Industries / Medical and Dental

    Financial leadership for dental and medical practices

    A practice can be busy, well reviewed, and fully booked, and still hand the owner a disappointing number at the end of the year.

    Production looks strong. Collections trail it. Overhead climbs a little every year without anyone deciding to let it. And nobody can say precisely which provider, which location, or which service is carrying the rest.

    That is a measurement problem before it is a dentistry problem.

    Overhead at the average dental practice runs 60 to 65 percent of collections. Top performing practices hold it between 50 and 55 percent.

    On a practice collecting $1 million a year, that gap is $100,000 to $150,000 in profit.

    Source: Dental practice overhead benchmarking, 2026.

    Scale matters more than most owners expect. Practices collecting under $750,000 typically run 70 to 80 percent overhead. Between $750,000 and $1.5 million, 60 to 70 percent. Above $1.5 million, overhead usually drops below 60 percent. Growth helps, but only if the cost structure is watched on the way up.

    Why practice finances get misread

    Four things make dental and medical practices harder to read than most small businesses.

    Production is not collections. Production measures what was done. Collections measure what was paid. The gap is write-offs, PPO adjustments, insurance denials, and accounts nobody chased. Practices that manage to production are managing a number that does not reach the bank.

    Overhead benchmarks are quoted two different ways. Most published benchmarks exclude doctor compensation. Plenty of practices calculate their own number including it, then compare the two and conclude they are doing fine. Before you decide your overhead is healthy, make sure you are comparing the same definition.

    Provider level margin is almost never measured. In a multi provider or multi location group, the practice wide P&L tells you the group made money. It does not tell you that one associate is subsidizing another, or that the second location has not cleared its fixed costs since it opened.

    Hygiene is treated as a service, not a business. Hygiene should carry its own margin. When it is buried inside a single practice P&L, a department that should be reliably profitable can quietly run at break even for years.

    01

    Overhead and cost structure

    Your real overhead, calculated consistently, then broken into the categories you can actually act on. Staff, supplies, lab, facility, and the fee schedules driving your write-offs.

    02

    Provider and location level margin

    What each provider and each location actually contributes after direct and allocated costs. The number that tells you whether the second location was a good idea.

    03

    Collections and revenue cycle

    The distance between production and collections, where it opens up, and what it is costing you. Payer mix, adjustments, and aging.

    04

    Cash flow and expansion planning

    Whether the practice can fund a new operatory, an associate, or a second location without straining. Modeled before you commit, not after.

    05

    Valuation and offer analysis

    What the practice is worth, and what an offer in front of you actually delivers after structure and tax. This is analysis, not brokerage. We are not the ones selling your practice.

    The DSO decision

    At some point a DSO calls, or an associate asks about buying in, and both roads look reasonable.

    They are not the same transaction, and the headline number is the least useful thing to compare.

    A DSO offer is rarely all cash. It typically combines cash at close, rollover equity in the parent company, an earnout tied to future performance, and an employment agreement that keeps you producing afterward, often at compensation lower than what you pay yourself today. Each of those four pieces carries different risk and different timing. The advertised multiple describes the whole package, not the money that reaches your account.

    Selling to an associate usually shows a lower headline price. It also usually involves seller financing, a longer runway, and no post sale employment agreement dictating your schedule. Different risk, different control, and frequently a different net result once tax and timing are accounted for.

    Our founder, Dylan Bastian, spent four years at a boutique investment bank working sell-side transactions. A DSO offer is structurally a private equity backed acquisition, and the levers are the same ones: what is cash, what is contingent, what is equity in someone else's company, and what you are agreeing to do for the next five years.

    Comparing the two properly means modeling them side by side, after tax, over the full term. Most owners compare two headline numbers instead, which is exactly how you pick the wrong one.

    Who this is for

    Dental practices and groups, and medical practices, collecting $1 million to $20 million.

    Single location owners who cannot tell where the overhead went. Multi location groups that outgrew their bookkeeper and need provider level visibility. Owners weighing a DSO offer, an associate buy-in, or a retirement runway, who want to understand the numbers before they are sitting across from someone who already does.

    If you are smaller than that, a good dental CPA is usually enough. If you are larger, you may be ready for a full-time CFO, and we will tell you so.

    Common questions

    What does a fractional CFO do for a dental practice?
    We handle the forward-looking financial work. Overhead analysis, provider and location level margin, the gap between production and collections, cash flow modeling for expansion, and the numbers behind a valuation or an offer. Bookkeeping keeps the record straight and your CPA handles the return. We work out what comes next, and we can handle the bookkeeping too. Learn more about our fractional CFO work.
    Our overhead is 62 percent. Is that bad?
    It depends on a question most owners have not answered: does that number include your own compensation? Most published benchmarks exclude it. If yours includes it, you are comparing two different measurements and 62 percent may actually be worse than it looks. Get the definition right first, then the comparison means something.
    A DSO made me an offer. How do I know if it is good?
    Break it into pieces. How much is cash at close, how much is rollover equity in the parent company, how much is an earnout you have to earn, and what does the employment agreement pay you afterward. Then model it after tax over the full term. A large headline number with most of the value in contingent pieces can easily be worth less than a smaller, cleaner offer.
    Should I sell to a DSO or to my associate?
    There is no universal answer, and anyone who gives you one quickly is guessing. A DSO usually offers a higher headline price with more of it contingent, plus an employment agreement. An associate sale usually means a lower price, seller financing, and more control over the transition. The right answer depends on your timeline, your tax position, and how much longer you want to practice. We model both so you are choosing between real numbers.
    What is my practice actually worth?
    More than a multiple of collections, which is the shortcut most people use. Payer mix, provider dependence, hygiene performance, lease terms, equipment age, and whether the practice runs without you all move the number. A practice that depends entirely on the owner is worth meaningfully less than one that does not, at identical collections. See how we approach valuation.
    Do you work with medical practices too, or only dental?
    Both. Dental is where the vocabulary and the transaction dynamics are most specific, so most of this page speaks that language. The underlying work is the same for medical practices: overhead discipline, provider level margin, the production to collections gap, and understanding an offer before you respond to it.

    Thirty minutes, no pitch. Bring the offer, the P&L, or just the question, and we will tell you honestly whether we can help. See how our engagements work.

    Request Discovery Call