For many dentists, selling a practice represents the culmination of decades of hard work. Years have been spent building patient relationships, investing in technology, developing a loyal team, and establishing a reputation within the community. When it finally comes time to transition ownership, sellers understandably focus on maximizing the value of what they’ve built.
Traditionally, that has meant strengthening production, improving collections, modernizing equipment, documenting profitability, and demonstrating a healthy patient base. Those fundamentals remain essential, but today’s buyers are looking beyond financial statements and clinical performance. Increasingly, they are evaluating something far less visible but equally important: cyber risk.
A practice’s cybersecurity posture has become another indicator of how well the business has been managed. It can influence buyer confidence, affect transaction timelines, and in some cases alter valuation.
Tasha Dickinson, MBA.
While financial due diligence has long been standard practice, cybersecurity due diligence is rapidly becoming just as important, particularly among sophisticated healthcare investors and larger dental organizations.
That shift should not come as a surprise.
Dental practices have evolved into highly connected healthcare businesses. Electronic health records, digital imaging, cloud-based practice management systems, patient communication platforms, online payment processing, remote access technologies, intraoral scanners, cone-beam computed tomography (CBCT) systems, and connected diagnostic equipment all contribute to better patient care, but they also expand the practice’s digital attack surface.
Cybercriminals understand this. Healthcare organizations continue to experience some of the highest data breach costs of any industry, largely because protected health information (PHI) is both valuable and difficult to replace. IBM’s "Cost of a Data Breach Report" has consistently identified healthcare as the industry’s costliest sector for data breaches for well over a decade.
When a practice changes hands, those cyber risks don’t disappear. They transfer to the new owner.
The danger of inherited liability
Dental practice buyers should understand that a transaction can expose them to cyber incidents and HIPAA compliance failures that originated before closing. The extent of that liability depends on the structure of the transaction, applicable law, and the terms of the purchase agreement.
Healthcare enforcement provides a cautionary example. A U.S. Health and Human Services' investigation of a breach involving telehealth company AuthentiDate was expanded after AuthentiDate acquired Peachstate Health Management. The Office of Civil Rights' review uncovered HIPAA Security Rule deficiencies at Peachstate, resulting in a financial settlement and a three-year corrective action plan.
Dentistry has not yet produced a widely reported successor liability decision with comparable facts, but the $3 million Dental Care Alliance breach settlement illustrates how quickly cyber exposure can become financially significant across a multipractice dental organization.
Cybersecurity is now part of enterprise value
Most practice owners don’t think about cybersecurity in terms of enterprise value, but they should.
Imagine purchasing a home only to discover after closing that the roof leaks, the electrical system no longer meets code, and mold is hidden behind freshly painted walls. Those problems existed before the sale. The ownership simply changed. Cybersecurity works much the same way.
A practice with outdated operating systems, poorly managed user accounts, unencrypted devices, incomplete backups, or undocumented HIPAA compliance creates liabilities that don’t appear on a balance sheet. Yet those liabilities can quickly become expensive once discovered through a ransomware attack, regulatory investigation, or data breach.
Increasingly, buyers recognize this reality. The question is no longer whether a practice has experienced a cybersecurity incident. The better question is whether the practice has demonstrated that it has taken reasonable steps to reduce its cyber risk before bringing the business to market.
Start with a HIPAA Security Risk Analysis
One of the most valuable investments a seller can make before listing a practice is completing a comprehensive HIPAA Security Risk Analysis. This is not simply an inventory of computers or a report generated by an IT company. Under the HIPAA Security Rule, covered entities are expected to conduct an accurate and thorough assessment of potential risks and vulnerabilities to electronic protected health information.
The Office of Civil Rights, which enforces HIPAA, continues to identify the absence of an adequate risk analysis as one of the most common compliance deficiencies discovered during investigations and enforcement actions.
Just as importantly, buyers may request evidence that one has been completed. A documented security risk analysis demonstrates proactive leadership. It tells prospective buyers that cybersecurity has been managed intentionally rather than reactively.
Documentation matters as much as technology
Many practice owners assume buyers simply want to know whether antivirus software is installed or backups exist. That’s only part of the picture.
Sophisticated buyers are often looking for evidence of governance and asking these five qualifying questions:
- Can the practice demonstrate documented cybersecurity policies?
- Has management reviewed identified vulnerabilities and implemented corrective actions?
- Are backup systems tested and not merely installed?
- Is there a written incident response plan?
- Are employees receiving ongoing security awareness training?
