The economics of the dental chair

In the first article in this series, we asked whether dentist burnout and patient dissatisfaction might partly be manifestations of the same problem. Dentists describe being rushed, overworked and increasingly measured by production. Patients describe rushed appointments, confusing bills and treatment conversations that sometimes feel more transactional than clinical.

It is tempting to treat those complaints as cultural problems. Dentists should slow down. Practices should communicate better. Patients should trust their clinicians. Everyone should focus more on prevention.

The problem with that explanation is that it ignores the economics.

A dental practice is a business with payroll, rent, equipment, supplies, laboratory costs, insurance, technology and dozens of other expenses that continue whether the dentist spends an hour performing a procedure or an hour talking with a patient about preventing one. 

If we want to understand why practices behave the way they do, the useful question is not whether dentists care about preventing disease. Let's assume they do. The more useful question is what the current payment system financially rewards them for doing.

The answer gets technical surprisingly quickly.

Production is not revenue

When evaluating the performance of a dental practice the word "production" is commonly used, but even that word can describe several different metrics.

The American Dental Association gives a useful example. Suppose a practice's standard fee for a crown is $1,500. That $1,500 is the practice's gross production. If the patient is covered by a PPO whose contract establishes a maximum allowable fee of $1,000, the dentist cannot simply charge the patient the remaining $500. The economically relevant production has already fallen from $1,500 to $1,000 before anyone pays anything.

In the ADA's example, the insurer pays $500, the patient pays $450 and another $50 is ultimately written off. The original $1,500 procedure therefore produces $950 in actual collections.

Those numbers describe three very different things:

The practice performed $1,500 worth of dentistry according to its own fee schedule, was contractually permitted to collect $1,000, and actually received $950.

This matters because expenses are paid with the third number.

A hygienist's paycheck cannot be paid with gross production. Neither can rent, utilities, laboratory bills or dental supplies. Ultimately, a practice survives on collected revenue.

A very simplified operating equation is therefore:

Operating income = collected revenue - practice expenses

That equation is obvious. Its implications are more interesting.

The margin is already under pressure

According to the ADA Health Policy Institute's 2025 Survey of Dental Practice, average gross billings per general dentist in private practice were $965,660, while average net income was $215,320. Those figures should not simply be subtracted from one another to calculate overhead because gross billings, collections, expenses and dentist income are different measures. They do, however, give a sense of the scale of the business flowing through a typical dental practice compared with the income ultimately accruing to the dentist.

The longer-term trend is even more revealing.

Using inflation-adjusted medians, HPI compared general dental practices during 2015-2019 with those during 2020-2024. Revenue per dentist declined from $706,966 to $698,436, a decrease of 1.2%. Expenses increased from $468,459 to $482,343, an increase of 3.0%. Median dentist income fell from $230,353 to $200,000, or 13.2%. Because each figure is a separately calculated median, they should not be expected to reconcile into a single model practice, but the direction is clear: expenses moved up while revenue did not.

The more recent data tell essentially the same story. HPI reported in 2026 that over a five-year period, revenue increased 1.4% while expenses increased 4.9%. The organization describes the result as a continuing "fiscal squeeze" on dental practices.

Reimbursement is part of that squeeze. From January 2021 through mid-2026, the dental reimbursement index across all payer types increased approximately 19%. Inflation increased about 27% over the same period. Private insurance reimbursement increased even less, approximately 18%.

In other words, a practice does not necessarily solve rising payroll, supply and facility costs by charging more. For insured patients, the relevant price may be established by a contract.

That changes the problem from:

How much should we charge?

to:

How much dentistry can we deliver at the amount we are allowed to collect?

Those are very different questions.

Time becomes the scarce variable

Consider a deliberately simplified dental practice.

Suppose a practice needs $700,000 in annual collected revenue associated with a dentist's clinical operation. Assume the dentist works 192 clinical days per year, roughly four clinical days per week for 48 weeks.

