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Improve Your Dental Clinic’s Valuation Using StrongBox

If you are a dental practice manager and/or owner, there is a strong probability you have been approached by Dental Support Organization’s (DSO’s) to sell your business.  If you are contemplating selling in the near-term, why would you let another party capitalize on the hard-earned value that you created?

By utilizing StrongBox’s revenue cycle management (RCM) and Patient Finance platform, you can maximize your clinic’s valuation and increase payout upon your exit. Valuations for dental practices are 75 percent of revenue for average practices up to 100 percent of revenue for well-run practices.

What Is Driving the Rising Price of Dental Clinics?

The dental industry is a $130 billion market. Consolidation is a consistent theme as more and more DSO’s compete for small to mid-sized group practices. Practice Financial Group recently highlighted the trends that are raising the value of dental clinics.

  • Dentists are retiring at later ages. Fewer retiring dentists means a lower supply of established practices are for sale.
  • Profit margins for dental practices are high compared to other industries, meaning that they are more lucrative in the eyes of venture capitalists and investment groups.
  • Newer dentists are also involved in the marketplace and searching for dental practices to purchase.
  • Banks understand how profitable funding dental clinic acquisitions can be. Some banks are even willing to fund more than 100 percent of the company’s valuation.

“Ownership of the income stream of a dental practice continues to be the most financially lucrative career choice in dentistry,” the article said.

How Will My Company Be Valuated?

Valuations for dental practices are 75 percent of revenue for average practices up to 100 percent of revenue for well-run practices.  For a $1 million practice, that is a $250,000 swing between average and exceptional.

Once you sell, the DSO is going to introduce best practices and economies of scale to your business to generate value (and cash flow) because they have to generate a return for their investors. A few of the low-hanging fruit key value drivers the DSO’s will capitalize on our bad debt expense (and related collections expense) and reduced administrative costs. Many of these best practices can be employed by your company before it is sold, increasing your payout.

How Can StrongBox Improve My Valuation?

When your company is evaluated, the DSO will be examining your clinic’s profitability, bad debt write-offs, outstanding accounts receivable, and revenue collection rates, among other factors. By utilizing StrongBox, your practice can realize the immediately accretive benefits of our RCM & patient Finance platform.  Further, by integrating your practice workflow and working with our online Dashboard, you can provide reports on these key insights while adding value to your overall valuation. StrongBox Dashboard tracks Key Performance Indicators (KPIs) on a daily, weekly, monthly, and annual basis. Commonly tracked KPIs include:

  • Total encounters
  • Total charges
  • Total collections
  • Number of procedures
  • Total adjustments

The Dashboard also offers a 12-month revenue snapshot that can be used to compare profitability with prior years.

StrongBox RCM and Patient Finance will increase your valuation and increase your payout upon your exit.  This can deliver $100,000’s to your realized value upon the liquidity event of a sale to a DSO.

Contact StrongBox to Learn How to Raise Your Clinic’s Valuation

You’ve worked hard to build your business. DSO’s will be looking to earn a return on your years of hard work and sweat equity. By using StronBox’s RCM, Patient Finance, patient payment portal and our other platform features, you can realize the full value of your practice and keep your hard earned money in your pocket. To learn more, contact our office in Boca Raton, FL online or call (855) 468-7876.

 

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