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How to Protect Your Dental Practice Valuation Amid Rising Costs
- Dr Dan Shaffer
- Oct 8, 2025
- 4 min read
by Abi Greenhough. MD of Lily Head Dental Practice Sales.
Over the past three years, dental practices have faced a perfect storm of rising operational costs. Inflation, increased pay rates for associates and workforce shortages have all contributed to tightening margins.
More recently, staffing costs rose again with the increase in the national minimum wage, employer national insurance contributions, and lower thresholds introduced on April 7th relating to company size and reporting requirements.
These cost increases are not just short-term financial burdens—they directly affect your dental practice valuation. With average EBITDA margins falling from 17–21% to around 12–18%, many practice owners are rightly concerned about the long-term impact.
It got us thinking and conferring with our professional partners about how dentists can mitigate the effects of rising costs without damaging the value of their business.
Understanding the Link between costs and valuation is a great place to start.
Valuation is typically based on a multiple of adjusted EBITDA. When profitability drops, valuations can follow. It may be tempting to slash costs to inflate short-term profits. But savvy buyers will adjust for sustainable, realistic expenses. Cutting too deeply—or underbudgeting—can backfire.
It’s essential to distinguish between discretionary costs, which are added back during valuation (e.g., consultancy or business coaching), and core costs that impact your adjusted EBITDA. For example, investing in expert advice during a crucial growth period may seem counterintuitive, but if these costs drive profitability, they won’t detract from valuation because they are added back to profit to calculate your EBITDA, so could boost it significantly.
Pricing strategies: Keep profitability aligned with market conditions.
Conduct Annual Price reviews. Review and update your pricing in anticipation of rising costs. Delaying price increases only leads to sudden, uncomfortable jumps later for patients.
Patient Communication: Be clear and transparent with patients, especially when honouring previous quotes. Explain why price adjustments are necessary and how they support continued quality care.
Market Comparison: Research local competitors and use a “cost per hour per surgery” model to better understand your margins.
Align Plans with Pricing: Ensure your maintenance plans reflect your private fee-per-item structure to avoid unintentional under pricing.
Remuneration Models: Don't Let Plans Drain Your Profit
Remuneration models, especially for associates under dental plans, can quietly erode profit. In many cases, associates receive a portion of the plan income and are recharged for hygiene time at non-commercial rates—often just a contribution to the hourly pay rate of the hygienist, without factoring in overheads. This setup can result in associates earning more from a treatment than the practice itself.
A more profitable approach is to pay dentists based on the activity they perform at an item-of-service equivalent rate. Retain hygiene income within the practice and manage its delivery cost directly. We've seen practices increase valuation by £500,000+ simply by restructuring income allocations on high-proportion plan models.
Growth Strategies: Shift to Value-Based Care.
Move Beyond Single-Tooth Dentistry: Focus on comprehensive care and full-case delivery to increase patient value and differentiate your practice.
Invest in Skills: Upskill in treatment planning and high-value services. This creates revenue opportunities that elevate both income and business appeal.
Track Clinician Performance: Understand who contributes most to profitability. Often, Principals are top earners, which can be a red flag to buyers if future performance is overly reliant on one person.
Marketing: Leverage What You Already Have.
Internal Marketing: Your patient database is a powerful asset. Focus on reactivation and recall campaigns to generate revenue with low acquisition costs.
External Marketing: Don’t shy away from investing here. Create a budget and evaluate ROI. A small spend can yield high returns when targeted properly.
Cost Control: Be Strategic, Not Stingy
Budget Intelligently: Review previous years. Was there unnecessary or duplicated spending? Can you negotiate better deals?
Track Monthly: Know what’s over and under budget. Monitor cash flow, track spending by surgery, and incentivise staff to help meet financial goals.
Practical Controls: Introduce surgery-level budgets and align staff incentives with performance. This instils accountability and transparency.
Operating Model: Work Smarter, Not Harder.
Process Mapping: Evaluate whether the right people are in the right roles. Consider therapy-led models for routine care, freeing dentists for higher-value treatments.
Digitisation and Automation: Identify manual tasks that can be streamlined. Automating admin processes can free up time and resources while improving patient experience and case conversion.
Asset Utilisation: Maximise Clinical Time
Optimise Chair Time: Reduce downtime by ensuring efficient scheduling and avoiding session lengths that block other users.
Increase Provider Utilisation: Introduce income-generating providers when possible. While top-performers are key, even modest contributions are better than unused surgery time.
The reality of rising costs in dentistry must not be ignored—but nor should you panic. With the right strategies in place, you can not only protect your profitability but safeguard and even enhance your practice’s valuation.
Conclusion
Focus on sustainable growth, strategic investment, and efficient operations. Buyers don’t just look at your bottom line—they assess the quality, stability, and scalability of your business.
Position your practice to meet those expectations, and you’ll thrive through challenging times!
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