As dental attorneys, the attorneys at Nardone Limited represent dentists in all aspects of their practice, including representation during the purchase of a dental practice. There are several due diligence steps that should be completed prior to purchasing a dental practice, including a thorough patient chart audit. This article provides a brief overview of the patient chart audit as it relates to purchasing a dental practice, which will effectively assess the practice’s strength as a business investment.

Patient Chart Audit Overview

Step 1: Determining Active Patient Base: Patient chart audits determine the number of active patients in the practice, uncovering whether some patients simply occupy space but are no longer affiliated with the practice. Often, sellers will provide an estimate of the patient base – the purchaser should demand an accurate count of this vital statistic to determine which patients are currently active. Patients who have not visited the practice in over 18 months are likely “lost” patients who have decided to go elsewhere.  By demanding an accurate definitive active patient count, the purchaser will gain better insight into the practice from an investment standpoint.

Step 2: Analyzing Zip Codes: Analyzing the current patients’ zip codes allows the purchaser insight into the future active patient base. According to a number of dental consultants, when a particular dentist has remained at the same office for 20 to 30 years, the children of the original patients will often drive considerable distance to bring themselves and their children to that location. If a substantial percentage of patients are beyond the typical driving distance, their allegiance may be to the seller based on that prior relationship and history of care. Once the seller retires, those families may seek dental care closer to home. Thus, consultants emphasize that a purchaser should factor in this possibility when reviewing the numbers, and consider ways to offset this potential loss.

Step 3: Review of Age Distribution: Reviewing the age distribution of the active patient base is an important step when conducting a patient chart audit. An older patient base usually requires more complex restorative and prosthodontics services, while a family oriented practice with a younger age distribution will require a broad range of clinical services.

Each above step in a patient chart audit is necessary to gain a full understanding of the seller’s practice from a business perspective, and assess the practice’s strength as an investment. For a detailed checklist relating to patient chart audits for purchasing a dental practice, please click here.

Contact Nardone Limited

Nardone Limited represents general dentists, dental specialists, and dental practices.  Nardone Limited’s dental practice and business attorneys and professionals have vast experience representing general dentists, dental specialists, and dental practices in such diverse areas as: (i) buying and selling dental practices; (ii) asset purchase agreements; (iii) employment contracts; (iv) labor and employment representation; (v) human resource representation; (vi) Ohio Dental Board representation; (vii) lease agreements; (viii) real estate purchase agreements; (ix) tax planning; and (x) estate planning. The staff at Nardone Limited understands that a dental practice is a business and strives to handle transactions while minimizing each client’s time spent away from the office. Contact us today to discuss your practice and how Nardone Limited may help you.