Acquiring a dental practice can be lucrative, as you will be able to take advantage of an existing location with an established patient base and staff. However, due diligence is important to mitigate risk and ensure that you aren’t making a big mistake. What are some of the red flags that you should consider when acquiring a dental practice?
High Turnover
Frequent staff turnover is one of the most worrisome red flags when acquiring a dental practice. A high turnover rate can indicate underlying issues like poor management, low staff morale, or bad working conditions. Meet with the current staff to gauge their satisfaction, and consider checking sites like Indeed or Glassdoor to see if the practice has reviews from past staff. While these reviews should be taken with a grain of salt, as unhappy employees are more likely to leave a review, you should still consider their contents. Professional, experienced team members are critical for maintaining continuity of care and patient trust. High turnover can disrupt operations and lead to a loss of patients who are uncomfortable with constant changes in personnel.
Old or Outdated Equipment and Technology
When you are acquiring a dental practice to make money, needing to replace or upgrade outdated equipment and technology can be a major drawback. Dental practices with outdated, last-generation technology often struggle to attract patients who are used to more modern care. Check over the condition and age of the equipment so that you can estimate the cost of upgrades or replacements. Practices that haven’t kept up with advancements may require significant investment to bring them up to current standards and patient expectations.
Decreasing Patient Numbers
A significant red flag when acquiring a dental practice is a steady decline in patient numbers. One off year isn’t necessarily a cause for concern, but overall trends are important to examine. A declining patient base can indicate a variety of problems that are quick fixes and a variety of problems that can doom a practice, like a negative reputation or market saturation. Analyze the local market to determine if there are any external factors impacting patient numbers. If the decline is due to internal factors, it often requires more effort and investment to turn things around.
Poor Financial Health
Finally, one of the biggest red flags when acquiring a dental practice is poor financial health. Take time to thoroughly review the financial health of the practice. Look for signs of current or future instability like inconsistent revenue, high debt, or unexplained expenses. Look through all financial statements, tax returns, and profit and loss statements from the past 3-5 years. Be wary of practices with declining revenues or increasing expenses that cannot be easily explained. Always work with an advisor, like APEX Reimbursement Specialists, to assess the practice’s profitability and ensure that you know what you’re getting into.
Improve Your Dental Practice Revenue with APEX Reimbursement Specialists
Whether you’re looking for a way to make revenue cycle management at your dental practice easier or hoping to improve your overall patient communication plan, APEX Reimbursement Specialists is here to help. Contact our team today by calling (410) 710-6005. We look forward to working with you to make your practice a more profitable place.