By Dr. Greg White
Through Chairside with Dr. White, I recently received a question that gets to the heart of how DSO leaders measure the health of their organizations:
The top KPI for any DSO president to focus on?
For me, the answer is durable cash flow and whether it’s improving year over year.
We track plenty of important metrics in dentistry: production, collections, profitability, provider productivity and overhead, among others. Each tells us something, but durable cash flow gives me the clearest picture of an organization’s long-term financial health.
I define durable cash flow as the recurring cash remaining after operating expenses, taxes, debt obligations and the reinvestments necessary to sustain our practices, including equipment replacement and working capital needs, before owner distributions.
The key word is durable. I’m not interested in cash flow that looks good because we’ve delayed necessary investments or benefited from a one-time gain. I want to know whether the business consistently generates enough cash to meet its obligations, reinvest in its future, and create value for its owners.
EBITDA matters, particularly in valuation discussions, but it doesn’t account for debt service, capital expenditures or working capital requirements. An organization can report improving EBITDA while becoming financially weaker.
Getting Bigger Doesn’t Necessarily Mean Getting Stronger.
At PepperPointe, we’re not building a business to sell. We’re focused on protecting doctor ownership and creating lasting value for the doctors and practices we support. That perspective shapes how we evaluate growth, investment, and financial performance.
When cash flow isn’t improving, I want to understand what’s happening at the practice level. Are we seeing fewer patients? Are doctors working fewer clinical days? Is production per day declining? Are we maximizing schedules, managing expenses, and investing in the right resources to improve productivity and patient care?
Sometimes the opportunity is revenue growth. Sometimes it’s expense management, staffing, or collections. Other times, improving long-term cash flow requires making an investment today that won’t generate a return until later.
The objective isn’t simply to spend less. It’s to make better decisions that strengthen the business over time.
We also can’t overlook the role of our doctors. Dentistry depends heavily on their leadership, clinical judgment, and daily efforts. When doctors have a meaningful connection between practice performance and their financial outcomes, they’re better positioned to participate in building long-term value. That’s why aligned incentives and operational efficiency must go hand in hand.
Focus on What You Can Control.
We can’t control interest rates, the economy, valuation multiples, or every challenge facing dentistry. But we can control how we respond.
We can strengthen existing practices, improve productivity, manage expenses, increase collections, and make smarter investments. More importantly, we can identify what’s driving performance and take action before small problems become bigger ones.
This discipline matters regardless of ownership structure. Private equity-backed organizations may face investment and exit timelines that influence decision-making, while doctor-owned organizations may take a longer view of reinvestment and returns. Either way, the fundamentals remain the same: a healthy business must generate sufficient cash to sustain operations, meet obligations, and invest in its future.
Three Questions Every Dental Leader Should Ask.
Whether you’re leading a DSO, group practice or individual office, I’d encourage you to consider three questions:
- 1. Is our cash flow improving because the underlying business is getting stronger?
- 2. Are we making investments that will strengthen the business over time?
- 3. Are our doctors and teams aligned around the success of the practice?
For me, durable cash flow is more than a financial KPI. It connects the decisions we’re making today to the financial strength of our organizations tomorrow.
Growth matters. Profitability matters. But neither means much if the business can’t consistently generate the cash necessary to sustain itself.
Our responsibility as leaders isn’t simply to build bigger organizations. It’s to build stronger ones that create lasting value.
Ask Dr. White
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Dr. Greg White serves as the president and CEO of PepperPointe Partnerships, and is one of the founding partners of White, Greer and Maggard Orthodontics (WGM). WGM formed in 1991, and is currently part of one of the largest, privately-owned pediatric and orthodontic group practices in the country. Prior to leading PepperPointe’s significant growth, he actively practiced orthodontics for more than 25 years.
