CDA Essentials 2017 • Volume 3 • Issue 5

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36 | Volume 3 Issue 5
Supporting Your P ractice
indicator of future revenue. Based on the last 100 valuations of Ontario practices we’ve done
at Tier Three Brokerage, the average revenue per patient, per year, is $620 (excluding lab) for
a general dental practice. But there are outliers. One practice averaged $1300 per patient, per
year, and some average barely over $100. So the question for potential buyers of those dental
practices is, how reliable are estimates of current revenue in predicting future revenue?
Components of revenue
To understand revenue contributions in a general dentist practice, you have to consider the
three typical components of revenue: hygiene, dentistry, and lab. Lab is a flow-through
cost because Canadian dentists do not markup lab fees. So we have to look at revenue from
hygiene and dentistry to understand their potential future contributions to the practice.
Buyers can count on hygiene revenue
Revenue from hygiene is a transferrable asset of the practice—this means that when you buy a
dental practice, patients will predictably keep coming to see that hygienist so average revenue
from hygiene per patient is reproducible. For example, if a practice is doing over $550 per
patient, per year, in hygiene services, even though the average for general dental practices is
$220, some portion of that higher-than-average revenue can probably be maintained. On the
other hand, if a practice is doing $65 per patient, per year, in hygiene, then unfortunately that
relatively low revenue will also be maintained unless the buyer is able to bring revenue up. And
that underperformance in hygiene can represent a possible upside in predicting future cash
flow and thus the value of that practice.
Dentistry revenue is less predictable
On the other hand, revenue from dental services tends to be specific to the dentist selling
the practice. So if a dentist produces over $1300 per patient, per year, in revenue from dental
services, chances are a new dentist is not going to be able to reproduce that. In general, if we
see a practice producing way above average in terms of dentistry revenue, we decrease our
projections of future cash flow because a new buyer will probably not be able to reproduce
those numbers. This would then represent a possible downside in predicting future cash flow
and thus the value of that practice.
More than a business
Increasing revenue is consistent with good oral hygiene and patient satisfaction—to a point.
To be blunt, the point at which it stops being consistent is overtreatment. Overtreatment is not
going to add to the value of a practice. The best way to increase your patient satisfaction—and
thus new patient flow and retention—is to keep your patients happy. And the best way I
know of doing that is by delivering excellent oral health care. a
To watch the full
interview with
Dr. Dolansky, visit:
The best way to increase your patient satisfaction—and
thus new patient flow and retention—is to keep your
patients happy.