How to buy a dental practice (and check the numbers first)
Short answer
To buy a dental practice, verify collections (not just production), split by payer (insurance plans, fee-for-service, any government programs), and look at active patient counts, new patients per month and hygiene recall rates, because hygiene is the engine that brings patients back. Check who produces the dentistry (the selling dentist or associates), equipment and technology age, the lease, staff tenure, and the seller's transition and non-compete.
State dental boards regulate who can own a practice; check your state's rules before you structure the deal.
A dental practice is a patient base, a team and a set of payer relationships, held together by the dentist. Buying one well means verifying all four.
Revenue metrics
| Metric | Source | Why it matters |
|---|---|---|
| Collections by month | Practice management software; bank deposits | Actual revenue |
| Production vs collections | Software reports | Write-offs, payer discounts |
| Payer mix | Collections by plan | Fee levels and plan risk |
| Active patients and new patients/month | Software | Size and growth of the base |
| Hygiene production and recall rate | Software | Recurring engine |
| Production by provider | Software | Dependence on the seller |
Worked example: production, collections and the hygiene engine
Illustrative example, not a real practice or fee levels
The practice management software shows $1,400,000 of gross production. Insurance plan write-offs (the difference between the practice's fees and plan-allowed amounts) are $250,000, so net production is $1,150,000. Collections were $1,104,000, a 96% collection rate on net production ($1,104,000 ÷ $1,150,000). Hygiene produced $380,000 of the gross. The practice has 1,900 active patients (seen in the last 18 months) and adds 30 new patients a month. If the hygiene recall rate (patients due for a cleaning who actually book) slips from 75% to 65% after the sale, hygiene visits fall by about 13% (10 ÷ 75), and the restorative work found in those visits falls with them. Price and the loan are based on collections, not production, and the patient flow through hygiene is what keeps collections there.
Practice-specific checks
- State dental board ownership rules for your structure.
- Payer contracts and credentialing: new owners usually must credential with each plan, which takes time and affects cash flow.
- DEA registration doesn't transfer without the agency's written consent; plan your own registration.
- Equipment and technology ages (chairs, imaging, sterilization); records system and data ownership.
- Staff tenure and pay; hygienists especially.
- Lease term and buildout ownership.
- Patient records transfer and privacy obligations.
Add-back traps
- The seller's own production: if they're leaving, a replacement dentist's pay comes out.
- Family on payroll in front-office roles that continue.
- Continuing education and lab costs labeled personal.
Goodwill in practices is often personal to the dentist; protect it with a non-compete and a real transition. See valuing goodwill.
Ownership rules, compliance and the transition
State dental practice acts generally restrict ownership and control of dental practices to licensed dentists, with variations in how management companies can be involved. If you're not a dentist, the structure has to fit your state's rules; if you are, your licence and credentialing with insurance plans have to be in place before you take over billing. Ask about insurance plan credentialing timelines, since claims may be delayed if the new owner isn't in network on day one. Check the practice's compliance basics: infection control and OSHA's bloodborne pathogens standard, X-ray equipment registration and inspections, HIPAA policies and any breach history, and DEA registration for any controlled substances prescribed or stocked (registrations don't transfer without DEA consent). Patients are loyal to their dentist and hygienist. The seller staying for a transition period, introducing you to patients and keeping the hygienists and front desk in place, protects what you're paying for.
Documents to request
- Practice management reports: production by provider and procedure, collections, adjustments, hygiene recall, active patients, new patients (36 months).
- Tax returns, financial statements and bank statements.
- Insurance plan participation list and fee schedules.
- Accounts receivable aging, patient and insurance.
- Staff roster with roles, pay, tenure and any agreements; associate agreements.
- Equipment and technology list with ages; service and lease agreements.
- Lease, X-ray registrations and inspection reports, OSHA and infection control records, HIPAA policies.
- Any board complaints, malpractice claims or payer audits.
Red flags specific to dental practices
- Production that relies on the seller's specialty procedures you don't do.
- An active patient count based on a long lookback, which overstates the real base.
- Falling new patients per month, or heavy reliance on one marketing channel.
- Large accounts receivable from patients, often uncollectible.
- Old equipment and software that will need replacement soon.
- Associate dentists without agreements or who plan to leave.
