The path to multipractice ownership Part 2: Building

April 19, 2016
Many dentists today are choosing to build their own group practices.

Eric Nuss, MBA

Editor's note: This is the second in a four-part series on expanding your practice to multiple locations. "Part 1: Planning" appeared last month.

Part 2: Building

Many dentists today are choosing to build their own group practices. Last month we looked at how dentists should begin the planning process for multiple practices. Now we will review critical aspects of building those practices.

Practice Acquisition

The fastest means of growth for a dental group is the acquisition of existing practices. The acquisition process starts with clear, identified goals. These goals should define more than just practice location, size, and the condition of equipment. They should clearly describe the type of practice and patient base you want to acquire. Use these criteria to screen potential practices; only consider those that meet your goals.

When negotiating price, keep in mind that the shortage of available practices has driven selling prices to an all-time high in relation to annual receipts. As Eugene Heller, DDS, has said, the patient base is the most important factor for estimating practice value. Patient base determines immediate cash flow and the opportunity to increase profits as new systems are installed, previously referred-out procedures are retained, and operational efficiencies are applied.


Creating the economies of scale (or operational efficiencies) necessary to increase profitability through expansion requires a centralized software platform. As software expert Vance Taylor has noted in his presentations, by centralizing practice management software (and subsequently all practice data), practices can easily and efficiently centralize operations. These include items such as revenue cycle management, scheduling, recall, data administration, security, and user management. Creating standardization from office to office ensures consistency in performance while reducing overhead.

One of the most immediate benefits of centralization is the ability to pull the billing activities (revenue cycle management) out of the front office. When this is done, the staff can focus on patient interaction, case presentation, and other activities that directly impact production. From a central office, one billing manager can easily create and submit all claims, receive and batch-process all explanations of benefits (EOBs), and receive and post non-point-of-care patient payments. This reduces your overhead per office and streamlines the collection process. Beyond revenue cycle management, the central office can take additional operational tasks away from patient-facing employees by managing a call center for appointment reminders, recall management, incoming call management, and billing questions. By implementing a single system on a centralized database, one central call center operator can easily manage the schedules for up to five offices.

If a group practice expands without implementing the technology necessary to decrease its per office overhead, it will have increased its ability to produce through growth, but done nothing to broaden the gap between production and overhead. Thus, profitability will be flat. By centralizing operations, you will broaden the profitability gap. As you expand, you will increase profitability and hedge your ability to on-board existing struggling practices. You can also build new offices that require a ramp-up window to get to full production.

Wealth Management

Founder and Chief Wealth Architect of Wealth Factory, Garret Gunderson, recommends using your practice "multiple" to judge the value of your business. This number determines whether your business sells at half the gross annual revenue, four times that amount, or even more. The higher your multiple, the more profitable your practice will be today and the more you can sell it for in the future.

The dental team is your greatest asset in growing your practice multiple. Start by creating a production-based mindset with a compensation program that rewards the team for hitting goals. Once your team members are engaged in the growth of the practice, involve them in all practice changes. Draft simple, one-page project plans for any new system, position to be filled, technology to be implemented, or any other actionable change. Have the team review and edit the plan to create a final step-by-step guide for a successful change. Review weekly production reports with your team to stay on track with your goals and make adjustments as needed.

Eric Nuss, MBA, leads the Business Solutions Department of Henry Schein Dental. He developed and now leads the Dental Business Institute, an educational program for dentists. Contact him at (414) 290-2542 or [email protected].

Planning for multiple practice locations is taught in greater depth at the Dental Business Institute. This program, designed for dentist-owners in the early stages of group practice development, educates, trains, and helps entrepreneurial dentist-owners to successfully lead, manage, govern, and grow dental practices of any shape or size. To learn more, visit

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