Your Practice Has Zero Business Continuity Plan. Here's What It Costs

One dental group's bad Sunday in October 2023 ended with a bill of up to $1,225,000. First Choice Dental, a 12-clinic Wisconsin network, got hit with ransomware on October 22, 2023 and later agreed to a settlement of up to $1,225,000 covering 159,145 patients, according to HIPAA Journal. That is not a cyber problem. That is a continuity problem with a dollar sign attached, and the reason it got that expensive is that the plan for "what if the systems are gone" did not exist in writing before the systems were gone.

Here is our thesis, and plenty of owners will fight us on it: for a solo or small-group owner, the single most valuable document in the practice is not the OSHA emergency action plan, not the cyber policy, and not the disability rider. It is a signed, funded buy-sell agreement naming a licensed successor who can legally operate the practice the week after you cannot. Your practice is the only asset you own that can die the same week you do.

The 90-Day Clock Most Owners Have Never Heard Of

Start with the scenario nobody wants to price. The owner-dentist dies. Not retires, not sells, dies.

In Ohio, state dental board policy means the practice can keep operating without a licensed owner for roughly 90 days, after which it must be sold or closed, per the Ohio Dental Association's guidance on closing a dental practice. Ninety days. That is the full window in which an executor who has never run a dental practice has to find a buyer, negotiate a price, satisfy a landlord, clear a lender, and get a license transfer through a state board.

Rules vary by state, so check your own board rather than assuming Ohio's number applies to you. But treat Ohio as the shape of the problem: a statutory forced-closure deadline that starts running on the worst day your family will ever have. Every buyer who walks through the door during those 90 days knows exactly when the clock expires. That is not a negotiation. That is a liquidation with a countdown clock on the wall.

Compare that to the orderly path. A healthy practice transition with a willing seller takes six to eighteen months of broker work, buyer financing, and patient-retention planning. The entire value of a dental practice above the hard asset value is goodwill, and goodwill is the one asset that evaporates when the dentist whose name is on the door is gone and the front desk is telling patients nobody knows what happens next.

The Regulatory Floor Is Lower Than You Think

Owners tend to assume compliance has them covered here. It does not, and the reason is structural.

OSHA legally requires dental practices with 11 or more employees to maintain a written Emergency Action Plan, as the ADA lays out in its emergency planning and disaster recovery guidance. That plan is about getting humans out of a burning building. It says nothing about who signs payroll, who holds the DEA registration, who can legally supervise hygiene, or who owns the patient records on day 91.

So the regulatory floor stops well short of the business question, and under 11 employees there is not even a written plan requirement to anchor to. A four-chair practice with nine employees has no mandated document of any kind that addresses operational continuity. That is most of the market.

And the disruptions are not exotic. An ADA member survey found the most commonly reported disruptive events dentists experience, setting aside the pandemic, were prolonged power outages and computer system failures, according to the ADA. Not hurricanes. Not fires. The power going out and the server going down. Boring, frequent, and expensive.

What Most Owners Get Wrong: They Insured the Dentist, Not the Practice

The specific mistake, and it is near universal among owner-dentists in their forties and fifties with one location and no partner, is believing that insurance is a continuity plan.

Look at what each policy actually does. Disability insurance replaces the owner's personal income. Business overhead expense insurance pays rent, payroll, and debt service for a defined number of months. Life insurance pays a death benefit to the named beneficiary. Cyber liability covers breach response and some portion of third-party claims. Every one of those pays money to somebody.

Not one of them produces a licensed dentist standing in your operatory on Monday.

That is the gap. Insurance solves cash flow. Continuity is a staffing, licensing, and legal-authority problem, and it has to be solved with signatures before the event, not with claims after it. The owner who has a $2 million term policy and no named successor has made sure the family has cash while the practice, often the largest asset on the balance sheet, is sold at whatever a 90-day deadline produces.

Our call: if you have to choose this quarter between increasing your disability coverage and getting a funded buy-sell with a named licensed successor executed, do the buy-sell. The coverage protects your income. The agreement protects the asset.

Five Dark Days Cost This Practice $51,720

Run the cheaper disaster first, because it is the one most likely to actually happen to you. Take a general practice collecting $1,200,000 a year across roughly 200 clinical days. Daily production runs $6,000.

Now the practice management server fails on a Monday and the backup turns out to be 11 months stale, which is the normal discovery in this situation. Five days of schedule gone. Lost production is $30,000.

Payroll does not stop. Six team members at an average fully loaded $28 an hour, eight hours a day, five days, costs $6,720 in wages paid for work that could not be done.

