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What Is Dental Practice Growth Potential?
Dental practice growth potential refers to a practice’s ability to increase revenue, patient volume, and services through operational, clinical, and market-based improvements.
When evaluating a dental practice for sale, many buyers and consultants alike will fixate on the purchase price or current financials. However, in my humble opinion, it’s equally, if not more important to consider the practice’s overall potential for growth in order to achieve sustainable, long-term success.
Understanding a practice’s nuances, such as its ability to expand its physical premises, service mix, staffing, etc., attract new patients, and ultimately increase production, can help you make a more informed decision and determine whether this particular practice is the right one to meet or exceed your career goals and financial expectations.
Below are a number of the major factors every buyer should carefully consider when assessing growth potential before purchasing a dental practice.
Key Factors That Indicate Dental Practice Growth Potential
A good place to start when evaluating growth potential of a practice is to look at how you might personally expand the dental services offered within the existing business.
Most general practices refer out high-value procedures such as implant placement, orthodontics, complex oral surgery, pediatric dentistry, and/or endodontics. By bringing one or more of those services in-house, you can capture revenue that’s currently leaving the practice on a daily basis.
In addition, a large percentage of patients prefer a “one-stop shop” dental home where they can be treated for a variety of conditions at a single location. This is especially true in secondary or tertiary markets where specialists are often practicing many miles away.
Lastly, many senior dentists nearing retirement, whom we’ve had the privilege of advising, often prefer to focus on “bread and butter” dentistry and refer out complex specialty procedures. For a buyer with a broader clinical skillset, this creates a strong opportunity to add value by keeping those high-revenue services in-house.
A common limitation for many practices is not physical space or patient demand, but time allocation. Reviewing the provider’s schedule to understand patient flow can help you determine whether there’s room to increase dental practice capacity without having to make major, possibly disruptive changes.
If the current owner operates three or four days a week, consider whether expanding to five days would fit your lifestyle and business goals, and more importantly, address the needs and wants of the patients and their ever-changing schedules.
However, just because you expand hours, doesn’t necessarily mean there’s enough patient demand for those expanded hours, or that the staff will work those additional hours. So, this schedule shift can’t be done arbitrarily or without careful planning and consideration.
In some cases, hiring an associate dentist or dental specialist can increase treatment volume given there’s enough patient demand. We would recommend conducting an associate assessment with an experienced dental broker before bringing in another clinician to make sure the practice would support it from a revenue and profitability perspective. The practice must be poised to support both dentists monetarily and professionally in order for this to make financial sense.
There are also several strategies for maintaining the exact same clinical hours, but scheduling the hygienist’s or dentist’s time more efficiently.
For example, in the post-COVID landscape, several practices have adopted a split scheduling model with designated hygiene-only days and treatment-only days. On hygiene days, the dentist focuses solely on exams and recall checks, while treatment days are reserved exclusively for restorative or procedural care without the interruption of hygiene exams.
This scheduling strategy helps the dentist maintain clinical focus by limiting the number of cognitive and procedural shifts throughout the day. It also creates more predictable time blocks for completing the administrative responsibilities that come with practice ownership.
Why Is the Hygiene Department Critical to Practice Growth?
A strong hygiene department supports recurring revenue, patient retention, and typically contributes 25%- 35% of total practice production.
The hygiene department plays a critical role in both production and patient retention for most general practices. According to the American Dental Association (ADA) Benchmark KPIs, total production from the hygiene department should equate to about 25% of the total revenues, with other industry experts stating it could contribute up to 35% of total revenues for a healthy practice.
Sources:
https://www.ada.org/resources/practice/practice-management/measuring-success20160428t155202
https://www.hygienemastery.com/article.cfm?ArticleNumber=16
A well-managed dental hygiene recall system is a key indicator of stable, recurring revenue and most likely a loyal patient base. When evaluating a potential acquisition, assess the number of active patients on recall and how far in advance hygiene appointments are booked. This will help you determine whether the hygiene department is running at optimal efficiency or presents an opportunity for improvement.
Practices that rely on the dentist to perform hygiene, which is something we are seeing more and more as of late, often leave revenue on the table. Hiring a dedicated hygienist, albeit easier said than done, allows the doctor to focus on more complex procedures and increases the overall productivity of the office.
Dependable recall reminders via email, phone, and even texting, improved patient education, and consistent follow-up protocols, help ensure that patients continue returning for preventive care, strengthening long-term relationships, and contributing to growth potential.
Facility design can either support or limit your ability to expand patient care and grow the practice. Review how many operatories are currently in use and whether there are additional dental operatories that are plumbed but not yet equipped.
