The Benchmark: your payer mix is your P&L
Picture two general practices on the same street. Same four operatories, same $1.2M in production, same 62% overhead structure on paper, same equipment, same hours. Practice A collects 95 cents of every dollar it produces, because most of its patients pay fee-for-service or through an in-house membership plan. Practice B is 75% PPO, and after contractual write-offs it collects closer to 70 cents.
Run the arithmetic. On $1.2M of production, Practice A collects roughly $1,140,000. Practice B collects roughly $840,000 — a $300,000 gap between two "identical" practices, before either one has changed a single clinical decision. And because overhead is largely fixed, nearly all of that gap lands on the owner's side of the ledger. Practice A's owner takes home more than double.
Here's what makes this the most under-managed number in dentistry: most owners can quote their production to the dollar and have never once run collections-per-hour by payer. Production is vanity. Collections by payer is the business.
It compounds at exit, too. A buyer — DSO or private — isn't buying your production; they're buying the durable cash flow your payer mix produces. Two practices with identical top lines can carry valuations hundreds of thousands of dollars apart on payer mix alone. When we say "read the offer through the cap table," this is what the buyer's cap table is reading in you.
The Market Note: consolidation runs on payer math
Roughly 39% of U.S. dental offices are projected to be DSO-affiliated by the end of 2026, up from 23% in 2024. The usual story is capital and scale. The quieter story is payer leverage: platforms negotiate reimbursement across hundreds of locations, which means the same PPO contract is worth more inside a platform than inside your practice. That spread — between what an insurer pays you and what it pays a platform for the same crown — is part of what a DSO is arbitraging when it buys you. Know it before they price it.
The Operator Tactic: run the report nobody runs
This week, pull one report from your PMS: collections by payer, trailing 12 months. Then do three things.
Compute collections per chair-hour for each plan. Not per procedure — per hour. Chair time is your only truly finite inventory.
Rank the plans. There is almost always one plan at the bottom paying 25–40% below your best payer for identical work.
Model dropping the worst one. The standard fear is losing the patients. The standard math says something different: if a plan fills 20% of your chair time at 65% of your average collection rate, replacing even half of those hours at better rates leaves you ahead — with less chair time used. You don't need to go out of network everywhere. You need to stop subsidizing your worst payer with your best hours.
That report takes twenty minutes. It's the highest-paid twenty minutes available to you this week.
Next Sunday: the number the insurance industry hopes you never plot — the dental annual maximum, frozen since the 1970s, and what its quiet erosion means for how patients will pay you in the next decade.
— Thad
The Practice Ledger is a neutral data publication. Nobody buys a number: sponsors buy adjacency, never editorial. Sources and methodology for every benchmark we publish are available on request — and will live at our data pages as they come online.