August 5, 2020
Which Reports to Run After Reopening Your Dental Practice Doors
To say the last few months have been a roller coaster is an understatement. After temporarily shutting your dental practice’s doors due to the COVID-19 pandemic, your revenue was only delayed and not lost. You may even be working harder now than ever to meet demand since tooth decay and impacted wisdom teeth don’t solve themselves. Even if you’re not considering selling, you should get an appraisal done to see where your dental practice stands. Here are the reports you’ll want to run to prepare.
Production summary by category
A buyer will want to know everything there is to know about your practice prior to making an offer. More specifically, they will want to know the types of procedures you do in-house and if they can replicate the type of dentistry you perform. Do you place a lot of implants? Do you refer out most surgery?
A practice statistics report will give you a statistical snapshot of your practice. A potential buyer is interested in looking at this so they can develop a strategic business plan should they decide to buy your practice. The report easily groups together statistical information about your practice, such as patient demographics, continuing care statistics, new patient stats and the number of patients per provider.
While your accounts receivables (A/R) tend to not be included in your practice value as it is always changing, it still holds value. An aging report helps determine how your practice is collecting its A/R, as well as tracking family and insurance balances. A good rule of thumb is to expect 85% of your A/R total on top of the fair market value of your practice, if you are planning to sell your A/R, in addition to your practice.
Ratio of patients with insurance versus cash-pay patients
Most buyers have a preference of fee for service (FFS) versus insurance when buying a practice. While some may not care, almost all want to know the breakdown. Is the practice 50% insurance-based and 50% FFS? Is it mostly insurance based? This report will do the hard work for you when finding the answer.
Patient demographics by age or zip code
A buyer does not need to know exactly who your patients are (after all, that would violate U.S. Health Insurance Portability and Accountability Act (HIPAA) laws). They do, however, need to know the types of patients you see. Do they skew younger or older? Do they live near the office, or do the majority tend to travel a long distance to see you? Understanding who the patient is by demographics allows a potential buyer to understand even further what they are investing in, as well as potential attrition rates.
Production summary by American Dental Association (ADA) code and category
In addition to the breakdown of production by category, a buyer will also want to know how much of each procedure contributes to your overall revenue. Furthermore, they are interested in learning what each provider is producing and collecting. This includes not only the seller, but also associates and hygienists. It is important for them to determine at what level they will need to produce to maintain practice revenue, especially if the selling doctor is not staying onboard.
Contact the experts at Professional Transition Strategies to set up a valuation of your dental practice.