Red Flags to Look for When Purchasing a New Dental Practice

Whether you are a newly-graduated dentist searching for a practice for purchase or an experienced dentist looking to add another practice to your multi-practice empire, the new dental practice purchasing process is much harder than it looks. Identifying potential problems before they’re your responsibility is essential to protecting your reputation and your wallet.

Pressure to Get the Deal Done Quickly

Properly researching a dental practice and reading through all of the associated documents takes time, even if you are working with numerous partners to speed the process along. If the dentist that currently owns the process is aggressively pushing you to seal the deal, that is a huge red flag. You do not want to take part in a fire sale unless you know the problems at hand, so take your time when assessing the practice. Hidden details and disclosures could make the practice wrong for you—the last thing you want to find out after the deal is done.

Information Being Withheld

It’s unreasonable to expect access to every single paystub and receipt from the past twenty years the practice has been open. However, it is completely reasonable to request access to numerous documents including past financial records, tax returns and payroll records. The seller might request that you sign a non-disclosure agreement before viewing sensitive information, but it is a large red flag if a seller outright prohibits you from seeing any practice records.

Production Is in a Nosedive

Declining production is not necessarily a red flag if the current practice owner has a good explanation. If the dentist is retiring and spent the past five years slowly cutting back on hours and days, it makes sense that production would be rapidly declining despite a thriving patient base. However, if there has been a steady decline without a disclosed cause, it’s a sign that a deeper problem is at hand.

Poor Patient Retention

Low patient retention and patient recall rates are typically not a good sign when purchasing a new dental practice. Look at patient records and charts for trends. Why are patients choosing not to return? Are patients aging out of the practice if it has a focus on pediatric dentistry? Are patients going elsewhere after a single experience? Staff members, especially dental hygienists and receptionists, often have a good feel for what the problem is.

Get Your New Dental Practice Off to a Great Start with APEX

APEX Reimbursement Specialists can handle the credentialing process or negotiate with PPOs on your behalf. Contact our team today by calling (410) 710-6005. We look forward to working with you to make your practice a more profitable place.