Consider the layout of the building and the potential for future expansion. Look for underutilized areas within the existing space that could be repurposed into additional operatories, consultation rooms, or offices without requiring major renovations. If there are extra rooms or adjacent property available, these may present valuable opportunities to expand the practice footprint over time.
It’s also important to check zoning and lease terms to confirm that expansion would be allowed if you decide to pursue it.
Even highly regarded, well-established practices can plateau without an effective marketing campaign that drives in a consistent flow of new patient leads. Evaluating the current approach used to market the practice can reveal untapped opportunities for attracting new dental patients.
Many practices rely solely on word-of-mouth or outdated advertising methods, especially those practices where the retiring dentist has taken their foot off the gas pedal. A limited online presence or lack of digital marketing often means there’s significant room for improvement to garnish new patients.
By pursuing a revamped digital presence, which can include an investment in a new website, search engine optimization, paid digital ads, social media campaign, patient referral programs (check with your state’s dental board for do’s and don’ts), and local community outreach, new owners can attract a broader audience and dramatically increase the chances of growing the practice.
Ask how the current practice has historically been advertised and consider what strategies could be implemented to reach more patients and achieve a positive ROI. The ability to grow through modern dental practice advertising can have a measurable impact on revenue.
Important: Just because a potential new patient responds to an advertisement or fills out an appointment request on your website, doesn’t mean that person physically walks through your doors to become a patient of record. And often times, it can take multiple attempts by various means (call, email, text) in order to reach that potential new patient to schedule.
Many practices (and dental marketing companies) have challenges knowing the efficacy of their marketing strategies and/or their marketing ROI due to the fact that the front office personnel may have no formal phone training and/or don’t have a lead follow up protocol.
An initial call with a potential new patient is one of the most important activities of the front office staff. That being said, during the initial call, make sure your team member is warm and welcoming, quickly establishes rapport, and reaffirms how much that patient will enjoy meeting the doctor. All these steps give that patient a warm and fuzzy feeling, and more importantly, can help convert those leads and reduce failed appointments.
Here is an example of a new patient call script I would use while managing my father’s family dental practice.
Keeping the conversation upbeat, reenforcing how awesome the dentist is, answering all questions ahead of the appointment, and demonstrating you’re committed to them having a fantastic experience can help that lead, and their family, become lifelong patients.
A healthy dental patient base is the foundation of a practice’s success. Before purchasing, review the number of new patients entering the practice each month and whether that number is trending upward or downward. If trending downward, ask the seller why they feel this trend is happening to determine if it’s easily curable. If trending upward, ask the seller what is attributing most to this upward shift in new patients.
Understanding patient demographics can also shed light on growth opportunities. A demographic analysis that includes community age ranges, income levels, insurance coverage, and overall oral health awareness helps predict future demand.
If the area has a strong mix of families, professionals, and retirees, it may support a variety of services, from preventive care to advanced restorative treatments, which can be ideal for a motivated, clinically sound buyer.
The success of any practice depends partly on the community it serves. Reviewing local dental market trends and area development can reveal additional potential for success.
Is the surrounding economy growing? Are there new housing developments, schools, or major employers moving into the area? These factors often indicate an expanding population and increased demand for dental care, and you as a buyer, could be targeting these developments and employers in your marketing outreach.
At the same time, review the competitive landscape. Too many nearby practices can make growth more challenging, while the right balance creates opportunities for collaboration and referral partnerships. Understanding area development and competition helps clarify the future outlook for your investment.
Strong referral relationships are a valuable asset when buying a dental practice. Proximity to specialists, physicians, and hospitals can create a steady flow of reciprocal patient referrals.
When evaluating a practice referral network, look for existing relationships that contribute to patient volume. If those relationships are limited, assess opportunities to build new connections with providers in the area. A location near medical offices or schools may offer natural referral potential.
A healthy network of dental referral sources not only supports initial patient flow but also reinforces the practice’s role within the local healthcare community.
Why Should Buyers Assess Growth Potential Before Buying a Dental Practice?
Evaluating growth potential helps buyers identify long-term opportunities, avoid stagnation, and ensure the practice aligns with financial and career goals.
ADS Dental Transitions brokers provide guidance backed by years of experience and help both buyers and sellers navigate dental transitions smoothly, from valuation to negotiation to closing.
A qualified dental broker can help you evaluate practice listings based on current performance, market trends, identifying realistic opportunities for growth and more. Working with professionals who understand the nuances of a dental practice purchase can help ensure the decision aligns with your goals.
If you’re considering buying a dental practice, connect with ADS Dental Transitions with any questions or view our available dental practices for sale by clicking here.