That produces a required average of about:

$700,000 ÷ 192 = $3,646 per clinical day

If we think of an eight-hour clinical day, the same target becomes approximately:

$3,646 ÷ 8 = $456 per clinical hour

This is not intended as an industry benchmark. It is an illustrative normalization. Real practices have hygienists producing revenue, multiple providers, different staffing structures, different payer mixes and very different expenses.

But the exercise exposes something important.

Once a practice has a required amount of collected revenue and a finite number of clinical hours, time acquires an implicit price.

If an hour of clinical capacity needs, on average, to support several hundred dollars of collected revenue, then an additional 20 minutes spent with a patient is not economically neutral. Something else has to happen. Another procedure must generate more revenue, another appointment must be compressed, the workday must become longer, or the practice must accept lower income.

This does not require a greedy dentist.

It requires arithmetic.

The marginal value of different kinds of care

Now consider two uses of 20 minutes.

In the first, the dentist performs part of a billable restorative procedure. That procedure generates measurable production and eventually some amount of collected revenue.

In the second, the dentist sits with a patient who is at high risk for future periodontal disease. They discuss home care, smoking, diet, interdental cleaning and why the patient keeps returning with inflammation. The discussion works. The patient's behavior improves and future disease is prevented.

Clinically, the second encounter may have produced enormous value.

Under a conventional fee-for-service model, its immediate marginal revenue may be close to zero.

We can describe the incentive more formally.

For a simplified fee-for-service practice:

Annual patient revenue = Σ collected fees for services performed

If no separately reimbursable service occurs, direct revenue associated with additional time approaches zero.

That does not mean the conversation has no economic value. Better care may improve retention, reputation, case acceptance and long-term loyalty. Those effects matter. But they are indirect, difficult to measure and delayed.

The billable procedure is immediate and measurable.

This distinction matters because businesses tend to optimize what they can measure.

Production can be measured by provider, day, hour, operatory and procedure. It can be compared against goals. Software can display it on dashboards. Compensation can be tied to it.

The economic value of the crown is visible.

The economic value of the crown that never became necessary is much harder to put on yesterday's production report.

This is not merely theoretical

When the ADA asked dentists about their biggest challenges looking ahead to 2026, 55.3% identified insurance-related issues including low reimbursement and denials among their top three challenges. Staffing and workforce shortages were identified by 54.2%, increasing expenses and overhead by 41.5%, and maintaining patient volume or sufficient revenue by 31.8%.

Those problems interact.

If reimbursement per unit of care does not keep pace with costs, a practice has only a limited number of levers. It can reduce expenses, negotiate or leave payer contracts, increase the number of patients, increase the mix or quantity of procedures, raise prices for patients not constrained by contracts, or find some other source of revenue.

HPI reported in 2025 that roughly one in four dentists had dropped out of at least some insurance networks as reimbursement failed to keep pace with inflation and operating costs.

Seen through this lens, increasing patient volume is not necessarily evidence that dentistry has become obsessed with efficiency. It may be a rational response to declining revenue per unit of economic input.

That distinction is important.

If the system produces undesirable behavior, blaming the people behaving rationally inside the system will not fix it.

Dental insurance is also not a small part of the equation

For working-age adults, private dental benefits remain the dominant form of coverage. Among Americans ages 19 to 64, 63% have private dental benefits, 16% have public benefits and 21% have no dental benefits. Insurance status is also strongly associated with utilization. In 2023, 53% of working-age adults with private dental coverage had at least one dental visit, compared with 24% of those with public coverage and 16% of those without coverage.

So simply declaring that dentistry should abandon insurance would ignore a major reason many patients seek care in the first place.

The point of this series is not to argue that insurance serves no useful purpose. It clearly affects access and utilization. The more interesting question is whether a system designed around reimbursement for discrete services creates incentives that sometimes work against prevention, time and continuity.

