Why RCM Is Core to Same-Store Growth

The definition problem

DSOs borrowed "same-store growth" from retail, where it has always meant net revenue per location. Somewhere in the translation to dental, it became production per location.

That substitution seemed harmless when insurance paid most of the bill, but it isn't harmless now. A location can grow production 8% and grow collected revenue 2%, and the monthly ops review will call that a good year. The gap between those two numbers is the subject of this post.

Here is the model worth adopting instead. Same-store growth has two primarylevers: produce more, or keep more of what you produced. Most organizations have a named owner, a bonus plan, and a dashboard for the first lever. The second lever gets a write-off policy that someone inherited from a software default.

Why the patient portion became the variable

Twenty years ago, patient responsibility was the rounding error at the end of the ledger. High-deductible plans changed that. Patient portion is now a meaningful share of production at most groups, and it is the only category of revenue that requires a human being to decide, voluntarily, to pay you after they have already received the service.

Meanwhile, insurance A/R has a process. There are claim statuses, aging reports, appeals workflows, and usually a person whose entire job is chasing it. Patient A/R has a statement that goes out on a cycle, and then, at 90 or 120 days, an adjustment.

That asymmetry is the single largest unmanaged revenue variance in a multi-location group. Not because anyone decided patient collections don't matter, but because the tooling and staffing grew up around insurance and never extended.

The math

Take an illustrative 40-location DSO. Each location produces $1.5M, so $60M in total production. Patient portion runs 28% of production, or $16.8M.

At an 82% net collection rate on that patient portion, $3.0M goes uncollected each year. Some of it sits in aging buckets, some of it is already written off, and a fraction has been placed with an agency at a contingency rate that makes recovery nearly pointless.

Move that collection rate to 92%, which is achievable and not theoretical, and you recover roughly $1.68M.

Now the part that matters to a CFO. That $1.68M is revenue you already produced. The chair time is spent, the lab bill is paid, the provider comp is accrued. Flow-through to EBITDA is approximately 95%, so call it $1.6M of new EBITDA.

For comparison, generating $1.68M through new production, at typical flow-through of 25 to 40%, adds somewhere between $420K and $670K of EBITDA. You would need to grow production by nearly $6M to match what the collection improvement delivered.

At an 8x multiple, that $1.6M of EBITDA is worth roughly $12.8M in enterprise value, or about what you'd pay to acquire six $1.5M practices.

Ten growth levers, not one

The reason collections gets treated as a single initiative is that it's usually described as one. In practice, the patient revenue cycle has ten distinct failure points, each with a different owner and a different fix:

1. Aging patient A/R recovery (60–120+ days). Balances still on the books that no longer receive outreach.
2. Omni-channel outreach on 0–60 day balances. Preventing balances from aging in the first place.
3. Card on file and autopay enrollment. The difference between asking for money and having authorization to collect it.
4. Point-of-service collection. What actually gets captured at checkout versus what gets deferred to a statement.
5. Payment plans and in-house financing. The only lever on this list that lifts case acceptance and collection rate simultaneously.
6. Pre-write-off letter automation. Structured final notice before a balance becomes an adjustment.
7. Post-acquisition A/R standardization. What happens to a practice's receivables in the 90 days after close.
8. Guarantor and family balance consolidation. One conversation with one payer instead of four unpaid statements.
9. Payment plan delinquency management. Plans fail quietly, and nobody notices until the term ends.
10. Insurance A/R follow-up and underpayment recovery. The one lever here that still scales primarily with headcount.

Most groups are running two or three of these and calling it their whole collections strategy.

The variance is the tell

If patient collections were a matter of effort, the distribution across your locations would be tight. It never is.

Pull net collection rate by location and you will probably find a 15 to 25 point spread across practices running the same PMS, serving comparable patient populations, with similarly capable teams. One office collects at 89%, another at 64%.

That spread isn't a people problem; rather, it's the signature of a process that was never systematized, where outcomes depend on whether a particular billing coordinator is organized, tenured, and not currently covering the front desk. When that person leaves, the location's collection rate leaves with them.

Systematizing is what closes the gap. Not working harder at the bottom of the distribution, but removing the dependency on individual diligence entirely.

From EBITDA to enterprise value

For sponsor-backed groups and DSOs, there's a second-order effect worth naming explicitly.

Recovered A/R raises EBITDA. EBITDA gets multiplied at exit. But a disciplined collections process also changes how a buyer reads your quality of earnings. A group with a 94% net collection rate and a shrinking bad debt reserve looks operationally mature. A group carrying a large reserve and 20-point variance across locations invites a diligence conversation about whether reported revenue is collectible revenue.

The reserve itself is also a balance sheet item. Reducing it isn't just a P&L story, it's a one-time release plus a permanent change to how much of your production you count on keeping.

What to do in the next 90 days

Days 1-30. Pull net collection rate on thepatient portion by location. Rank them. Pull your A/R aging by bucket and identify how much is sitting past 90 days with no scheduled outreach. Establish what your write-off policy actually is, as practiced rather than as written.

Days 31-60. Attack the aging buckets first, because that money is already earned and the recovery shows up in a single quarter. Establish a standard outreach cadence across channels for 0–60 day balances so you stop feeding the aging report.

Days 61-90. Systematize. Card on file, payment plan offers at treatment presentation, automated pre-write-off sequences. Set a single net collection rate target for every location and report it beside production in the monthly review.

The last step is the one that sticks. Once collection rate appears next to production on the same slide, the second lever stops being invisible.

Your 41st location is already inside your first 40.

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