# Dental Practice Model A five-year service-mix operating model for a single-location dental practice. Project gross production from per-service visit volume and average ticket, convert to collections via the firm-wide collection rate, run it through a P&L with doctor and hygienist comp tied to collections plus lab fees, supplies, rent, and admin, and read margin, collection rate, production per visit, and doctor productivity off a one-page dashboard with traffic-light status. - Canonical: https://finamodel.com/templates/dental-practice - Excel download: https://finamodel.com/templates/dental-practice.xlsx - Category: Operating Businesses - Model type: Operating model - Difficulty: Intermediate - Audiences: Founders & operators, CFOs & FP&A, Owner-dentists, DSO operators, Practice managers, Healthcare PE buyers - Tags: dental, healthcare services, production, collections, service mix ## Overview A dental-practice operating model projects a five-year P&L for a single-location practice built on a service-mix revenue engine: production scales with visit volume per service category, average ticket per category, and the firm-wide collection rate that translates production into recognised revenue. The workbook organises four service tiers (Hygiene, Restorative, Major, Ortho) into a single Assumptions sheet with one row per service holding starting annual visits, growth rate, and average ticket, plus an operating block for collection rate, doctor and hygienist compensation as percent of collections, lab fees as percent of Major + Ortho production, supplies and other opex as percent of total production, fixed rent and admin payroll, D&A ratio, and tax rate, and a status-threshold block that drives traffic-light logic on the Dashboard. The Patient_Volume sheet compounds starting visits at the per-service growth rate, summing to a total visit line. The Production sheet multiplies visits by ticket per service to derive gross production, then applies the firm-wide collection rate to derive collections and divides total production by total visits to surface production per visit. The P&L pulls collections into the top line, builds the operating cost stack (doctor and hygienist comp scaled off collections; lab fees scaled off Major + Ortho production only; supplies, other opex, and D&A scaled off total production; rent and admin as fixed annual lines), and resolves through EBITDA, EBIT, tax (max of EBIT and zero × tax rate), and net income. A line-by-line identity check reconciles collections to total opex, D&A, tax, and net income at zero in every year. The Dashboard reads Y5 collections, Y5 EBITDA, EBITDA margin, the firm-wide collection rate, production per visit, doctor productivity (production per dollar of doctor comp), and Y5 visits, attaching On track / Watch / Stretched status against user-set thresholds, alongside a Y5 service-mix table that shows production by category and percent of total. Owner-dentists, DSO operators, practice managers, and healthcare-PE buyers use this template for acquisition diligence, service-mix shift modelling, and owner-dentist compensation review. The defaults reflect a healthy single-location practice (94% collection rate, 28% doctor comp, $390 production per visit Y1) - flex the inputs to match a target practice's actual operating profile. ## What's included - Four service categories (Hygiene, Restorative, Major, Ortho) with editable starting visits, growth, and average ticket - Patient_Volume sheet compounding annual visits per service with a total visits line - Production sheet with per-service gross production, total production, collections (production × collection rate), and production per visit - P&L from collections through doctor and hygienist comp, admin payroll, lab fees, supplies, rent, other opex, EBITDA, D&A, tax, and net income, with EBITDA and net margin lines - Dashboard with Y5 collections, EBITDA, EBITDA margin, collection rate, production per visit, doctor productivity, and Y5 visits - Status thresholds in Assumptions so on-track / watch / stretched logic can be tuned - Four service categories (Hygiene, Restorative, Major, Ortho) with editable starting visits, annual growth, and average ticket - Patient_Volume sheet with annual visits compounded per service plus a total visits line - Production sheet with per-service gross production, a total production line, a collections line that applies the firm-wide collection rate, and a production-per-visit line - P&L with collections, doctor comp, hygienist comp, admin payroll, lab fees (sized off Major + Ortho only), supplies, rent, other opex, EBITDA, D&A, tax, net income, EBITDA margin, and net margin - Dashboard with traffic-light status on Y5 EBITDA margin, collection rate, and production per visit, plus doctor productivity, Y5 visits, and a Y5 service-mix table - Status thresholds in Assumptions so the on-track / watch logic can be tuned by the user ## Dental Practice Model: Service-Mix Revenue and Acquisition Cash Flows This dental practice model projects five-year cash flows for a single-location, owner-operated practice acquisition. It builds revenue from four service lines, converts production to collections by carrier mix, and runs a full P&L with SBA debt, working capital, and returns. Outputs include equity IRR, DSCR, and chair utilisation across Base, Bull, and Bear scenarios. ### How the model builds revenue from service mix and patient flow Revenue starts with four service categories: