DUE DILIGENCE CHECKLIST

FINANCIAL RECORDS: FIRST AND FOREMOST

Done

Need to Complete

I received all the financial documents applicable to the practice I am considering buying

 

 

I received an explanation as to any item I do not understand on the financial documents

 

 

INSURANCE COMPOSITION OF THE DENTAL PRACTICE

Done

Need to Complete

I received a complete list of all insurance plans the practice accepts

 

 

I received a fee schedule for all the insurance plans the practice accepts

 

 

I inquired about the transferability of the insurance plans the selling doctor accepts

 

 

I received an exact breakdown of the insurance composition of the dental practice, based on collections

 

 

I received 1099 forms for the major insurance plans the selling doctor’s office accepts, especially Denti-Cal.

 

 

I know that I cannot legally use any other doctor’s Denti-Cal provider number and that it generally takes about 8 weeks after the sale close to obtain my own number

 

 

ADVERTISING

Done

Need to Complete

I received a copy of all the advertising the selling office utilizes

 

 

I received a copy of any on-going advertising contracts that I would have to assume

 

 

I know the exact cost of all advertising and have a copy of those bills

 

 

NEW PATIENTS

Done

Need to Complete

I received a new patient list, breaking down the number of new patients/month and year

 

 

I know exactly where the new patients are coming from

 

 

I examined a demographic zip code list of patients

 

 

PATIENT RECORDS

Done

Need to Complete

I examined a representative number of patient charts, and I chose those charts myself

 

 

I examined the x-rays, compared those with the treatment plan and the progress notes

 

 

I compared the progress notes with treatment actually billed to the insurance company

 

 

I examined the treatment plans to be certain I could provide that type of dentistry

 

 

I examined the financial arrangements on the patients whose charts I selected

 

 

I read the progress notes to determine their accuracy and completeness

 

 

I looked at cities/areas the patients were coming from, to determine whether the patients would likely return

 

 

PATIENT SCHEDULE

Done

Need to Complete

I have carefully examined the patient schedule, both for past and future appointments

 

 

I noticed whether a scheduling system is used, or names are just “thrown” on the page

 

 

I noticed how long hygiene is booked in advance

 

 

I noticed how long hygiene appointments are, and whether I agree with that philosophy

 

 

PATIENTS AND PATIENT COMMUNICATION

Done

Need to Complete

I observed the doctor work for at least a few hours (not always possible, but ask!)

 

 

I looked at the practice’s website, if any

 

 

I examined any patient newsletters, or other forms of communication sent to patients

 

 

FEES/FINANCIAL ARRANGEMENTS

Done

Need to Complete

I have received a copy of all the dental practice’s fee schedules

 

 

I know when the selling dentist last increased his/her fees

 

 

I have examined the financial arrangement documents and procedures

 

 

I know what financing options the practice provides

 

 

EQUIPMENT

Done

Need to Complete

I have an inventory of what exactly is being sold, and what is excluded

 

 

I thoroughly examined all the dental and office equipment

 

 

I know the age of all the dental and office equipment

 

 

I know what the dental computer software is, its age and whether it has been updated

 

 

STAFF

Done

Need to Complete

I have received information regarding each staff member’s pay, benefits, hours, licenses, length of time with the practice, probability of staying with the practice.

 

 

I have received the DE-6 for the last completed calendar year

 

 

I have received a copy of the W-2 forms for each employee for the last calendar year

 

 

I have received a copy of the quarterly payroll reports, for the last completed quarter

 

 

I have examined the practice’s personnel manual

 

 

I have met the staff (may not be feasible until the contracts are signed

 

 

ACCOUNTS RECEIVABLE

Done

Need to Complete

I received a comprehensive accounts receivable report, showing aged money owed

 

 

I noted carefully the amounts owed by individual patients

 

 

I asked whether co-pays and deductibles are routinely collected

 

 

SELLER ISSUES

Done

Need to Complete

I asked whether the seller is a member of any particular group, religion, organization or other entity that accounts for 10% or more of his/her patients

 

 

I asked the seller whether 10% of his patients or more are of any particular group, religion, organization or entity

 

 

I asked the selling dentists what his/her future plans are and asked whether he/she was willing to warrant and guarantee all the information he has provided me in the final sales contract, knowing that information is forming the basis of my decision to buy the practice

 

 

I asked the seller whether a management consultant has been utilized and, if yes, I contacted that person and discussed the practice with him/her.  I asked the fee for that person.

 

 

I asked the seller whether any particular management style or program is utilized, and, if yes, I thought about whether I agree with that style and would want to continue it.

 

 

I asked the selling doctor what continuing education course he/she has taken recently and what he/she would advise me to take.  I asked whether there was any particular ‘system’ he/she relied on (such as a certain endodontic system, perio program, etc.)

 

 

BUYER ISSUES

Done

Need to Complete

I understand that I must hire appropriate professionals to advise me, but that I cannot rely solely on my attorneys, accountants and consultants, who rarely actually visit the selling practice.

 

 

I understand that I cannot rely completely on what the selling doctor and/or broker is telling me: I must independently verify all information and I must insist that the selling doctor warrant and guarantee in the final sales contract any information that is not verifiable (such as a seller’s future plans).

 

 

I must be certain that anything the selling doctor or the broker told me that I relied on to make my decision to purchase the practice is included in the final sales contract.

 

 

I understand that I must use my own common sense and good judgment!

 

 

I must pay attention to any ‘red flags’ or bad feelings in the pit of my stomach, all the way up to the close date!  See list of RED FLAGS!

 

 

I must thoroughly read, understand and agree to everything before I sign it!

 

 

I understand that the law will not generally help me very much if I make a bad decision: the time to make a good decision is before the close date!

 

 

I understand that I should buy a practice that is very close to what I ideally want: I understand that practices are very hard to change!