Same Collections, Different Practices
Two practices with identical top-line numbers can be worth wildly different amounts. Here's why the collections figure alone tells you almost nothing.
A buyer once sent me two broker summaries on the same day, asking which one I liked better. Both practices collected almost exactly $980,000 the prior year. Same city. Similar square footage. Similar asking price.
He assumed they were roughly interchangeable, two versions of the same opportunity.
They weren’t.
Practice A had 1,400 active patients, a hygiene department running at capacity, and a new patient pipeline bringing in 25 to 30 new patients a month. Practice B had 2,600 active patients, a hygiene schedule with visible gaps, and new patient numbers that had been declining for three years straight.
Same collections. Completely different trajectories.
Practice A’s number reflected a healthy, sustainable engine: patients coming in regularly, hygiene feeding the restorative schedule, new patients replacing natural attrition. Practice B’s number reflected a much larger patient base working harder and harder to produce the same result. The roster looked impressive on paper, but a shrinking share of it actually cycled through the schedule, and too much of the production came from one-time treatment rather than a recurring hygiene rhythm.
One of these practices was going to keep collecting $980,000 next year with no changes required. The other was one slow quarter away from a very different number.
What the Collections Figure Never Shows
A single collections number can hide almost everything that actually determines whether a practice is worth buying:
- How many active patients are actually generating that revenue
- Whether hygiene is running at capacity or leaking patients
- Whether new patient flow is stable, growing, or quietly declining
- How much of that number came from a handful of large cases that won’t repeat
- Whether the number is trending up, flat, or down year over year
Two practices can post the exact same collections and require completely different levels of work, risk, and investment to sustain, let alone grow.
The collections figure is a snapshot. It tells you where a practice landed. It doesn’t tell you how it got there, or where it’s headed next.
Why This Matters More Than the Sticker Price
Buyers naturally gravitate toward the top-line number because it’s simple, and it’s usually the first thing a broker summary leads with. But two practices priced off the same collections figure can carry entirely different levels of risk, and entirely different amounts of work required just to maintain what you’re paying for, let alone grow it.
The practice with the healthier underlying metrics isn’t just the safer buy. It’s often the better long-term investment, even if the sticker price looks identical to the alternative.
Due diligence exists precisely to separate practices like these: the ones that only look the same on paper.
This is an excerpt adapted from my book, The Smart Dentist’s Guide to Buying a Dental Practice, available now on Amazon.
Work with JoAnne for independent, operations-first due diligence that looks past the headline numbers to the variables that actually determine whether a practice will thrive under your ownership.