What Questions Should You Ask Before Buying a Dental Practice?

Buying a dental practice can be an exciting opportunity. Instead of starting from scratch, you are stepping into an established business with an existing patient base, team, systems, equipment, and reputation.

Before you sign a purchase agreement, it is important to look beyond the practice’s revenue and asking price. You need to understand what you are actually buying, what condition the practice is in, and whether the opportunity aligns with your professional and financial goals.

Asking the right questions during the due diligence process can help you identify potential problems and make a more informed decision. Here are some of the most important questions to ask before buying a dental practice.

1. How Has the Practice Performed Financially?

Financial records should be one of the first things you review. A practice that appears successful on paper may have underlying financial issues that affect its true value.

Ask for several years of financial statements, tax returns, production reports, collection reports, accounts receivable aging reports, and other relevant financial records. Then ask questions such as:

• What are the practice’s annual collections and production?
• What percentage of production is actually collected?
• How much outstanding accounts receivable does the practice have?
• What are the practice’s largest ongoing expenses?
• Are there any outstanding debts or financial obligations?

 

You should also compare reported production with actual collections. Strong production numbers do not necessarily mean the practice is generating strong cash flow.

2. Why Is the Owner Selling?

The seller’s reason for leaving can tell you a great deal about the opportunity.

Perhaps the dentist is retiring, relocating, or pursuing another opportunity. Those can be relatively straightforward reasons for a sale. However, you should also investigate whether declining revenue, staffing difficulties, changes in the local market, or other concerns are influencing the decision.

Ask the seller directly:

Why are you selling the practice now?

Then look for whether the financial and operational records support the explanation.

If the seller says the practice is thriving but the numbers show declining production and patient volume, that discrepancy deserves further investigation.

 

3. How Strong Is the Patient Base?

An established patient base is one of the biggest advantages of purchasing an existing dental practice. But the size of the patient list does not tell the entire story.

Ask:

• How many active patients does the practice have?
• How many new patients does the practice acquire each month?
• What percentage of patients regularly return for preventive care?
• What is the patient retention rate?
• Is the patient base growing or shrinking?

 

A practice may advertise thousands of patients, but if many have not visited in years, the actual value of that patient base could be significantly different.

You should also understand the demographics and geographic makeup of the patient population. Consider whether the practice serves the type of patients you want to treat and whether the local community provides opportunities for continued growth.

4. What Insurance Plans and Payers Does the Practice Accept?

Insurance participation can have a major impact on a dental practice’s revenue.

Ask for a breakdown of the practice’s payer mix, including the percentage of patients who are:

• Private-pay
• In-network
• Out-of-network
• Covered by specific insurance plans
• Participating in discount or membership programs

 

Find out which insurance contracts are currently in place and whether those contracts can be transferred to you after the acquisition.

It is also important to understand how reimbursement rates compare with the practice’s fees. If a large percentage of the practice’s revenue depends on one insurance provider or a small group of plans, that concentration could create additional risk.

5. Who Works at the Practice?

Your employees are an important part of the practice’s value. A successful transition may depend heavily on whether the existing team stays after the sale.

Ask about:

• Dentists and hygienists
• Dental assistants
• Front-office staff
• Office managers
• Employee tenure
• Compensation and benefits
• Vacation and paid time off

 

You should also ask whether any employees are expected to leave when the current owner does.

A knowledgeable and experienced team can make the transition much smoother. On the other hand, a practice that relies heavily on the selling dentist personally may require more time, hiring, and investment than you initially expect.

6. What Equipment and Technology Are Included?

Dental equipment can be expensive to replace, so you need to know exactly what is included in the purchase.

Ask for a complete inventory of equipment and determine:

• Whether equipment is owned, leased, or financed
• Whether equipment is currently functioning properly
• What equipment may need to be replaced soon
• Whether technology is compatible with your preferred systems

 

This is especially important for items such as dental chairs, imaging equipment, sterilization equipment, compressors, computers, and digital technology.

A practice with older equipment may look affordable initially but require a significant capital investment shortly after closing.

 

7. What Does the Lease Look Like?

If the practice operates from a leased location, carefully review the lease before moving forward.

Ask:

• How long is left on the current lease?
• Are there renewal options?
• Can the lease be assigned to the buyer?
• What is the current rent?
• Are there scheduled rent increases?
• Who is responsible for repairs and maintenance?
• Are there restrictions on renovations or signage?

 

Location is a major part of a dental practice’s value. A favorable lease can be an asset, while an unfavorable lease can create significant problems after the acquisition.

If the building is owned by the seller, determine whether the real estate is part of the transaction or whether you will be expected to enter into a new lease.

8. Are There Any Legal or Regulatory Issues?

Before purchasing a practice, you need to know whether there are unresolved legal, licensing, compliance, or regulatory concerns.

Ask whether the practice has experienced:

• Malpractice claims
• Patient complaints
• Licensing issues
• Insurance disputes
• HIPAA or privacy concerns
• OSHA violations
• Billing or coding problems

 

You should also determine whether there are pending claims, lawsuits, audits, or other liabilities that could affect the practice after the sale.

This is an area where experienced legal counsel can be particularly valuable. You want to understand which liabilities remain with the seller and which, if any, could become your responsibility.

9. What Is the Practice’s Reputation?

A practice’s reputation can be one of its most valuable—or most difficult to repair—assets.

Look at online reviews, patient feedback, referral sources, and community reputation. Ask the seller how patients typically find the practice and whether the practice has established relationships with other healthcare providers.

You should also consider how the transition will be communicated to patients. If the seller has practiced in the community for decades, patients may have a strong personal connection to that dentist. A thoughtful transition plan can help preserve patient trust.

10. What Is the Practice’s Growth Potential?

Finally, ask what opportunities exist after the purchase.

You may be able to increase production by expanding services, improving scheduling, adding providers, investing in marketing, updating technology, or improving patient retention.

Ask:

• Is the practice currently accepting new patients?
• Are there services patients are requesting that the practice does not offer?
• Could expanded hours increase production?
• Is there room to add another dentist or hygienist?
• Are there opportunities to improve case acceptance?

 

The goal isn’t simply to buy a practice that is successful today. You want to understand whether it has the foundation to remain successful under your ownership.

Don’t Skip Dental Practice Due Diligence

Buying a dental practice is a significant financial and professional decision. The right practice can provide an established patient base, existing revenue, and a strong foundation for future growth.

The wrong practice—or a practice purchased without thorough due diligence—can bring unexpected financial, operational, and legal challenges.

Before making an offer, take the time to review the practice’s financials, patients, employees, equipment, lease, insurance relationships, reputation, and potential liabilities. More importantly, don’t rely solely on information provided by the seller.

Ready to Take the Next Step?

At Buccal Up Dental, we understand that buying a dental practice is about more than acquiring a building, equipment, and a patient list. It is about making a decision that can shape your professional future.

Taking the time to ask the right questions—and get the right professional guidance—can help you move forward with greater confidence and a clearer understanding of the opportunity in front of you. Contact our team to get started on your journey!