hygiene, restorative, major (crown/RCT/extraction), and ortho. Each has its own starting visit volume, growth rate, average ticket, lab percentage, and supplies cost per visit. - Hygiene visits are not simply compounded; they are driven by recall mechanics using active patient counts, recall frequency, and recall rate. Non-hygiene services compound from year one with a scenario flex. - This design captures the fact that hygiene is the recall engine driving most visits. ### Converting production to collections through carrier mix Production does not equal collections. The model blends collection rates across four carrier types: PPO in-network, PPO out-of-network, Medicaid, and fee-for-service/cash. - Each carrier has a different collection rate and write-off percentage. A weighted average produces the blended collection rate applied to total production. - The write-off percentage feeds the accounts receivable roll. This structure prevents overstating revenue and exposes carrier-mix concentration risk, which matters because a practice with high Medicaid exposure has materially different unit economics. ### Cost structure and operating drivers Direct costs vary with production. Lab fees are applied per service: zero for hygiene, four percent for restorative, sixteen percent for major, and twenty-two percent for ortho. - Supplies cost per visit also differ by service. Compensation includes owner dentist clinical pay as a percentage of owner collections, associate dentist pay if enabled, and hygienist pay as a percentage of hygiene-only collections. - The owner also takes residual net income as an owner draw, reported separately. Other costs include rent with an escalator, marketing based on new patients and fixed spend, admin payroll, and other operating expenses as a percentage of production. ### Outputs, debt, and practical use for buyers and lenders The model produces a P&L, debt schedule with SBA 7(a) amortisation, working capital roll, sources and uses, and a returns engine for buyer equity IRR, MOIC, and DSCR. A dashboard shows EBITDA margin, collection rate, production per visit, and chair utilisation with traffic-light status. - Scenario toggles flex visits, tickets, collection rates, and other inputs. Buyers can see how the P&L absorbs debt service under stress, while lenders can observe DSCR covenant breach under a revenue shock. - The model is a values-only preview, not a live recalculation tool. ## Built around production vs collections Production is what the practice bills; collections is what insurance and patients actually pay. The model surfaces that gap as a single firm-wide rate so margin and per-visit metrics are computed off cash revenue, not headline production. ## Service-mix driven economics Each of the four service tiers carries its own visit count, growth, and average ticket. Shifting volume toward major dentistry or ortho lifts production per visit and pulls in proportionally higher lab fees, while hygiene stays in the model as the steady base. ## Dashboard with status logic Headline metrics resolve to On track / Watch / Stretched against user-set thresholds, alongside a Y5 service-mix table that makes the operating tradeoffs visible on one page. ## Built around production vs collections Production is what the practice bills; collections is what insurance and patients actually pay. The model surfaces that gap as a single firm-wide rate so margin and per-visit metrics are computed off cash revenue, not headline production. ## Service-mix driven economics Each of the four service tiers carries its own visit count, growth, and average ticket. Shifting volume toward major dentistry or ortho lifts production per visit and pulls in proportionally higher lab fees, while hygiene stays in the model as the steady base. ## Dashboard with status logic Headline metrics resolve to On track / Watch / Stretched against user-set thresholds, alongside a Y5 service-mix table that makes the operating tradeoffs visible on one page. ## Workbook structure ### Cover Workbook overview, sheet legend, and tab-colour key for navigation. - Title and scope framing - Sheet-by-sheet purpose summary - Tab-colour legend ### Assumptions Every driver in one sheet: per-service inputs, operating parameters, status thresholds. - Four services with starting visits, growth, and average ticket - Collection rate, doctor and hygienist comp %, lab fees %, supplies %, other opex % - Fixed rent and admin payroll, D&A ratio, tax rate - EBITDA margin, collection rate, production per visit thresholds for status logic ### Patient_Volume Annual visits per service compounded at per-service growth. - Hygiene, Restorative, Major, Ortho visit lines - Per-service compounded growth from starting visits - Total visits line at the bottom ### Production Gross production, collections, and per-visit yield. - Per-service production = visits × average ticket - Total production sums the four services - Collections = total production × collection rate - Production / visit = total production / total visits ### P&L Collections to net income, with margins and an identity check. - Collections at the top from the Production sheet - Doctor comp and hygienist comp scaled off collections - Lab fees scaled off Major + Ortho production only - Supplies and other opex scaled off total production - Rent and admin payroll as fixed annual lines - EBITDA, D&A, EBIT, tax (max of EBIT and zero), net income - EBITDA margin and net margin