Oral Surgery Practice Due Diligence Checklist
Oral surgery practice due diligence is the process of verifying what you are buying before you commit to a purchase. It gives a buyer the chance to confirm the seller’s financial claims, understand the referral base, assess equipment and facility condition and identify risks that could affect price, structure or financing.
Oral and maxillofacial surgery practices have unique features, including office-based anesthesia, high equipment intensity and both medical and dental billing. This checklist highlights the areas buyers often review. It is general information only. Buyers should work with healthcare counsel, accountants and qualified billing or compliance professionals, and nothing here is legal, tax, billing or compliance advice.
Financial Records
Start with the numbers. Buyers typically request:
- Several years of practice tax returns and financial statements
- Year-to-date profit and loss statements and balance sheets
- Production and collection reports by provider and procedure category
- Accounts receivable aging by payer type
- Bank statements to confirm reported deposits
- Payroll records and owner compensation details
- A list of proposed add-backs with supporting documentation
- A schedule of existing debt, equipment loans and leases
An accountant can help reconcile records and estimate true earnings after paying a market salary to the surgeon who will provide care. Our guide to oral surgery practice valuation explains how these figures influence price.
Referral Base
Referrals are often the most important intangible asset in an oral surgery practice. Request:
- New patient counts and production by referring office over several years
- Trends showing growing or declining referral sources
- Information about any referring dentists who are retiring, selling or joining groups
- The seller’s role in each major relationship
Concentration in a few referring offices can increase risk. Our article on the oral surgery referral base covers how buyers and lenders evaluate it.
Billing, Payers and Collections
Oral surgery practices may bill dental insurers, medical insurers, Medicare, Medicaid and patients directly. Buyers should review:
- Payer mix and revenue by payer type
- Payer contracts and enrollments
- Collection timing and denial patterns
- Fee schedules and fee-for-service pricing for implants and full-arch cases
- Any past payer audits, refund requests or recoupments
Payer contracts and enrollments should not be assumed to transfer, and billing and documentation practices should be reviewed by qualified billing or compliance professionals. Our article on oral surgery medical vs dental billing explains why billing mix affects cash flow.
Anesthesia, Permits and Facility
Office-based anesthesia is a defining feature of most oral surgery practices. Buyers should review:
- Current anesthesia permits and facility approvals, and what the buyer must obtain
- Recent facility inspections and any findings
- Emergency protocols, equipment and drills
- Staff training and certification records
- Controlled substance registration and record-keeping practices, reviewed by counsel
Licenses and permits should not be assumed to transfer. Healthcare counsel can clarify what applies in your state.
Equipment and Technology
- A full equipment list with age, condition and service history
- Ownership status of each item, including leases and liens
- Imaging system registrations and inspection records
- Practice management and imaging software licenses and transferability
- Expected near-term replacement needs
Lease and Real Estate
Review the lease term, renewal options, rent escalations, assignment provisions and landlord consent requirements. If the seller owns the building, determine whether it will be sold, leased to you or retained, and how that affects financing.
Staff and Employment
- A staff roster with roles, tenure and compensation
- Employment agreements and benefit plans
- Associate surgeon agreements and restrictive covenants, which counsel should review because enforceability varies by state
- Worker classification, which should be reviewed by qualified professionals
Legal and Risk Items
Buyers should ask about pending or past malpractice claims, licensing board matters, employment disputes and regulatory inquiries. Review professional liability coverage history and consider tail coverage. Entity documents, contracts and any management or marketing agreements should be reviewed by counsel.
Organizing the Due Diligence Process
Due diligence can involve hundreds of documents. Buyers often create a request list early, share it with the seller and track what has been received and reviewed. Assigning areas to the right advisors helps: an accountant for financials and tax returns, healthcare counsel for contracts, permits and regulatory items, and billing professionals for payer and documentation review.
Set a realistic timeline in the letter of intent so there is enough time to complete the review before deadlines. If important information is slow to arrive, discuss whether the timeline should be extended rather than skipping steps.
Patient Records and Transition
Confirm how patient records will be transferred and maintained under applicable rules. Plan how patients, staff and referring dentists will be informed, and document the seller’s transition role in the purchase agreement.
How Oral Surgery Practice Due Diligence Connects to Financing
Lenders rely on much of the same information. Organized due diligence files can make the lending process smoother and help a lender understand the practice’s cash flow and risks. SBA 7(a) loans are often used for practice acquisitions, with eligibility and terms depending on the business, the buyer, use of proceeds, program rules and lender review. Every loan is subject to approval.
Findings during due diligence may lead to a price adjustment, a change in structure or a decision to walk away. For a broader overview of the purchase process, see our guide on how to buy an oral surgery practice.
Final Thoughts
Thorough oral surgery practice due diligence helps buyers confirm value, identify risks and plan a smoother transition. Reviewing financials, referrals, billing, anesthesia permits, equipment, the lease and staff carefully can protect your investment and strengthen your financing request.
US Medical Funding helps oral and maxillofacial surgeons finance practice acquisitions. Learn more about our maxillofacial surgery practice acquisition financing.
