PPO Negotiation Solutions

We Level The Playing Field Between Dental Practices and Insurance Companies

How Your PPO Structure Affects Dental Practice Valuation

Buyers don’t just buy your patients. They buy your contracts.

Valuation Starts With What You Collect

When a buyer or lender values a dental practice, they look closely at cash flow. Production is important, but collections are what pay the loan, the staff, and the new owner.

That puts your PPO contracts at the center of the conversation. On average, dentists write off nearly 40% of their fees on PPO patients. Every point of that write-off reduces the earnings a buyer is paying for.

What a Buyer Looks At

  • Payor mix concentration: How much of your patient base depends on one or two carriers?
  • Fee schedule strength: Are your contracted rates competitive for your market, or years out of date?
  • Write-off percentage: How much of your production never turns into revenue?
  • Rental network exposure: Are claims being routed to lower-paying networks without anyone noticing?
  • Credentialing transfer: How will contracts carry over to a new owner, and how long will that take?

A Simple Example

Consider a hypothetical practice producing $900,000 a year from PPO patients with a 40% write-off. It collects $540,000 from those patients.

Improve PPO reimbursement by 10% and collections rise by $54,000 a year, with no added chair time and no added staff. Nearly all of it reaches the bottom line.

If a buyer values the practice as a multiple of earnings, that recurring gain is multiplied. At a 4x multiple, $54,000 in added annual profit represents roughly $216,000 in added value. Actual multiples vary by market and buyer, but the principle holds.

Timing Matters

Buyers look at trailing financials, usually the last one to three years. A fee increase negotiated three months before a sale barely shows up.

If you’re planning a sale or transition, start your PPO review 12 to 24 months in advance. That gives new fee schedules time to appear in the numbers a buyer will review.

Pre-Sale PPO Checklist

  1. Audit your payor mix and fee schedules against your market.
  2. Confirm your UCR fees aren’t below any contracted rate.
  3. Identify rental network routing and underpayments.
  4. Renegotiate your highest-volume, highest-leverage contracts.
  5. Document everything so a buyer can verify it.

Buying a practice instead? The same review belongs in your due diligence before you sign.

Know what your contracts are worth before a buyer tells you. Request your complimentary PPO Revenue Assessment.