7 Things to Help Identify the Right Medical or Dental Practice – NaviPath Financial
March 17, 2021

7 Things to Help Identify the Right Medical or Dental Practice


by Brian Swilling

Whether you are an associate dentist looking to purchase your first practice, an existing practice owner purchasing additional practices, or a later career dentist who is selling to the next generation; knowing the following 7 things when buying or selling a practice can make a huge difference…

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1. General Practice Information

  • Ask for a practice profile – an information sheet about the practice, building, employees, office hours, procedures, and makeup of the practice, etc...
  • Investigate what is going on in the immediate area as far as development or changes.
  • Research the area demographics, growth, and existing competition.
  • Contact the city office that handles development or access the city or county web site to read about the community master plan. This is a long-term plan that maps the county's future growth and where it is to occur. It will list all the areas of future development and expected zoning changes. A very good resource for the long-term potential of any practice.

2. Financial Data

  • Request a recent Profit & Loss statement to measure current income and expenses.
  • Request a production report by department and provider to determine where revenue is generated.
  • Ask for the past 3 years of complete tax data is this is a good reference to establish past performance but the last 12-18 months of data offers more information as to the health of the practice.
  • Request a report to determine how many patients were seen in the last 12 to 18 months.

3. Building Lease / Purchase

  • Is the office in a setting where it can be expanded if needed rather than having to relocate?
  • Is the building lease an assignment to you or will the landlord require a new lease?
  • If a new lease - will the terms and costs change?
  • Inquire about renewal options for both an assignment and a new lease.
  • A minimum lease of 10 years will be required by most lenders but you should also secure as many options as possible to best allow for your future growth plans.

4. Employees / Associates

  • Ask for the payroll records to determine what that employee/position was paid for the last few years and the current year. This is helpful to accurately understand the net cash flow if there have been any recent changes.
  • If the office manager, associate doctor, or any other key employees are new, why did the prior employees leave?
  • Determine if there has been any patient erosion since the departure of these key employees.
  • Based on the cash flow of the practice, will there be a required payroll change?
  • If the cash flow is weak, what options are there to reduce the immediate costs without losing staff?
  • If it is known in advance that a reduction in staff will occur determine the potential risk of patient loss.

5. Associate Doctors

  • If the seller employs an associate make sure there is an assignable non-compete in place or if the associate will sign a non-compete before the closing. This is normally required by a lender to ensure minimum impact on the patients and practice revenue post-sale.

6. Procedures and Patient Approach

  • Does the seller seem to have a similar philosophy as to patient treatment and procedures?
  • Is the office adequately equipped for the procedures you plan to offer and will there be any additional equipment needed and at what cost?

7. Transition

  • Will the seller offer you a comfortable transition as you feel is needed to get familiar with the practice operation, systems, patients, and staff?
  • Is the seller available to provide support for several months after the sale?
  • How long is the seller willing to offer assistance or possibly fill in for you after the sale?

RFG Advisory and its Investment Advisor Representatives do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. Please consult your own tax, legal, and accounting professionals for guidance on such matters.

Securities offered by Registered Representatives through Private Client Services, member FINRA/SIPC. Advisory products and services offered by Investment Advisory Representatives through RFG Advisory, a Registered Investment Advisor. RFG Advisory, NaviPath Financial, and Private Client Services are unaffiliated entities.