In this episode of the Dental Boardroom Podcast, host Wes Read, CPA and financial advisor at Practice CFO, and Chris Marshall break down some of the most important warning signs dentists should watch out for when evaluating a dental practice for purchase. Drawing from real client cases and common deal-flow patterns, they discuss the financial, operational, and clinical red flags that often hide beneath the surface of seemingly attractive listings.

Listeners will learn how to interpret declining numbers, inconsistent hygiene schedules, sudden production increases, PPO manipulations, risky seller behaviors, and gaps in patient flow. By the end of the episode, you’ll understand how to look past broker language and identify the true health or weakness of a prospective practice.

Key Takeaways

1. Declining Production or Collections Are a Major Red Flag

If collections or production drop year-over-year even slightly it signals deeper issues.

This could mean a declining patient base, ineffective ownership, poor systems, lack of demand, or mismanagement.

2. Hygiene Department Instability Signals Deeper Problems

• Large swings in hygiene revenue
• Inconsistent recall schedules
• Declining hygiene visits
• These typically indicate poor systems, weak re-care, or a lack of organization affecting long-term revenue.

3. Sudden, Unexplained Production Increases Are Often Artificial

A seller spiking numbers in the year before the sale is a common tactic.

Examples include:

• Over-treatment
• Running unnecessary procedures
• Pre-billing treatment
• A buyer should be cautious: inflated numbers ≠ sustainable revenue.

4. PPO / Insurance Manipulation Is a Growing Concern

Practices sometimes:

• Drop PPOs before selling
• Switch PPO participation
• Adjust fee schedules to appear more profitable
• Understanding the insurance environment is essential to projecting true cash flow.

5. Seller Behavior Tells You Almost Everything

Pay attention if the seller:

• Wants to leave immediately
• Avoids answering questions
• Has incomplete records
• Shows disorganized systems
• These behaviors often align with financial or operational decline.