A few months ago, we wrote a blog focusing on Evaluation and Management of In-Network Insurance Contracts. This blog laid the groundwork on how to assess your adjustment percentage with each insurance company and how to pull data to evaluate each contract. Even with all of this information, the question sometimes arises: Should I go out-of-network? The decision to leave a dental insurance network should be approached as a business and clinical strategy decision—not simply a fee schedule decision. The objective is to determine whether the practice is creating greater long-term profitability and patient value by remaining in-network or by transitioning to an out-of-network relationship.
We’ve put together a step-by-step framework for you to work through to determine what the best decision is for your dental practice.
Dental Insurance Network Evaluation Framework
Step 1: Measure the Financial Impact of the Insurance Plan
Begin by understanding exactly how much revenue is negatively impacted through contractual adjustments.
Review:
- Total Annual Production
- Total Collections
- Total Insurance Write-Offs (Contractual Adjustments)
- Number of Active Patients
- Number of New Patients
- Percentage of Production tied to the insurance company
Example:
| Metric | Value |
| Gross Production | $2,000,000 |
| Insurance Write-offs | $320,000 |
| Net Production | $1,680,000 |
Step 2: Determine the True Cost of Participation
Many practices look only at reimbursement. Instead calculate: Total Insurance Adjustments ÷ Total Production
Example:
$320,000 ÷ $2,000,000 = 16% discount
The practice is discounting 16% of its production due to contractual adjustments.
Now compare this against:
- overhead percentage
- profit margin
- provider compensation
- hygiene profitability
A 16% fee reduction may reduce profit by significantly more than 16%, especially when fixed expenses remain unchanged.
Step 3: Evaluate Patient Dependency
How dependent is the practice on this insurance?
Review:
- Number of active patients with the plan
- Number of hygiene patients
- Number of restorative patients
- Number of new patients annually
- Percentage of production
Example:
| Insurance | Production % |
| Delta | 42% |
| MetLife | 8% |
| Guardian | 5% |
A practice that receives only 5% of production from a carrier has much lower risk than one receiving 40%.
Step 4: Evaluate Patient Loyalty
Review patient behavior for your practice. Does this insurance refer a lot of patients to your practice? Do those patients bring their families in?
Determine:
- Average years patients remain
- Referral Source
- Family Members
- Acceptance Rate
- Recall Compliance (consider adding) Are there large local businesses that provide a specific insurance to their employees
- Long-term relationship patients generally stay with the doctor—not necessarily with the insurance network.
Practices often discover patients selected them because of:
- Reputation
- Convenience
- Clinical Excellence
- Relationships
- Trust
Not because they were in-network.
Step 5: Compare Fee Schedule to Usual and Customary (UCR) Fees also referred to as your office fees
Compare each carrier’s allowable to:
- Office Fee (UCR)
- Average Regional UCR Fee
- Percent of UCR reimbursed
Example:
| Procedure | Your Office UCR | Average Regional UCR | Insurance Fee |
| Crown | $1,450 | $1,425 | $930 |
Carrier reimburses only 65% of UCR.
Step 6: Calculate Lost Revenue
Estimate: “What would production have been like if no write-offs occurred?”
Example: Annual Adjustments: $320,000
If the practice retained 80% of those dollars after going out of network:
Potential Additional Revenue: $256,000
Now estimate patient attrition.
Example assumptions:
- Lose 8% of patients
- Production decreases $120,000
- Insurance adjustments eliminated $320,000
Net improvement: +$200,000
This type of analysis helps determine the financial break-even point.
Step 7: Estimate Attrition Risk
Create multiple scenarios of what might happen to your patient base if you do go out of network. You might also call this a ‘what-if’ calculator. What if only 5% of our patient base leaves? What if 25% leave?
| Scenario | Patient Loss | Financial Impact |
| Best Case | 3% | Significant gain |
| Expected | 8% | Moderate gain |
| Conservative | 15% | Small gain |
| Worst Case | 20% | Review carefully |
Many established practices experience lower patient attrition than anticipated if and when communication is handled effectively and the practice has strong patient relationships.
Step 8: Compare Profitability by Insurance Company
Develop a payer scorecard.
| Metric | Carrier A | Carrier B |
| Production | $650,000 | $180,000 |
| Adjustments | $150,000 | $22,000 |
| % Discount | 23% | 12% |
| Active Patients | 780 | 145 |
| New Patients | 65 | 18 |
| Avg Adjustment per Visit | $168 | $64 |
| Administrative Difficulty | High | Low |
| Renewal History | Poor | Fair |
This allows leadership to compare plans objectively rather than relying on anecdotal impressions.
Step 9: Strategic Questions to Ask
Beyond the numbers, ask yourself the following questions:
- Does this plan help us grow?
- Are reimbursement rates keeping pace with inflation?
- Is the payer receptive to fee negotiations?
- Would the practice replace lost patients through marketing or referrals?
- Does participation align with our long-term vision?
- Does remaining in-network support or hinder investments in technology, team compensation, continuing education, and patient experience?
Decision Matrix
A carrier may be a strong candidate for termination if several of the following are true:
- Contractual adjustments exceed 20–25% of production for that payer.
- Reimbursement is substantially below usual and customary fees.
- The payer represents a relatively small share of total production.
- The practice has a loyal, established patient base.
- Clinical recommendations are frequently constrained by plan limitations.
- Administrative burden is high.
- The projected financial improvement remains positive even after modeling reasonable patient attrition.
Conversely, remaining in-network may be appropriate when the plan is a major source of new patients, reimbursement is competitive, contractual adjustments are modest, and participation aligns with the practice’s growth strategy.
Overall, the decision to remain in-network should be based on data rather than emotion. By analyzing contractual adjustments, procedure-level reimbursement, patient dependence, administrative costs, clinical impact, and multiple attrition scenarios, a practice can estimate the true value—or cost—of participating with a dental insurance plan and make a confident, evidence-based decision about whether remaining in-network supports its long-term goals.
If you would like help on any of the following topics, please reach out to a member of our team HERE:
- How to properly analyze current in network insurance contracts
- How to create a ‘what if’ calculator to estimate the practice break-even point
- How to communicate with existing patients about our insurance contracts and decisions
If you missed our last blog post about why writing a blog for your dental practice website is so important, you can read it HERE. To request a FREE Practice Optimization Analysis for your practice and to learn more about how to create more profitability in your practice, click HERE.
