1. Define Your Professional and Business Goals

When buying a dental practice, establishing clear professional and business goals serves as your compass. It's optimal to set clear, three-year horizons that will motivate both you and your team.

Your dental practice should reflect your professional vision, so ask yourself about your career aspirations:

• Do you want to focus on general dentistry or specialize in areas like pediatrics, cosmetics, or orthodontics?

• Are you interested in incorporating advanced technologies?

• Do you see yourself in a solo practice or a multi-dentist partnership?

Your practice should also complement your lifestyle goals and values. Consider work-life balance preferences, geographic location priorities, community involvement aspirations, and long-term financial goals like retirement planning to ensure personal alignment with your practice.

2. Choose the Right Location

When selecting the right location, consider these factors:

Community Demographics

Conduct a comprehensive analysis to identify key population metrics like age, income levels, and education.

Age distribution matters. For example, if your practice offers services for older adults, areas with higher concentrations of this demographic could provide better revenue opportunities.

Income levels directly impact the types of services you can viably offer. Keep in mind that communities with higher household incomes typically pursue more elective procedures and cosmetic dentistry.

Also, education levels often predict oral health awareness and preventative care habits.

Insurance penetration rates should also be one of the factors in your location decision, since areas with higher dental coverage typically show increased utilization beyond emergency care.

Competition Analysis

Once you understand demographic patterns, evaluate the competitive environment. A healthy competition ratio is one dentist to every 1,500 patients. For general practices, areas with a population density of 2,000 to 3,000 residents per dental office often work best.

Look beyond raw numbers when assessing competition:

• Are existing practices meeting current demographic needs?

• Are competitors using outdated equipment or technology?

• What service gaps could you fill?

Also, be wary of areas experiencing a surge in new dental practices, as marketing saturation can make patient acquisition challenging.

Accessibility and Convenience

The physical attributes of your location significantly impact patient attraction. For example, when parents make dental care decisions for their family, convenience heavily influences their choices.

Consider these accessibility factors:

• Proximity to residential areas and shopping

• Ample, easily accessible parking

• Public transportation options

• Building visibility and signage possibilities

• First-floor location when possible

Nowadays, more dental practices are being set up near shopping centers rather than medical buildings. These locations offer better visibility and align with patients' desire for convenient care near their regular activities.

3. Evaluate the Financial Health of the Practice

Before purchasing a dental practice, carefully assess its financial health to determine long-term viability. Start by reviewing key financial documents, including profit-and-loss statements, tax returns, and balance sheets. Pay close attention to gross production, net production, adjustments, and the collection ratio to gauge revenue efficiency.

Additionally, analyze key dental KPIs (Key Performance Indicators) such as revenue per patient and case acceptance rate, which reflect the practice’s ability to maximize treatment plans and offer diverse services.

Expenses should be broken down into fixed costs (e.g., rent, base salaries) and variable costs (e.g., supplies, lab fees). While optimizing expenses is important, excessive cost-cutting—especially in staffing or equipment—can negatively impact patient care and growth potential.

A cash flow analysis provides valuable insight into financial stability. Review the cash flow statement to understand operating cash flow, investing cash flow, and financing cash flow. A financially stable practice should maintain at least two to three months’ worth of cash reserves to cover unexpected expenses. Examining past cash flow trends can also help identify seasonal fluctuations and forecast future financial performance.

Lastly, consider whether the practice offers an in-house dental membership plan, which can provide a steady revenue stream and improve financial stability by reducing reliance on insurance reimbursements.

4. Assess the Patient Base

The size and stability of the patient base are key indicators of a dental practice's long-term viability. An active patient count typically includes individuals who have visited within the past 6 to 12 months. However, some valuation specialists extend this timeframe to 18 to 24 months to gain a more comprehensive view of the practice’s recurring revenue.

Patient retention is significantly more cost-effective than new patient acquisition. One useful metric is the pre-appointment percentage—the proportion of active patients with future appointments scheduled. If this figure drops below 30-40%, it may indicate retention issues that need attention.

5. Review Staff and Human Resources

Examine the qualifications, experience, and tenure of the current staff. Long-term employees possess valuable institutional knowledge about patients and operations. Staff credentials, certifications, and continuing education history reveal their competence and commitment.

Identify any potential gaps in the current staffing structure:

• Are all essential roles appropriately filled?

• Is there adequate support for the patient load?

• Do staff members have necessary training to maintain quality standards?

Also, review all existing employment contracts to understand current compensation structures, non-compete agreements, employment terms, upcoming contract renewals, and consider methods for determining employee raises.

This review clarifies your legal obligations to staff upon takeover and identifies any contractual issues that might affect future staffing decisions or practice operations.

