Buyers spend weeks on the patient list, the equipment, the lease, and the P&L. The PPO structure usually gets a paragraph.
That paragraph is often the single biggest determinant of future reimbursement and practice value.
If you’re acquiring a dental practice, the PPO contracts you inherit will affect your revenue for years. They deserve the same scrutiny as the financial statements.
Why PPO mix belongs in acquisition due diligence
Most acquisition models project future revenue from historical collections. That’s a reasonable starting point — until you realize that the seller’s collections reflect a specific PPO participation structure that may not be one you would have chosen, may not be optimized, and may not be transferable on the same terms.
What you’re really buying:
- A patient base
- A payor mix
- A set of negotiated fee schedules — some current, some not
- A credentialing footprint
- A specific exposure to rented and layered networks
Three of those five items are about insurance, not patients. They’re often the most under-examined.
What to actually review
Before closing, you should have clear answers to:
- Which PPOs the practice currently participates in (direct contracts)
- Which additional networks are accessing the practice through leasing or rental
- The current fee schedule for each network and how long since it was last negotiated
- The payor mix percentage by PPO — the top three to five typically drive most revenue
- The current write-off percentage and how it has trended year over year
- The credentialing status of each provider on the team
- Any pending or upcoming contract renewals or fee schedule changes
If the seller can’t produce this, the practice’s PPO structure has not been actively managed — which is itself a finding.
Red flags to watch for
A few patterns that should slow down an acquisition:
- Write-offs exceeding 40% of production
- Heavy reliance on low-paying networks with no recent renegotiation
- Fee schedules unchanged for three or more years
- A credentialing structure that doesn’t transfer cleanly to a new owner
- High exposure to leased networks the seller can’t fully account for
- A payor mix concentrated in carriers known for restrictive contract terms
None of these are deal-breakers in isolation. All of them affect valuation, and all of them affect what your first 12 months of ownership will actually look like.
Build a PPO audit into the LOI period
The cleanest approach is to make a PPO audit part of the due diligence checklist, alongside the financial and legal review. The audit should answer two questions:
- What does this practice’s reimbursement structure actually look like today?
- What is the realistic ceiling on that reimbursement after we own it?
The gap between those two numbers is often where the real opportunity — or the real risk — lives.
The strongest acquisitions we see are the ones where the buyer treats the PPO structure as a strategic asset, not a paperwork formality. The weakest are the ones where the buyer assumes the seller’s reimbursement is what they’ll inherit — and finds out 90 days in that it isn’t.
If a practice acquisition is on your horizon, a pre-close PPO assessment is one of the highest-leverage diligence steps available.
👉 Schedule your complimentary assessment: https://pponegotiationsolutions.com