What Insurance May Actually Be Costing Your Practice
Written by: Kari Miller, Investment Grade Practice Business Advisor, Productive Dentist Academy
Most dentists don’t think of insurance as advertising, but financially that is exactly how it functions inside a practice.
Insurance introduces patients to your office in exchange for a discount on services. That trade can make sense in certain stages of growth, and for many practices it feels like a stable way to maintain patient flow. The part that often goes unexamined is the price of that arrangement. Every adjustment represents revenue the practice produced but agreed not to collect. Over time, those adjustments accumulate into one of the largest financial line items in the business, yet very few doctors evaluate it the way they would evaluate any other marketing expense.
When a practice spends thousands of dollars each month on advertising, the doctor expects to know the return. They’re keen on tracking new patients, monitoring retention, and analyzing performance so they can clearly see what their investment is producing. Insurance write-offs rarely receive that same level of scrutiny, even though they might represent a far greater investment than any traditional marketing campaign.
Once a doctor sees insurance through that lens, the conversation changes. The question stops being whether insurance is good or bad and becomes something more practical: is this investment producing the kind of practice we actually want to run?
When Cost of Acquisition Fades Into the Background
Once insurance adjustments become routine, they begin to feel like part of your practice’s foundation. Most practices don’t wake up one day and choose to invest a specific percentage of their revenue into patient acquisition through write-offs. It’s a relegation that occurs over time. Your profits begin to erode due to changes in percentages, minor contract adjustments, and tighter and tighter reimbursements. Pretty soon, the adjustment column expands quietly while your schedule stays full, meaning you get busier while your profits stay the same, or shrink.
It’s the busyness of your office that keeps most offices from realizing the financial shift.
A packed schedule feels like proof that your system is working, but your profitability tells a different story. In many practices, insurance adjustments can account for 20–40% or more of production, while practices with a stronger fee-for-service mix retain a much higher percentage of what they produce. That gap alone can impact profitability, even when production levels look similar, as reflected in benchmarking from groups like the Academy of Dental CPAs and the American Dental Association. The margin underneath that bustling activity narrows in ways that are difficult to see unless you deliberately review your numbers.
This is how practices drift into structures they never intended to build. Each adjustment viewed on its own feels manageable, and you think, “Oh, that’s not so bad,” but when you gather years of micro-adjustments and put it all in one pile, it completely reshapes the economics of your dental practice. That’s where the stress you feel every day lives.
When the cost of acquisition fades into the background, your practice loses the ability to evaluate whether the trade even makes sense.
The only way to interrupt that drift is to look directly at the numbers.
The Numbers Many Practices Never Fully See
When we begin coaching a practice, the first step is always the same: gather clean data.
Many doctors know their production totals. Fewer know their net collections by insurance plan. Even fewer can state their adjustment percentage without opening a report. That gap in visibility makes strategic decision-making almost impossible.
Once the numbers are organized, patterns emerge. Some plans contribute meaningfully to profit. Others consume chair time without delivering margin. Administrative effort increases alongside those relationships. Team members (or, in some cases, pricey third-party companies you’ve hired as administrative adjuncts) spend hours on hold with insurance carriers, correcting claims, and chasing reimbursements that might never arrive in full.
The doctor sees a packed schedule and assumes growth. The financial reports reveal a different story. That disconnect explains why some practices feel exhausted even while appearing successful.
The Volume Illusion
Practices that rely heavily on insurance often respond to shrinking margins by trying to increase volume. Doctors push themselves to move faster, schedules grow tighter, and teams stretch to keep pace with the demand. The reaction makes sense. When financial pressure builds, the instinct is to produce more in order to stabilize the numbers. The difficulty is that greater effort does not always translate into greater strength for the business, especially when the underlying reimbursement structure remains unchanged.
Your practice works harder without actually fixing the real problem, and until your payment model changes, more effort won’t create a healthier business. Adjustments scale with production. And that means if 50¢ of every dollar disappears into write-offs, doubling production does not double profit. It doubles workload. For example, a practice producing $100,000 per month with a 50% adjustment rate collects $50,000. If that same practice doubles production to $200,000 without changing its payer mix, collections rise to $100,000, but so does the workload, team pressure, and clinical strain required to get there.
That math creates a cycle where the practice becomes busier without becoming stronger. The emotional impact shows up as frustration, fatigue, and a sense that the business demands more and more from you and your team every year just to maintain the same position.
Doctors rarely enter dentistry expecting to run on a treadmill. Most entered the profession to practice excellent care and build something sustainable. When the numbers prevent that sustainability, the tension becomes personal.
Seeing Insurance as a Strategic Choice
Once a practice understands the financial architecture clearly, insurance becomes easier to evaluate rationally. Some plans might make sense to keep working with, and others might not. Your goal is not total insurance elimination, but intentional participation.
Practices in competitive markets might rely on certain networks during growth phases. New offices might use insurance as a bridge while building reputation. Established practices might choose a hybrid model that balances accessibility with profitability. The name of the game is knowing what your options are.
When you recognize that insurance is simply one tool among many rather than the foundation of your practice, you restore agency, allowing you to drive your own future instead of just being a passenger.
Why Awareness Comes First
Before you even think about changing your relationship with insurance providers, your first step is to understand what your business’s numbers are telling you. If you don’t have the clean data in front of you, you’re only making an emotional decision rather than a strategic one. Every doctor should be able to answer a few basic questions about their practice without guessing:
- What percentage of total production is written off as insurance adjustments?
- Which insurance plans produce the highest collections, and which consume the most chair time relative to what they pay?
- How much administrative labor is tied directly to insurance, including team hours spent verifying benefits, correcting claims, and chasing reimbursements?
- What is the practice’s true profit margin after adjustments, overhead, and payroll?
- How dependent is monthly cash flow on a small number of insurance carriers?
These numbers don’t tell you what to do next, but they tell the story of the reality of your current model. If you don’t know these numbers, every decision you make is built on assumption. So when you gather this information, you obtain the ability to calmly evaluate your own structure instead of reacting to stress. You can see precisely where your profit leaks are, where you’re putting in most of your effort, and where the risk is hiding, turning vague frustration into a problem you can solve.
A Question Worth Considering
If insurance functioned purely as a marketing expense inside your practice, how much would you choose to invest? That question does not demand a dramatic response. It simply invites clarity. Once you have that clarity, every decision you make from then on becomes easier to evaluate.
That’s where change begins.
ABOUT THE AUTHOR
Known for her practical insight, radical empathy, and straight talk, PDA IGP Business Advisor Kari Miller helps dentists and their teams bridge the gap between struggle and success. With more than a decade of coaching experience, Kari empowers practice owners to see their potential clearly and take confident steps toward lasting growth. Her approach balances compassion with accountability, celebrating wins while tackling challenges head-on. Rooted in resilience and authentic care, Kari’s work is guided by one belief: when you trust yourself and take great care of others, great things happen.
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