6. Inspect the Facility and Equipment

The physical condition of the office can reveal hidden costs. Pay attention to the waiting area, treatment rooms, staff spaces, and storage. Worn-out flooring, outdated fixtures, or inefficient layouts may require renovations after purchase.

Equipment maintenance also plays a role in a practice’s efficiency. Autoclaves should receive annual inspections, water line cartridges need regular replacement, and air compressors must undergo routine servicing. Reviewing maintenance records can help identify potential repair costs and ensure compliance with health regulations.

Technology is another factor to consider. An integrated system improves workflow, while outdated or incompatible software can slow down operations. Look at the practice management software, digital imaging systems, and patient communication tools to determine if upgrades will be necessary.

7. Understand Legal and Compliance Factors

A dental practice must meet various legal and regulatory requirements. Before purchasing, confirm that all necessary licenses can be transferred or that you can obtain new ones, including dental practice operating licenses, DEA registrations, and equipment certifications. Without proper licensing, the practice cannot legally operate, which could cause delays or interruptions.

Regulatory compliance affects both daily operations and long-term stability. Practices must follow HIPAA privacy rules, OSHA workplace safety standards, and state dental board regulations. Violations can result in fines, lawsuits, or restrictions on your ability to practice.

Contracts shape financial obligations and business relationships. An attorney should review lease agreements, equipment leases, service contracts, insurance policies, and employee agreements to identify any unfavorable terms. Some contracts may include clauses that limit flexibility or add unexpected costs after the sale.

For practices operating in leased spaces, lease terms can affect long-term viability. If purchasing the property along with the practice, legal due diligence ensures the transaction is structured correctly, avoiding potential disputes or hidden liabilities.

8. Plan for a Smooth Transition

A strong relationship with the selling dentist can make the transition easier for both patients and staff. Meeting early in the process helps determine if your clinical philosophies align and whether they are open to assisting during the handover. 

Their involvement, even on a part-time basis, can ease patient concerns and provide valuable insights into the practice’s daily operations.

Patient and staff retention should be a priority. A letter to patients announcing the ownership change can reassure them about continuity of care and help maintain loyalty. Existing staff play a crucial role in practice stability, so taking the time to meet with each team member, understand their roles, and listen to their insights fosters trust and collaboration. 

Staff meetings that encourage open communication can also help integrate new leadership.

Changes to branding and operations should be introduced gradually. Keeping the practice name initially, with an "Under New Management" tagline, can ease the transition while preserving the practice’s reputation. Updating digital assets, such as the website and social media pages, should be done carefully to maintain patient recognition.

9. Secure Reliable Staffing Solutions

When purchasing a practice, evaluate the existing staff to understand their roles, experience, and long-term commitment. Retaining key team members can help maintain continuity, preserve patient relationships, and reduce hiring challenges after the transition.

Short-term staffing gaps may arise during ownership changes. Temporary dental staffing platforms like Teero can connect you with qualified hygienists to prevent appointment cancellations and keep operations running smoothly. This flexibility is especially useful during periods of unexpected growth or when team members attend continuing education.

10. Work with Industry Professionals

Buying a dental practice is a complex process that involves legal, financial, and operational considerations. Working with experienced industry professionals can help you avoid expensive mistakes.

Dental practice brokers provide access to listings that may not be publicly available and help match you with practices that fit your goals. They facilitate introductions to sellers, assist with negotiations, and guide you through due diligence to evaluate whether a practice is a good investment. Their expertise can also help identify red flags that may not be immediately obvious.

A dental-specific attorney is essential for handling the legal aspects of the transaction. They review purchase agreements, verify compliance with healthcare regulations, and assess employment contracts to prevent future disputes. Their guidance protects your interests and ensures the transition aligns with both state and federal requirements.

Financial advisors with dental industry experience secure favorable financing, analyze financial statements, and evaluate profitability. They help interpret financial ratios, assess cash flow stability, and create a transition plan that minimizes financial disruptions after you take ownership.

Build A Strong and Reliable Team in Your Dental Practice

Buying a dental practice is a significant step that requires careful consideration of multiple factors, from financial stability and patient retention to legal compliance.

One of the most important aspects of this transition is maintaining reliable staffing to avoid disruptions in patient care. Whether you're navigating temporary staffing shortages or hiring permanent team members, having the right professionals in place will sustain patient trust and practice efficiency.

Teero can help you hire with our dental staffing platform that connects you with qualified dental hygienists. Whether you need temporary support during ownership transition or long-term staffing solutions, Teero makes hiring quick and stress-free.

Give us a call to find the right dental professionals and build a strong, reliable team for your practice.