The Operational QoE™
The Operational QoE is the missing complement to the financial quality of earnings. It is a report that quantifies how much more a practice could be earning from the patients it already has, and how much of that is recoverable, shown at a conservative rate and a moderate rate.
The Operational QoE gathers the granular operational detail that your existing diligence process misses to capture in the small post-LOI window. DRAI does this by going into the practice management system and quantifying recoverable revenue across five categories, in a transaction-grade format built for the investment committee, the lender's credit desk, and the counterparty's diligence team, and that your operations team can execute from.
Our role in a transaction is to close the information asymmetry between what a practice's financials show and what its patient base can actually produce, and to hand that edge to the party that retained us.
“I don't want our team ever being the ones gathering this information and putting it into a digestible format. I want my team focused on executing it. It's the same as our QoE: verifying the financials gives us confidence about what we're bidding on. What we don't have confidence about is the upside that may exist in the practice currently. I really want the third party to identify it, give us a deliverable just like our QoE, and then have my team focus on getting the plans in place to hit the ground running day one.”CEO of a fast-growing mid-sized DSO in Texas, on what he wants from a third party
The deliverable
- A written report built for everyone who will read it: the people approving the deal, the operations team that executes, and the advisors, lenders, and counterparties who need to verify it.
- Delivered within four weeks of receiving the requested data.
- Delivered exclusively to the party who commissioned it. All findings remain private.
- A flat fee per engagement, typically priced per location or as a scoped project fee on larger-scale transactions. For acquirers running deal volume, we offer retainers that cover every acquisition in the period and a review of the existing locations.
- A fixed method, tailored to you: the conversion runs on your own cost stack and underwriting targets, the categories are weighted to the deal in front of you, the executive summary is written for the reader you have to convince, and the recovery roadmap is sequenced to your integration calendar. Where you want something specific examined in the practice management system, or a question put to the other side's operations team, we add it to the scope where it can be done.
- Every engagement revisited at 6, 12, and 24 months, at no cost, comparing the figures quantified at the data date against what was recovered.
The five categories it looks at
These categories represent production the practice is capable of and is not capturing, invisible on a financial statement because none of it ever generated a billing event. We focus on these five because each sits in the practice's own data, so it can be proven rather than asserted, and each traces to a probable driver the operating team can confirm. Because the chairs and providers to deliver the production are already in the building, what survives the practice's own write-offs, collection rate, and variable cost lands in EBITDA and moves the valuation at the multiple.
This is also what separates it from the upside most deal models carry. A model projects growth that has not happened yet: more new patients, another hygienist, a marketing push, and a buyer discounts it accordingly. But the production in these five categories has already happened once. The patient came in, was diagnosed, in many cases said yes, and then did not come back. What remains uncertain is how many of them come back, which is why every figure is shown at a conservative rate and a moderate rate rather than as one number.
Whether you're acquiring practices, managing your existing ones, exiting in the near future, or advising a DSO, not knowing how much you're leaving on the table in these five categories costs you. This is the case for measuring it first. → The Operational QoE Thesis in full
“You're identifying the gap that exists between what this looks like from an EBITDA perspective theoretically, and you're coming at it from a practical perspective. This is showing you that you're adding $3 million to your bottom line, but here are all the reasons why it's $5 million or $2 million.”Former founder of a 45-location DSO, who sold it to private equity and now advises dental groups on transactions
What the report contains
The Operational QoE always follows the same structure. In order:
- Executive summary. Three headline numbers: year-one net EBITDA uplift, five-year cumulative net EBITDA, and exit value impact at your multiple on a transaction, or recurring annual EBITDA on a portfolio review, with the findings across the five categories summarized on the same page.
- Five category pages. Counts, rates, conservative and moderate cases, what we observed in the PMS, and the arithmetic that produced each figure.
- Conversion to EBITDA and value. Recoverable production, through the practice's own write-offs and collection rate to cash, through your own cost stack to EBITDA, then to value: hold-period value at your multiple on an acquisition, trailing earnings at the listing date pre-sale, documented asset value at LOI, or recurring annual earnings on a portfolio.
- Cross-location comparison. Every location ranked across the five categories, with your best-performing location as the internal benchmark for the rest and the spread between them quantified.
- Structural findings and the recovery roadmap. Provider concentration quantified as production at risk and as exit-value exposure at your multiple, and the recoverable categories sequenced by when capture can start: at close, within 30 days, within 90 days.
- Appendices. Per-location schedules, provider detail, sources, methodology, and the raw exports, with the filter behind each figure frozen at a stated date so anyone can re-run it without us.
- Every recoverable figure is built the same way: a population from the practice's own data (the patients overdue, the plans unscheduled, the appointments missed), a value per patient or appointment from the practice's own data, and a capture rate.
- The capture rate is the only judgment in the number, and it comes from one of three sources in strict order: what the practice has already demonstrated, what you already target in your own underwriting, and our own modeling estimate. The conservative case never assumes better than the practice has shown, and the moderate case never assumes better than you underwrite.
- Each gap is measured directly in the PMS data; the cause behind it is stated as a probable driver for your team to confirm. The report quantifies the EBITDA uplift and its value at your multiple, while the return calculation stays in your model.
Fit and terms
DRAI is retained by acquirers, sellers, groups reviewing the locations they own, and the advisors and lenders around them, on transactions and reviews priced on EBITDA, by one side of a transaction only. An engagement needs 24 months of practice management history and four weeks from complete data to delivery. We document and quantify; you and your counsel structure and negotiate with it.
Every figure in the report shows its derivation and reconciles against every other figure, so your own advisors can check the work. Where a figure has to hold up to the other side of your transaction, we revise it to that standard, once, at no additional fee. Fees are fixed per engagement and never move with the number. Findings go to the party who commissioned them and nobody else.
