Navigating Dental Insurance Podcast (SayNoToPPOs.com)
Navigating Dental Insurance Podcast (SayNoToPPOs.com)
This podcast.blog teaches the best practices for cash flow, recurring revenue, Membership plans, PPO Fee negotiation, insurance best practices, marketing, reducing your dependence on dental insurance and building a fee for service practice.
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Jordon Comstock
Jordon Comstock

Dentistry's Fiscal Squeeze: Why Rising Costs Are Forcing Practices to Rethink Their Business Model

Dentistry's Fiscal Squeeze: Why Rising Costs Are Forcing Practices to Rethink Their Business Model

8/5/2026 4:06:00 PM   |   Comments: 0   |   Views: 34

Dentistry's Fiscal Squeeze: Why Rising Costs Are Forcing Practices to Rethink Their Business Model



Image based on data from the ADA Health Policy Institute's 2026 Survey of Dental Practice.
Every dental practice owner feels it.

Payroll is higher than ever. Dental supplies cost more. Technology subscriptions seem to multiply every year. Rent, utilities, insurance, and compliance expenses continue to climb.

Yet many dentists are asking the same question:

"Why doesn't it feel like we're making more money?"

The answer was recently highlighted by the ADA Health Policy Institute in its latest analysis of the Survey of Dental Practice.

The numbers tell an important story.

From 2021 through 2025, inflation-adjusted dental practice revenue increased just 1.4%, while expenses increased 4.9%.

That means practice expenses grew 3.5 times faster than revenue.

The ADA refers to this trend as a "fiscal squeeze."

For practice owners, it means something much simpler:

You're working just as hard—or harder—but your profit margin is shrinking.

The Hidden Problem Isn't Production

Dentists are producing incredible dentistry.

Patients still need treatment.

Technology continues improving clinical outcomes.

The issue isn't that practices have forgotten how to grow.

The issue is that the economics of dentistry are changing.

When revenue barely moves while expenses continue climbing, every percentage point matters.

A few examples:

  • Team wages continue increasing in a competitive labor market.

  • Dental supplies remain more expensive than they were before inflation.

  • Software subscriptions have become a permanent monthly expense.

  • Compliance, cybersecurity, and technology investments continue growing.

  • Marketing costs continue rising.

Unfortunately, reimbursement has not increased at the same pace.

The PPO Tax

Many practice owners think of PPO write-offs as "just part of doing business."

But what if they're really a tax?

Every month, practices perform high-quality dentistry.

Then thousands—or sometimes tens of thousands—of dollars disappear through contractual adjustments.

No additional work was avoided.

The doctor still diagnosed the case.

The assistant still set up the room.

The hygienist still provided care.

The front office still scheduled and collected.

Yet the practice simply receives less revenue.

As operating expenses rise, those write-offs become even more painful.

A write-off that felt manageable five years ago may now represent the profit needed to cover payroll increases or technology investments.

The ADA's data doesn't specifically blame PPOs for the fiscal squeeze.

However, many practice owners recognize that declining reimbursement combined with rising operating costs creates increasing financial pressure.

Why More Dentists Are Talking About Recurring Revenue

Healthcare businesses outside dentistry have understood recurring revenue for decades.

Subscription businesses have predictable cash flow.

Software companies value monthly recurring revenue.

Fitness clubs rely on memberships.

Even streaming services understand the power of recurring monthly income.

Dentistry has traditionally depended almost entirely on fee-for-service production.

That creates two challenges.

First, every month begins at zero.

Second, insurance companies influence a significant portion of practice revenue.

Membership plans introduce another revenue stream that comes directly from patients.

Instead of relying exclusively on reimbursement schedules, practices begin building predictable monthly recurring revenue.

This doesn't replace clinical production.

It stabilizes it.

Membership Plans Are More Than an Alternative to Insurance

Some dentists mistakenly believe membership plans exist only for uninsured patients.

In reality, successful membership programs often accomplish much more.

They can:

  • Improve patient loyalty

  • Increase preventive visits

  • Encourage treatment acceptance

  • Improve collections

  • Create recurring revenue

  • Reduce dependence on PPO participation

Many practices eventually use recurring revenue as a financial cushion while strategically evaluating PPO participation.

Instead of asking:
"Can we afford to drop this PPO?"
The conversation becomes:
"We've already replaced part of those write-offs with recurring revenue."
That's a completely different financial position.

Manage your Patient membership program with BoomCloud™

Building a Financial Safety Net

Imagine walking across a high wire.

Would you rather cross with no protection?

Or with a safety net underneath?

Membership revenue functions much like that safety net.

Every enrolled patient contributes predictable monthly income.

As recurring revenue grows, practices gain flexibility.

They're less dependent on any single insurance company.

Less vulnerable to reimbursement changes.

Less exposed to economic fluctuations.

That doesn't mean every PPO should immediately be dropped.

It means practice owners have options.

Financial freedom begins with having options.

The Real Cost of Waiting

Many dentists wait until profitability becomes a problem before evaluating their payer mix.

Unfortunately, that's often the hardest time to make changes.

A practice already experiencing declining margins has fewer resources available for transition.

Instead, consider building recurring revenue while the practice remains healthy.

Think of it as strengthening the foundation before the storm arrives.

Questions Every Practice Owner Should Ask

As you review the ADA's findings, ask yourself:

  • How much did payroll increase over the past five years?

  • Have your supply costs increased?

  • Have your PPO reimbursements kept pace?

  • What percentage of production is written off each month?

  • How much recurring monthly revenue does your practice currently generate?

  • If one PPO reduced reimbursement tomorrow, how prepared would you be?

These questions matter because they reveal where future opportunities exist.

The Future Belongs to Financially Resilient Practices

Dentistry remains one of the best professions in healthcare.

Demand for quality dental care isn't disappearing.

Patients continue valuing excellent clinicians.

However, the business side of dentistry is changing.

The practices that thrive over the next decade may not simply be the ones producing the most dentistry.

They'll likely be the ones building stronger financial models.

That means:

  • Diversifying revenue sources.

  • Improving profitability instead of simply increasing production.

  • Creating predictable recurring income.

  • Becoming less dependent on declining reimbursement models.

The ADA's latest report should serve as a wake-up call.

If expenses continue growing faster than revenue, every practice owner should ask:

"How do I build a more resilient business?"

For many practices, the answer won't be working longer hours.

It will be building systems that create stronger economics.

Membership plans are one example of that shift.

They're not simply another patient benefit.

They're a strategy for increasing financial stability in an environment where expenses continue rising faster than reimbursement.

Final Thoughts

The ADA's numbers tell an important story.

Revenue grew just 1.4%.

Expenses grew 4.9%.

That gap may seem small on paper, but over several years it compounds into shrinking profitability for many practices.

You cannot control inflation.

You cannot always control insurance reimbursement.

But you can control how your practice generates revenue.

The practices that proactively build recurring revenue today may find themselves far better positioned tomorrow—not just to survive dentistry's fiscal squeeze, but to thrive despite it.
Category: Practice Management, HR and Accounting
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