{"id":6658,"date":"2021-10-27T11:23:05","date_gmt":"2021-10-27T17:23:05","guid":{"rendered":"https:\/\/www.planetdds.com\/?p=6658"},"modified":"2024-08-16T14:00:55","modified_gmt":"2024-08-16T21:00:55","slug":"top-5-things-for-dsos-to-consider-before-acquiring-a-dental-practice","status":"publish","type":"post","link":"https:\/\/www.planetdds.com\/blog\/top-5-things-for-dsos-to-consider-before-acquiring-a-dental-practice\/","title":{"rendered":"Top 5 Things for DSOs to Consider Before Acquiring a Dental Practice"},"content":{"rendered":"

Growth through acquisition is in the DNA of successful\u00a0DSOs and small practices looking to take their next step. And the good news\u2014there\u2019s great growth opportunity in the market right now.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

COVID has had a significant impact on the dental industry. Some dentists are looking to accelerate their\u00a0<\/span>retirement<\/span><\/a>\u00a0plans. And with the pent-up demand of patients who have been putting off visits to the dentist, it\u2019s foreseeable that as\u00a0<\/span>patients return<\/span><\/a>, they may require more advanced work. Another pandemic-related consideration is the need for practices to be more efficient. With less predictable patient volume and schedules,\u00a0growth-driven\u00a0DSOs\u00a0can provide much-needed support for non-clinical functions to increase practice efficiency.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

As you seek to grow your\u00a0DSO\u00a0through acquisition, it\u2019s essential to know what to research so you can make sound business decisions while minimizing risks. In fact, your research might uncover just the right acquisition opportunity, such as a practice owner getting ready to sell and retire.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

Here are the top\u00a05\u00a0things you should research before you acquire a dental practice.\u00a0<\/span>\u00a0<\/span><\/p>\n

1. Research the target market\u00a0 <\/span><\/b>\u00a0<\/span><\/h2>\n

Do your market research to determine where you want your DSO to expand. Consider geographic areas or specialties to narrow down which practice makes the most sense for acquisition. Consider what areas would be optimal for future referrals between offices post-acquisition for your patients and your DSO.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

2. Research the dentist and the practice<\/span><\/b><\/h2>\n

Once you\u2019ve identified a potential practice to acquire, take\u00a0time to get acquainted with the dentist and the staff to understand their culture and their needs. Get a feel for the working culture of the practice and ask yourself if it aligns with your organization or departs from it.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

As to their needs, how can your\u00a0DSO\u00a0help bridge any gaps in their staffing or operation? Before acquiring a practice, it\u2019s imperative to understand the nuances of the practice and its operations.\u00a0<\/span>\u00a0<\/span><\/p>\n

3. Research patients <\/span><\/b>\u00a0<\/span><\/h2>\n

Since each practice is unique, find out how they manage patient relationships and look into indicators such as the percentage of\u00a0<\/span>recall appointments<\/span><\/a>\u00a0versus new patients and how well the practice attracts and keeps patients. Find out about their billing practices, case acceptance rates, and clinical practices to see if there are any red flags.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

Get a good understanding of what patients at this practice expect out of their patient experience and ensure that your DSO can meet and hopefully exceed these expectations, so the acquisition is a smooth and positive experience for the patients as well.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

4. Research the business side of the practice <\/span><\/b>\u00a0<\/span><\/h2>\n

Beyond the clinical\u00a0aspect\u00a0of the practice, it\u2019s crucial to get the complete picture of the business side of the practice. Determine the true value of the practice by focusing on the EBITDA (earnings before interests, taxes, depreciation, and amortization) and seek the expertise of a consultant, accountant, and attorney as needed. Are there strategic, legal, financial\/accounting, tax implications for when the acquisition becomes final?\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

Find out why the practice is looking to get acquired and what challenges they\u2019re facing if any. Obtain audited financials and previous years\u2019 tax returns.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

5. Research their technology\u00a0 <\/span><\/b>\u00a0<\/span><\/h2>\n

Depending on what technology the practice currently has at their practice, you may need to convert data or implement new software at their practice. Aside from software, are there any technologies that are due for replacement, such as imaging devices, servers, or office equipment?\u00a0Is the practice leveraging newer technologies such as cloud-enabled\u00a0<\/span>imaging<\/span><\/a>\u00a0or\u00a0<\/span>practice management solutions<\/span><\/a>?\u00a0<\/span>\u00a0<\/span><\/p>\n

Ask the right questions<\/span><\/b>\u00a0<\/span><\/h2>\n

Here are some questions to think about as you research whether a practice is the right fit for acquisition:\u00a0<\/span>\u00a0<\/span><\/p>\n

1. Questions related to the owner-dentist: <\/span>\u00a0<\/span><\/p>\n