What moves the value of a dental practice
We don't value deals or publish multiples we can't verify. Appraisers and lenders weigh these factors:
| Factor | Supports a higher value | Pulls it lower |
|---|---|---|
| Collections | Steady, high collection rate | Falling, large patient receivables |
| Hygiene | Strong recall, full hygiene schedule | Weak recall, open hygiene chairs |
| Payer mix | Balanced fee-for-service and plans | Heavy reliance on low-fee plans |
| New patients | Steady flow from several sources | Falling, one channel |
| Equipment and space | Modern, room for another operatory | Old equipment, no room |
Payer mix: what each patient dollar is worth
Two practices with the same production can collect very different amounts, depending on how patients pay.
| Payer type | How the practice is paid | What to check |
|---|---|---|
| Fee-for-service (no network) | The practice's own fee schedule | Share of patients, and how many would leave if fees rose |
| PPO networks | Discounted fees agreed with each plan | Fee schedules by plan, write-offs, and whether contracts transfer to you |
| Capitation / HMO plans | A fixed amount per enrolled patient | Enrolled patients against actual visits |
| Medicaid | State fee schedule | Enrollment and credentialing under new ownership |
Ask for production, adjustments and collections by payer for each of the last three years. Insurance contracts are often with the dentist or entity, so ask your attorney and each plan whether you need new contracts or credentialing, and how long that takes.
Associates and their agreements
If associate dentists produce part of the revenue, read their agreements: pay basis, term, notice and any restrictive covenants. Whether those covenants transfer, and whether they can be enforced, depends on state law. Meet each associate before closing.
Questions to ask the seller
- What are gross production, write-offs, net production and collections by month for three years?
- What share of production is the seller's, and which procedures?
- How many active patients (18-month lookback), and how many new patients a month?
- What's the hygiene recall rate, and who manages recall?
- Which insurance plans is the practice in, and what are the fee schedules?
- How long will you stay to transition patients?
Before closing, spend time in the practice on a normal day: watch how hygiene appointments are rebooked at checkout, how treatment plans are presented and how the front desk handles insurance questions. These routines drive collections more than the equipment does.
Ask, too, for the practice's recall list and how many patients are overdue for hygiene. A large overdue list is both a risk, because those patients may have drifted away, and an opportunity, if a structured recall program brings them back. Either way, it tells you how much of the active patient count is real.
Frequently asked questions
What's the difference between production and collections?
Production is the value of work done at the practice's fees; collections are what was actually received after insurance write-offs, adjustments and bad debt. Collections drive earnings.
Can a non-dentist buy a dental practice?
Many states restrict ownership of dental practices to licensed dentists, with various exceptions and management structures. Check your state dental board and get healthcare legal advice.
Why does hygiene recall matter?
Regular hygiene visits keep patients active and generate much of the restorative work. A falling recall rate means the patient base is quietly shrinking.
How long should the selling dentist stay?
Long enough to introduce patients and staff and transfer relationships; terms vary. In SBA initial acquisitions, the seller can consult for up to 24 months in total.
What is the difference between production and collections in a dental practice?
Production is the value of dentistry done at the practice's fee schedule. Collections are what actually gets paid after insurance plan write-offs, patient balances that aren't collected and refunds. With heavy in-network insurance participation, collections can be well below production, so price and lending are based on collections.
How long should a selling dentist stay after the sale?
Long enough to introduce patients and staff to the new dentist and hand over complex treatment plans, often several months, sometimes longer for relationship-heavy practices. In an SBA-financed full purchase the seller can't stay as an employee, officer or owner, but can consult for up to 24 months in total; agree the terms with your attorney and lender.
Sources
- SBA SOP 50 10 8.1, Appendix 15 (seller consulting limit; valuation)
- DEA Diversion Control: registration (does not transfer without written consent)
- OSHA Bloodborne Pathogens standard, 29 CFR 1910.1030
- HIPAA privacy, security and breach rules, 45 CFR Part 164
- eCFR 21 CFR 1301.52 (DEA registration transfer)
- ADA (American Dental Association)
Related guides
General information, not legal, tax, financial or investment advice. Rules and lender practices change; check the linked sources and talk to your attorney, CPA and lender about your deal. Examples with named numbers are illustrations, not real businesses. OKtoBuy's Deal Check does not value businesses or give price opinions.