We take on two to three groups a quarter. Acquirers with a pipeline engage us at LOI. If we are at capacity when you reach us, we scope and paper the engagement immediately and hold your start date.
Engagement process
- Scoping call. Fit, location count, deal stage, timing, and how you intend to use the report (1 day).
- Paperwork. A mutual NDA and an engagement letter (1 to 3 days).
- Intake and data request, sent together. We work through one coordinator on your side, usually the VP of operations, the COO, or a regional manager. The coordinator completes a short group overview form, and each office manager completes a short per-location form and exports a fixed set of standard reports from the practice management system, each covering the trailing 24 months, uploaded through a secure Dropbox file request we provide:
- Recall and continuing care statistics
- Treatment plan approval: presented, accepted, and completed, by provider
- Schedule summary: scheduled, completed, canceled, and failed, by month
- Provider production and collections
- Patient activity: the active count and patients with no visit in 12 months or more
- New patients by month
- Adjustment summary, so the conversion to cash runs on the practice's own write-off rate
- Analysis. Our system standardizes the exports, measures the opportunity in each of the five categories, traces each one to its probable driver, and converts it into dollars on your own cost stack. If anything material cannot be settled from the data alone, one batched set of written questions goes to the coordinator (2 to 3 weeks).
- Delivery. Within four weeks of complete data, into your data room or by secure link, to the party who commissioned it and nobody else. Questions are answered in writing, and a walkthrough call of the findings is available on request.
- Follow-up. At 6, 12, and 24 months we compare the report's figures against what was recovered, at no cost, so you see whether the number held.
Timing in the transaction
On an acquisition the work runs after LOI and before close, on the access the LOI already grants, and is delivered before the financial QoE closes. The ideal moment to engage is at or shortly before LOI, so the full diligence window is available once the seller's data is released. Sellers use it 12 to 24 months before an expected LOI, when recovery still lands in the trailing earnings a buyer prices, or inside the last 90 days before signing, when documentation anchors the structure instead. Groups run it on the locations they already own at any point, including alongside live acquisitions.
“Organizations move fast to expand footprint, capture EBITDA, and reach the next turn. Operations arrives late by design.”Multi-site operations leader who runs post-close integration for a sponsor-backed group
Typically, the growth plan is written before the operational picture actually exists, which means the targets in it are assumptions about a practice nobody has measured yet, so the integration team inherits whatever diligence did not find, and by the time operations catches up, the months that compound most have gone to discovery rather than execution. The Operational QoE is delivered inside the diligence window, before close, so the plan is written from measured figures, the opportunity is already located and sized, and the team starts capturing in month one with the accuracy the model assumed and the speed the hold period needs.
The system behind our Operational QoE
“Their head of operations goes in and looks at the data coming out of Dentrix or Jarvis, they've got a checklist of everything they would look at, and make their best guess of where they think opportunity is. I don't know if there's a company out there that's spitting out reports showing it like you're proposing, and streamlining it, making it scalable.”Former founder of a 45-location DSO, on how the operational read is done today
Behind the report is a method built over the past year for dental practice management data, with AI carrying the data-heavy work. Each engagement adds its pre-close figures and post-close recoveries to a benchmark no group and no analytics vendor is positioned to build, because neither sees the practice on both sides of the transaction.
Every acquirer we have spoken with describes the same gap. Someone on the team could go through a practice's reports and find the opportunity; nobody has a method for turning what they find into a document a sponsor, a lender, or a board will accept inside the diligence window. The Operational QoE is that method: the operational read, converted into the figures the finance side prices on.
What we built, and run on every engagement:
- One data request for every practice management system. Dentrix, Open Dental, Eaglesoft, Curve, and the rest each report the same things in different formats and under different names. We translate every export into one set of definitions, so a Dentrix group and an Open Dental practice are measured on the same terms and can be compared.
- Five categories with fixed definitions. What counts as a lapsed patient, an unscheduled plan, a lost appointment, provider variance, and a retained new patient is defined once and applied the same way to every location, on every engagement. Every figure ties back to the specific report it came from, so your own advisors can re-run it.
- Conversion on your numbers, not industry averages. Recoverable production runs through the practice's own write-offs and collection rate to cash, then through your own cost stack to EBITDA, then to value at your multiple. Along the way we check that the practice has the chair time and provider capacity to deliver the production, so nothing is counted that the building cannot produce.
- A report with a section for every reader. Executive summary for the investment committee, category pages for the operations team, the conversion for the CFO, the structural findings for the lender, the appendices for whoever wants to check. Whether the report is being used to approve, to execute, to underwrite, or to show a partner what was found, each reader finds their part written for them. Roughly thirty pages, four weeks from complete data, on every engagement.
- A record that compounds with every engagement. At 6, 12, and 24 months the figures quantified before close are compared against what was recovered after it, practice by practice, category by category. Over time that becomes something no group can build for itself: a benchmark of what each kind of opportunity is actually worth, which drivers are fixable and which are not, and how far a pre-close figure lands from the post-close result. A group sees its own deals, a few a year. An analytics vendor sees the practice after it is bought, never before. We see the practice on both sides of the transaction, across every group we work with, and every engagement makes the next figure more defensible than the last. That is the part of this work that cannot be hired for or built internally, because it only exists at volume, across firms, over years.
We spent the past year building this before taking a client. AI carries the data-heavy work inside it: reading the exports, rebuilding the patient base's visit and treatment pattern by cohort from the summary reports, and checking every figure against every other so the report reconciles in every section. That is how a six-location tuck-in gets the same depth on every location inside four weeks.