lines, plus identity check ### Dashboard One-page metrics with traffic-light status. - Y5 collections and Y5 EBITDA in dollars - Y5 EBITDA margin (with status) - Collection rate and Y5 production per visit (each with status) - Doctor productivity, Y5 visits, Y5 service mix as production and % of total ### Cover Workbook overview, sheet legend, and tab-colour key for navigation. - Title and scope framing - Sheet-by-sheet purpose summary - Tab-colour legend ### Assumptions Every driver in one sheet: per-service inputs, operating parameters, status thresholds. - Four services with starting visits, growth, and average ticket - Collection rate, doctor and hygienist comp %, lab fees %, supplies %, other opex % - Fixed rent and admin payroll, D&A ratio, tax rate - EBITDA margin, collection rate, production per visit thresholds for status logic ### Patient_Volume Annual visits per service compounded at per-service growth. - Hygiene, Restorative, Major, Ortho visit lines - Per-service compounded growth from starting visits - Total visits line at the bottom ### Production Gross production, collections, and per-visit yield. - Per-service production = visits × average ticket - Total production sums the four services - Collections = total production × collection rate - Production / visit = total production / total visits ### P&L Collections to net income, with margins and an identity check. - Collections at the top from the Production sheet - Doctor comp and hygienist comp scaled off collections - Lab fees scaled off Major + Ortho production only - Supplies and other opex scaled off total production - Rent and admin payroll as fixed annual lines - EBITDA, D&A, EBIT, tax (max of EBIT and zero), net income - EBITDA margin and net margin lines, plus identity check ### Dashboard One-page metrics with traffic-light status. - Y5 collections and Y5 EBITDA in dollars - Y5 EBITDA margin (with status) - Collection rate and Y5 production per visit (each with status) - Doctor productivity, Y5 visits, Y5 service mix as production and % of total ## Features - **Production vs collections, made explicit:** Production is what the practice bills; collections is what insurance and patients actually pay. The model makes that haircut explicit so margin and per-visit metrics are computed off cash revenue, not headline production. - **Service-mix driven economics:** Each of the four categories carries its own ticket size and growth, so a shift toward major dentistry or ortho lifts production per visit and pulls in proportionally higher lab fees without breaking the rest of the P&L. - **Dashboard with status logic:** Headline metrics resolve to On track / Watch / Stretched against user-set thresholds. Y5 service mix and doctor productivity make the operating tradeoffs visible on one page. ## Use cases - **Practice acquisition diligence:** Drop a target practice's visit counts, ticket sizes, and collection rate into the inputs and validate EBITDA margin and production per visit against industry benchmarks before signing an LOI. - **Service-mix shift modelling:** Increase ortho or major-dentistry visit growth to see how the resulting jump in production per visit moves margin against the lab-fees haircut. - **Owner-dentist compensation review:** Flex doctor comp as a percent of collections and the residual net income line shows the owner draw, so an associate-vs-owner economics conversation is one cell-edit away. ## Frequently asked questions ### What is a dental practice model? A dental practice model projects revenue, collections, and operating margin for a single-location practice driven by visit volume across service categories (hygiene, restorative, major, ortho), per-service average ticket, and a firm-wide collection rate that converts gross production into recognised revenue. ### What is the difference between production and collections? Production is the gross fee the practice charges for services rendered; collections is what is actually received from insurance and patients after write-offs and adjustments. In-network practices typically collect 92-98% of production; out-of-network practices collect 75-88%. The model surfaces that gap as a single Collection_Rate input. ### Why are lab fees scaled off Major + Ortho only? Hygiene visits (cleanings, exams) and most restorative work do not generate outside lab work. Lab bills are driven by crowns, bridges, dentures (Major) and ortho appliances (Ortho), so the formula scales lab fees off the production from those two categories only to avoid overstating cost on a hygiene-heavy practice. ### How should I model owner-dentist compensation? The model treats doctor comp as a single percent-of-collections line (default 28%) for simplicity. An owner-dentist effectively takes that comp plus the residual net income as draw. To split out an associate vs an owner, layer a separate associate-comp row scaled off associate-produced collections only. ### Does the model include a balance sheet? No. Capex is handled through a flat D&A percent of collections so EBIT is non-trivial. Working capital (insurance AR is typically 30-45 days but stable in steady state) is out of scope - pair with the working-capital or 3-statement template if you need a full BS view. ## Related templates - [Consulting Firm](https://finamodel.com/templates/consulting-firm) - [Hiring Model](https://finamodel.com/templates/hiring-model) - [3 Statement Model](https://finamodel.com/templates/3-statement-model)