ASSESSING A DENTAL PRACTICE’S POTENTIAL

As you probably have seen, there are not a lot of dental practice’s for sale.  The seller’s market continues for dental practices.  The great practices get snatched up literally before they hit the market.  The practices that need a lot of work are out there, but it’s difficult to assess what you are getting.  Here are a few tips to evaluate a practice that may not be perfect, but might have some potential:

1.  Is the trend in the practice production going up by more than 10% per year for the past 3 years?  If it is that’s a good sign the practice is growing steadily.

2.  Look at the unscheduled treatment plan report.  Is there a good amount of treatment out there?  Has the doctor been diagnosing treatment, or doing a lot of “watching”.  The more treatment left for you, the better.

3.  Is there enough patients to keep you busy a minimum of 3 days per week. That typically means 500 to 600 patients.

4.  Does the practice take all the major insurances?  If not, that tell you that you can get an increase in new patients by adding more insurances.

5.  Does the selling doctor refer out a lot of treatment? – Endo, surgery, etc.,  If this is the case and you do endo and surgery, that’s a quick 10% increase in production.

6.  What’s the competition like?  Are there dentists within 3 miles?  How old are they and what are their practices like.  If they are older practices, that means those docs may be happy with their level of production and not into competing for business.

7.  Do the neighboring dentists advertise?  If not, you can beat them with strategic marketing.

8.  What type of advanced procedures does the selling dentist do?  Invisalign, implant placement, etc.  If you do these, it’s another increase in production.

9.   Are there a lot of inactive charts within the last 3 years?  You can typically activate  number of the inactive charts by aggressively calling and mailing the patients.

10.  Has the practice been remodeled recently?  A simple remodel, even painting, carpet can freshen up a practice and entice existing patients to start referring again.

The next time you’re looking at a practice that may appear run down, do a little more detective work and you may discover a diamond in the rough!

-Rod Johnston, MBA. CMA