving scheduling efficiency can significantly increase revenue without adding additional days or hours.
If hygiene production represents more than 40% of total office production, this may indicate that the practice has historically delivered very conservative dentistry. In many cases, there may be opportunities to increase dentist production through improved diagnosis and treatment acceptance.
For scaling, polishing, and fluoride procedures, hygiene production should ideally range between $200 and $220 per hour. If the current numbers fall below this benchmark, there may be an opportunity to adjust fees and improve hygiene department performance to align with industry standards.
Staff salaries should also be carefully reviewed. If salaries exceed 28% of revenue, it does not necessarily mean staffing reductions are required. Often, increasing overall production and efficiency will naturally rebalance this metric over time.
It is also important to remember that the salesperson involved in the transaction represents the vendor’s interests. Conducting your own research and working with trusted professionals during the due diligence process is essential and well worth the investment.
One area many purchasers overlook is the transition plan. You can acquire an exceptional practice, but without a thoughtful and strategic transition, the experience can quickly become stressful for both the new owner and the team. Simply stepping in as the new provider is not always the best approach, and changing everything immediately after closing can create unnecessary disruption. A well-executed transition plan helps minimize stress, maintain patient trust, and create stability for the entire team.
Purchasing a dental practice involves many important considerations. Your decisions should be based on facts and data, not emotion or assumptions. Clearly identifying opportunities and challenges in advance allows you to develop a realistic, measurable, and attainable growth strategy. Most importantly, rely on trusted professional advisors throughout the process. Their experience and insight from previous practice purchases and transitions can provide invaluable guidance and help position you for long-term success.