Good documentation provides confidence that cybersecurity has become part of routine business operations rather than something addressed only after problems occur. In many respects, documentation is the business equivalent of good clinical charting. It demonstrates consistency, accountability, and attention to detail.
Inventory everything that connects to your network
Many dental practices underestimate how many devices actually connect to their network. Computers are only the beginning. Today’s practices may also include digital radiography systems, CBCT units, intraoral scanners, milling equipment, imaging servers, practice management software, patient communication platforms, payment terminals, voice over IP telephone systems, wireless access points, tablets and mobile devices, cloud storage applications, security cameras, smart televisions and internet-connected printers. Every connected device represents another potential security breach point.
Older practices in particular often accumulate technology over many years. Equipment remains connected long after it is actively used. Legacy operating systems continue running because replacing them appears costly or inconvenient. Unsupported software becomes increasingly attractive to cybercriminals because known vulnerabilities are no longer being patched.
Before listing a practice for sale, sellers should identify unsupported systems and develop a realistic remediation plan wherever feasible.
Access management deserves a close look
One of the simplest cybersecurity improvements often involves user access.
Practices should review who has administrative privileges, eliminate shared user accounts whenever possible, require strong passwords, and implement multifactor authentication for systems that support it.
Employee turnover also deserves attention. Former employees should never retain active user credentials after leaving the organization. Inactive accounts create unnecessary exposure and may raise questions during due diligence.
The U.S. National Institute of Standards and Technology (NIST) identifies identity management and access controls among the foundational elements of effective cybersecurity programs. Fortunately, these improvements are often less expensive than many practice owners assume.
Don't overlook third-party vendors
Dental practices increasingly depend on outside software and service vendors, including cloud practice management providers, IT companies, billing services, patient communication platforms, credit card processors, remote support vendors, and data backup providers.
Each of these may have access to sensitive information. That’s why HIPAA requires covered entities to obtain appropriate business associate agreements (BAAs) with vendors that create, receive, maintain, or transmit protected health information on their behalf.
Before beginning a sale process, practice owners should review these agreements to ensure they remain current. Buyers are not simply acquiring technology; they’re inheriting vendor relationships.
Employee training is a business asset
Technology alone cannot prevent every cyberattack. Many successful attacks begin with something remarkably ordinary: an employee clicking on a convincing phishing email. Security awareness training is therefore another indicator of organizational maturity.
Practices should maintain records documenting employee cybersecurity education, phishing awareness initiatives, password policies, and incident reporting procedures. These records demonstrate that cybersecurity extends beyond hardware and software and has become part of the organization’s culture.
Be honest about past incidents
Some sellers hesitate to disclose previous cybersecurity events. That’s understandable. But transparency almost always produces better outcomes than concealment.
If a ransomware attack occurred several years ago, but the practice fully recovered, strengthened its security controls, upgraded the infrastructure, and implemented ongoing monitoring, that story reflects responsible leadership.
Attempting to conceal a previous incident can erode trust if it surfaces later during due diligence. Sophisticated buyers recognize that cybersecurity incidents can happen to virtually any organization. What they evaluate most carefully is how leadership responded.
Cybersecurity should be viewed as value preservation
Dentists routinely invest in cosmetic improvements before selling a practice: fresh paint, new carpeting, updated equipment, and modernized reception areas. Those investments help create favorable first impressions.
Cybersecurity deserves similar attention. Unlike cosmetic upgrades, it protects something far more valuable than appearance -- it protects the integrity of the business itself.
Practices that demonstrate mature cybersecurity governance often inspire greater buyer confidence because they reflect disciplined leadership, sound operational management, and reduced post-closing uncertainty.
Ultimately, cybersecurity preparation isn’t about passing an audit. It’s about protecting the value you’ve spent an entire career creating.
Preparing a practice for sale is only half of the equation. In Part 2, we’ll shift perspectives and examine cybersecurity through the eyes of the buyer: the questions every purchaser should ask during due diligence, the red flags that may signal hidden liabilities, and why overlooking cybersecurity can transform what appears to be an attractive acquisition into an expensive post-closing problem.
Editor's note: References are available upon request.
Tasha Dickinson, MBA, dentistry’s cybersecurity guide, is the founder and chief technologist of Siligent Technologies, a trusted provider of cybersecurity and IT solutions for dental businesses. She is dedicated to helping dentists protect their data, avoid cyberattacks, and build resilient business operations. Contact Tasha at [email protected] or connect on LinkedIn.
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.