That is a different question.

Now change the revenue function

This is where membership and direct-care models become interesting, not because subscriptions are fashionable, but because they change the mathematics.

Consider a simplified membership model:

Annual patient revenue = annual membership fee + collected fees for services outside the membership

A more comprehensive direct-care model might look like:

Annual patient contribution margin = membership revenue - expected cost of included care

The distinction is fundamental.

Under fee-for-service, preventing a future procedure can also prevent future revenue.

Under a prepaid model, preventing future disease can reduce future cost while the recurring revenue relationship remains intact.

That is a much closer alignment between the financial objective and the clinical objective.

It does not eliminate every perverse incentive. It may simply reverse some of them.

A poorly designed capitated system could reward undertreatment just as a poorly designed fee-for-service system can reward overtreatment. If a practice receives the same payment regardless of how much care a patient needs, the economic incentive could theoretically become "do less."

This is why the objective is not to find a payment model with no incentives. Such a model probably does not exist.

The objective is to understand which behaviors each model makes economically attractive and then design guardrails around them.

Dentistry already contains several experiments

The dental market is not purely fee-for-service today.

PPO arrangements establish contracted fees for procedures. DHMO or capitation models may prepay dentists a set amount per month for assigned patients. The ADA describes DHMO arrangements as paying contracted dentists a predetermined amount each month for each patient assigned to them.

In-office dental plans introduce another variation. Patients generally pay the practice a fixed monthly or annual amount in exchange for included preventive services and discounts on additional procedures. The ADA has developed both guidance and a financial calculator specifically for practices considering these plans.

That means dentistry already contains versions of all three broad economic structures:

Payment for procedures.

Payment per patient.

Hybrid systems combining recurring payment with procedure fees.

What we largely lack is an obvious consensus about which combination produces the best alignment between patient health, clinician satisfaction and financial sustainability. More importantly, those outcomes should be measurable.

A model we could actually test

Suppose we wanted to compare a traditional fee-for-service practice with a membership-oriented practice rather than simply arguing about them.

We could define outcomes in several categories.

For the patient, we could measure disease incidence, emergency visits, restorative treatment, tooth loss, appointment availability, wait time, out-of-pocket cost, retention and satisfaction.

For the dentist, we could measure clinical hours, patients seen per day, administrative time, income, income volatility, schedule utilization, burnout and professional satisfaction.

For the practice, we could measure revenue per patient, contribution margin, recurring revenue percentage, acquisition cost, retention, collections, insurance write-offs, cancellations and revenue per clinical hour.

Then we could ask whether changing the payment model changes those outcomes.

The unit of analysis could be the patient-year rather than the procedure.

That change alone is important.

Instead of asking:

How much production did this patient generate?

we could ask:

What did it cost to keep this patient healthy for a year, what revenue supported that care, and what happened to the patient's health?

For a preventive healthcare system, that may be the more meaningful denominator.

The healthy patient problem

This returns us to the question that started the series.

What would dentistry look like if the most profitable patient were the healthy one?

Under a procedure-driven model, a healthy patient who receives two uncomplicated preventive visits and needs nothing else generates relatively little production.

That is clinically excellent.

Economically, it is limited.

Under a well-designed recurring-revenue model, the same patient can remain economically valuable precisely because the practice maintains a long-term relationship with that patient. Prevention, education and early intervention can potentially reduce the future cost of maintaining that relationship rather than eliminating the practice's opportunity to generate future revenue.

That does not prove that a membership model is better.

It gives us a hypothesis.

And unlike a general argument about what dentistry ought to look like, it is a hypothesis we can begin to test.

The next step is to build the model more seriously: determine what a patient actually costs a practice over time, estimate the distribution of risk across a patient population, identify which services could realistically be included in a recurring fee, and determine what membership price would be required to make the system financially sustainable.

At that point, the question stops being philosophical.

It becomes mathematics.