THE DENTAL TRANSITION NEWSLETTER
Published on
- 10-08-2026
Improving Your Practice Value Through Better Practice Management
Preparing a dental practice for sale is not just about finding the right buyer. It begins years earlier with how you manage, organize, and document clinical and financial information in your practice management software.
When this information is clean, consistent, and complete, it improves the perceived value of your practice, strengthens your appraisal, and builds buyer confidence. When the information is disorganized, missing, or inaccurate, it almost always lowers value and can even cause a sale to fall apart.
Below are practical, high-impact changes you can make now to ensure your software supports a smooth, successful transition later.
Organize Your Collections by Insurance Carrier
Most dental offices record income under general labels such as “patient check,” “credit card,” or “insurance check.” This makes it nearly impossible to determine which insurance plans generate the most revenue. Buyers, lenders, and appraisers rely heavily on this information when assessing risk and long-term sustainability.
The solution is to create categories or subcategories in your software that identify the specific insurance carrier. This can be done in Dentrix, SoftDent, Eaglesoft, PracticeWorks, Curve, Open Dental, or nearly any other program.
Examples include “MetLife insurance check” or “Delta Dental insurance check.” If you have a mix of in-network and out-of-network plans with the same carrier, it is even more valuable to create categories such as “In-Network BCBS” and “Out-of-Network BCBS.”
This helps you accurately track revenue by payer. It also helps you make decisions about insurance participation, reducing dependence on low-paying plans before you are ready to sell.
When the information is disorganized, missing, or inaccurate, it almost always lowers value and can even cause a sale to fall apart.
Clean Up Accounts Receivable and Patient Credits
Accounts receivable is one of the first financial items a buyer will examine. A high balance over 30 days indicates weak collection processes. A large balance over 90 days may signal significant operational issues that can reduce the value of your practice. At the very least, it shows a lack of attention, allowing old, delinquent accounts to accumulate over a period of years.
Equally important are patient credit balances. Many offices unintentionally allow credit balances to accumulate when patient refunds are not issued promptly. Buyers, lenders, and attorneys treat patient credits as a liability. Any outstanding credits at closing are deducted from the purchase price. This can be a substantial financial hit if not proactively addressed.
If the balance of your receivables and credits has grown to a significant amount, now is the time to correct the issue. This not only improves value but also demonstrates that your practice is well organized and financially accountable.
Accounts receivable is one of the first financial items a buyer will examine. A high balance over 30 days indicates weak collections processes.
Separate Production by Provider
Accurate production reporting is crucial during due diligence. The cleanest setup is to list each provider separately: the owner doctor, hygienists, and any associate doctors. This allows buyers to clearly identify who produces what and understand how the practice functions clinically.
Hygiene exams should be posted to the dentist. Cleanings and radiographs should typically be posted to the hygienist. If you have an associate dentist, that provider must be set up separately using their own license number and personal NPI. Posting their production under the owner’s credentials creates inaccurate reporting and complicates both valuation and future insurance credentialing for the buyer.
Audit Production Daily
Even the best software setup is only as accurate as the information entered. Reviewing all procedures billed to insurance each day confirms that nothing has been missed and that the treatment aligns with clinical notes.
An astute buyer will often examine these records in detail. Missing codes, incorrect postings, or inconsistent charting can impact their trust in the data and their perception of your practice systems.
Track Watch Areas and Future Treatment
Treatment notes must reflect all watch areas and future treatment needs, even if you use paper charts. Most practice management software allows you to mark or log watch items and pending treatments.
Buyers use this information to assess case acceptance, patient needs, and the potential for future production. Without it, buyers may assume your practice has fewer treatment options or less consistent diagnostics.
Maintain Clean Active Patient Lists and Update All Fees Your active patient count is one of the most significant drivers of value. Deactivate patients who have moved, passed away, or left the practice. Inflated active patient numbers weaken credibility during due diligence.
Moreover, the most common buyer complaint after a sale is that the active patient count was inaccurate and overstated.
Missing codes, incorrect postings, or inconsistent charting can impact their
trust in the data and their perception of your practice systems
Equally important is keeping your fees current. Update your office fee schedule each year and audit your insurance fee schedules annually to ensure accuracy.
Always bill your full UCR fee whenever allowed. If you bill a reduced fee that matches the insurance allowable, the insurance company will pay you the lower amount.
This is a common and costly mistake that reduces practice revenue without buyers ever knowing why.
Final Thoughts and Why This Matters
A practice with clean data, organized reporting, and well-maintained records consistently sells for more and transitions more smoothly. Buyers evaluate practices not only based on financial performance but also on the systems that support day-to-day operations.
Strong internal practice management systems improve a buyer’s ability to replicate the practice’s historical performance. When your reports are accurate, your accounts receivable is clean, production is properly tracked, and your systems demonstrate discipline, buyers feel confident in the practice. Confidence directly translates into value.
If you are considering selling your practice in the next three to five years, or sooner, now is the time to begin preparing. These improvements take time, and the earlier you begin, the stronger your valuation and negotiations will be.
If you would like help understanding your true practice value or planning the steps needed to maximize your price, Hemmen & Associates would be happy to assist. A short consultation can make a significant difference in your outcome.
What Our Clients Have To Say About Us Matters
“I worked with Tom for almost 10 years. He periodically evaluated my practice and gave my wife and me great advice along the way. This helped tremendously in further developing our practice.
It provided us with the confidence that when we were ready to sell, with his help, we would have a great outcome. True to his word, he found the perfect buyer for our practice!
We are so appreciative of all that Hemmen & Associates has done for us!”
– D.L.Y.,DDS
