When dentists start looking at practices to buy, the first number they fixate on is almost always last year’s collections. And that makes sense! Collections are easy to understand, easy to compare, and easy to brag about. And they are important.
But after helping hundreds of buyers evaluate real practices, I can tell you this with confidence: collections alone will mislead you more often than they help you.
If I had to strip the process down to the bare essentials, if I could only see five numbers before deciding whether a practice is worth deeper diligence, these would be them.
Not because they tell the whole story, but because they tell you whether there’s a story worth reading.
1. Trailing 12-Month Collections (Not Last Calendar Year)
Last year’s numbers are important, but what I want to see is trailing 12-month (TTM) collections—the most recent, rolling year of performance. This tells you what the practice is doing right now, not what it did under a different staffing mix, a different associate schedule, or a different level of owner involvement.
A practice that collected $1M last year but is trending down is very different from one collecting $900K and growing.
Direction matters at least as much as averages.
2. Total Payroll as a Percentage of Collections
Payroll is almost always the largest expense in a dental practice, and it’s also easily misunderstood.
I’m not just looking for whether payroll is “high” or “low.” I’m looking for structure.
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Is hygiene carrying its weight?
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Is the doctor doing too much of the wrong work?
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Are there long-tenured staff with compensation far outpacing productivity?
Payroll percentage is a starting point, not a verdict, but it’s essential to understand.
3. Doctor Compensation (What the Seller Actually Takes Home)
This number cuts through a lot of noise. But be very careful here. Getting to the correct take-home pay number is very tricky, and takes a trained eye.
This is actually a more important number than collections, once everything is understood, because it determines not only whether it’s a “good” practice, but whether it will be financially worth your time and effort.
The problem is that if you’re looking at a Profit & Loss statement or tax return, especially one that was prepared by a really good CPA, then you’re looking at numbers that may be telling a less-than-obvious story. A good CPA lowers the practice owner’s tax burden, but in so doing makes that P&L or tax return harder for you, the buyer, to understand.
It’s a bit like an x-ray: If you look at one you see a story, while your CPA just sees a picture. When you’re looking at a P&L, you see numbers, while a good dental CPA sees a clear story.
Don’t try to figure this number out alone. Get competent help.
4. Hygiene Production Percentage
Hygiene is the engine of a general practice. When it’s healthy, it feeds the rest of the office. When it’s weak, everything downstream suffers.
In a typical GP office, I’m looking for hygiene production that’s roughly 25–30% of total collections, with consistent recall, stable staffing, and minimal gaps in the schedule.
Low hygiene numbers often signal deeper issues: poor systems, over-reliance on the doctor, or deferred care that will hit collections later.
Strong hygiene won’t save a bad practice, but weak hygiene can quietly undermine a good one.
5. Total Debt Service Coverage (Realistic, Not Optimistic)
Finally, I want to know one thing: Does this practice comfortably pay for itself once you own it?
That means looking at projected loan payments after adjusting for realistic doctor income, not best-case assumptions.
A practice can be profitable on paper and still be a bad buy if debt service squeezes the buyer into unsustainable hours or income expectations.
If the numbers only work when everything goes perfectly, they don’t really work.
The Point of These Five Numbers
These metrics aren’t meant to tell you everything.
What they will tell you is whether the fundamentals are solid enough to justify the time, money, and emotional energy that full due diligence requires.
Buying a dental practice isn’t about finding the biggest number. It’s about finding the right ones.