Fixed overhead keeps running too. Rent, equipment notes, and the practice loan at $18,000 a month works out to $600 a day, so $3,000 across the outage.

Then the recovery invoice. Emergency IT forensics, data reconstruction, and re-entering what can be re-entered from paper and claims history: call it $12,000, which is conservative if any patient data was exposed.

Total: $51,720.

You will recapture some production. Assume you rebook 40 percent of the lost days within 60 days, recovering $12,000 and bringing the net hit to $39,720.

Now layer on the patient-data version. Using the First Choice Dental settlement, up to $1,225,000 across 159,145 patients works out to roughly $7.70 per patient record in settlement exposure alone, before legal fees, notification costs, and credit monitoring.

Apply that to a practice with 6,000 active and inactive patient records in the system and you get $46,200 of settlement-shaped exposure sitting in a server closet next to the sterilizer.

That is not a prediction. It is an order of magnitude. And the relevant point is that a tested offsite backup and a written downtime protocol cost a few hundred dollars a month, which against a $39,720 single-event cost is the easiest arithmetic in this business.

The Forced Sale Discount Is the Number That Should Scare You

Now the expensive disaster. Say an orderly, well-marketed sale of your practice would fetch $850,000.

You die on a Tuesday. Your spouse is the executor and has never read a production report. The associate you kept meaning to formalize an agreement with has no buy-sell, no right of first refusal, and no financing pre-approved. The clock starts.

Every buyer in the market can see the deadline. Discounts in distressed, deadline-driven dental sales are real and they are not small, because the buyer is pricing in collapsing collections, staff who are already interviewing elsewhere, and a patient base that is hearing "we're not sure" at the front desk. Take a 35 percent discount off the orderly number and you clear $552,500, a loss of $297,500.

That $297,500 is the price of a document your attorney would have drafted for a few thousand dollars.

And it gets worse in the gap. If there is no licensed dentist available to supervise, hygiene production may legally stop in your state, which means the only revenue line that could have held steady through the transition goes to zero while rent and payroll keep billing. We have seen owners insist their associate "would obviously step in." Would they, at what price, with what financing, under what valuation method, with what non-compete already signed? If the answer to any of those is a conversation rather than a signature, you do not have a successor. You have a hope.

Our View: Three Signatures Beat Any Binder

There is a cottage industry selling dental practices thick emergency preparedness binders. We would not buy one. The binder is not what fails. What fails is legal authority.

Our view is that continuity for a small dental practice reduces to three signed instruments and one tested system:

• A funded buy-sell or successor agreement naming a specific licensed dentist or group with a pre-agreed valuation formula, pre-arranged funding, and a trigger that includes death, disability, and license suspension. Pre-agreed formula matters more than pre-agreed price, because the price will be stale within a year.
• A durable power of attorney scoped to the practice entity, so somebody can sign payroll, talk to the lender, and authorize an IT vendor on day two without waiting on probate.
• A written records and notification plan naming the custodian of patient records, the notification language, and the state board filing path, so your executor is not improvising HIPAA compliance under grief.
• A tested offsite backup with a documented restore, meaning somebody has actually restored it this year, not that the vendor says it runs nightly.

Four items. No binder. If the practice has 11 or more employees, keep the OSHA-required Emergency Action Plan current as well, because that one is law, but do not confuse it with this.

Do This Before Friday

Email your attorney this week and ask one question: if you died tonight, who is legally authorized to operate this practice tomorrow, and for how long? Then call your IT vendor and require a documented test restore of your practice management data, with a timestamp, not an assurance. Third, write down a single number: what you believe your practice is worth in an orderly sale, because that is the figure a forced sale gets discounted from and most owners have never calculated it. Fourth, put a date on the calendar inside 60 days to execute a successor agreement, because the version of this task that never gets a date never gets done.

What we are tracking next: broker listing language. Estate-driven and deadline-driven listings tend to announce themselves, and the spread between what those practices ask and what comparable unhurried listings ask is the cleanest available read on the real cost of having no plan. We will publish that spread when we are confident in it. What would change our mind on all of this: if state boards start routinely granting trustee-operation extensions well beyond 90 days, or if DSO rollups begin offering credible standing backstop agreements to solo owners at a fair pre-agreed formula, then the forced-sale discount shrinks and the urgency drops. Neither has happened yet.

If you have never put a defensible number on what your practice would fetch in an orderly sale, you cannot measure what a rushed one would cost you. Start with the valuation side and run your own numbers on our free practice valuation calculator, then take that figure to the successor-agreement conversation. The number you walk in with is the number your family will be arguing over without you.