How To Make Your Dental Practice or DSO More Attractive to Buyers

Melissa LuVisi
October 21, 2021 | 3 min read

When you plan to sell your dental practice or dental service organization (DSO), you’d want to make it as attractive to potential buyers as possible. Knowing what they look for will allow you to allocate resources optimally to make strategic improvements that’ll raise your business’s valuation.

Here are the three things that buyers of dental practices of DSOs look for:

1. Low Overhead and Operating Expenses

Your overhead cost directly impacts the profitability of the business. However, you can’t afford to slash operating expenses indiscriminately. For example, cutting tenured staff is a common mistake that does more harm than good, while skimping on equipment upkeep could impact treatment outcomes, patient satisfaction, and your reputation.

The good news is that there’s one area where you can reduce cost and improve your operational efficiency at the same time — your IT infrastructure. 

On-premise solutions can lead to high overhead due to various expenses, including hardware purchases, third-party vendors, and high maintenance costs. Especially if you’re still using old server technologies, potential buyers would worry about the cost of an upgrade in the back of their head — making your practice less desirable.

On the other hand, using cloud dental practice management software can lower your operating budget since you don't have to buy servers or hire a large IT team to maintain the hardware. The subscription model increases the predictability of your budget, which also makes your practice more attractive to buyers.

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2. Well-Managed Collections

For any business, cash flow is king. And it’s no different when it comes to running a dental practice. Potential buyers will review your financial records to ensure that your business generates enough revenue to cover expenses and earn a profit. Therefore, you not only need to maximize productions but also achieve a high collections percentage.

To increase collections, you can implement a dental practice management software that allows you to collect same-day payments with mobile payment solutions and issue invoices immediately after each visit as e-statements to avoid delays associated with cumbersome paperwork.

Use cloud dental software that allows you to send out automated invoice reminders via text and email. You can stay on top of collections without having your staff spend hours on tedious and manual tasks. Meanwhile, the ability to take online payments makes it easy for patients to pay you (who wants to hunt for an envelope and lick a stamp anymore?)

In fact, a tab32 customer continued to collect outstanding bills even when her office was closed during the pandemic, thanks to the automated e-statement function. When you implement automation technologies for sending invoices and reminders, you can clear outstanding balances to better prepare your practice for sale.

3. An Efficient Technology Stack

Are you paying your employees a lot of overtime because of inefficient technologies? For example, are your employees spending a lot of time sending out invoice reminders or handling payments manually? Do they have to pick up the phone or send individual emails to remind patients about their upcoming appointments? Do they have to comb through patient records every couple of months to find incomplete treatments?

These activities increase the employee expense ratio, which should be 24-28% of your collections. To make your practice more desirable, bring the employee expense ratio down to a reasonable cost so the new owner doesn’t have to do the extra work.

The good news is that you can eliminate inefficiencies by simply switching to an all-in-one cloud dental practice management software. For example, tab32 offers a comprehensive patient engagement module that allows you to schedule appointment and invoice reminders to deliver a streamlined patient experience without adding extra work for your staff.

Our platform also helps you automate various revenue-generating workflows, such as online booking, incomplete treatment and recall reminders, and billable code tracking. Not to mention, the cloud-based platform allows you to manage all the activities from a centralized location to eliminate redundancies, which are common for practices with multiple office locations.

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Make Your Dental Practice Attractive to Potential Buyers

A dental practice or DSO with efficient workflows and low operating costs is more profitable in the long run. When you improve the operational cost-efficiency of your business, you can command a higher price while attracting more potential buyers.

 

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