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Welcome to Dental Unscripted, a podcast brand that meets doctors wherever they are at in their professional journey. We talk about starting a practice, buying a practice, and running a practice. We cover a lot of ground on this channel!

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Dental Unscripted

Here is a 600-700 word article based on the podcast episode, utilizing headers to organize the content as requested.

The #1 Reason for Post Practice Sale Lawsuits! 
Accounts Receivable - Whose Money is it Anyway? 

For dentists purchasing a new practice, the transition period is often filled with anxiety regarding clinical continuity and staff retention. However, a recent episode of the Dental Unscripted podcast highlights a less obvious but more litigious danger zone: Accounts Receivable (AR). According to host Mike Dinsio, attorneys consistently cite disputes over ARs as the "number one reason for lawsuits post-sale". In this episode, Dinsio and co-host Paula Quinn, joined by billing expert Stafani Sandoval, break down why collecting money after a sale is chaotic and how to avoid the "hot mess" that ensues when buyers and sellers start to share a billing system.

The "First In, First Out" Rule & How it Crunches Buyers

The friction typically arises in deals where the buyer does not purchase the seller’s existing ARs. In this scenario, the new owner is drilling and producing new revenue, but checks are still rolling in for work done by the seller. The complexity lies in the accounting principle of "first in, first out". When a patient with an outstanding balance returns for a new procedure and makes a payment, dental software often defaults to paying off the oldest debt—the seller’s money—rather than the current production, which belongs to the buyer.

Stefani Sandoval notes that this confusion is exacerbated by the sheer variety of payment methods, including virtual credit cards, EFTs, physical checks, and third-party financing like CareCredit. Without meticulous tracking, funds are easily misallocated. Sandoval warns that front office teams often rely too heavily on practice management software to automatically separate these funds, a mistake that leads to significant errors.

The Loyalty Dilemma, Team Members Feel Obligated to Help Seller

Beyond the technical accounting issues, there is a profound human element. Paula Quinn, who has navigated these waters as both a buyer and a seller, explains that front office staff often harbor deep loyalty to the selling doctor. When a new owner steps in, these employees may feel an obligation to prioritize collecting for their former boss. Dinsio notes that in some cases, staff members have been caught holding checks for the seller or communicating with them behind the buyer's back, creating a dynamic where the new owner feels they are competing with their own team.

This tension is often fueled by the seller's psychology, and state of mind. For many retiring dentists, the practice was their "cash cow," and once sold, the ARs represent the last remnants of their control and hard earned income. Many times though sellers do not realize how poor their practice's collection habits actually were until the practice is sold, leading to desperation and micromanagement. They weren't that worried about it before and now they are trying to recoup every last dollar owed to them before exiting.

Strategies for a Smoother Transition

To mitigate these risks, the Dental Unscripted team offers several strategic solutions to protect the buyer:

1. Utilize a Neutral Third Party Quinn strongly advocates for removing the burden from the internal team entirely by hiring a third-party billing service. This ensures a neutral entity handles the collections, preventing the "bickering" and distrust that occur when a seller demands access to the software to monitor their money. Quinn shares her own cautionary tale of allowing a seller access to her software, which resulted in significant animosity and a struggle for control over patient accounts.

2. Establish a Monthly Payout Cadence Sellers often harass the front desk weekly for updates on their money. Dinsio suggests establishing a firm rule in the contract: the seller gets paid once a month, typically 15 days after the month closes. This allows the buyer time for proper reconciliation and reduces the daily friction of having the seller hovering over the front desk.

3. The 90-Day Hold Quinn proposes a more aggressive protection for buyers: writing a clause that delays payment to the seller for 90 days. This allows the buyer to build up working capital during the cash-flow crunch that inevitably occurs in the first few months of ownership, preventing the stress of writing checks to the seller while the buyer's own bank account is draining.

Rethinking Patient vs. Insurance AR

Finally, the team highlights a critical distinction between insurance AR and patient AR. Insurance claims are generally reliable liabilities that will likely be paid. However, collecting old balances from patients is fraught with risk. Dinsio argues that buyers should be wary of aggressively pursuing patient debt on behalf of a seller, as it can sour the doctor-patient relationship on day one. It is difficult for a new owner to threaten collections against the very patients they are trying to retain.

Ultimately, the consensus from Dental Unscripted is that clear expectations and meticulous tracking are non-negotiable. As Dinsio concludes, without micromanaging the process or hiring experts to do it, buyers leave themselves open to legal battles that can tarnish the start of their ownership journey.