Should I buy a fee for service dental practice?

Or is it too risky?

I hear this question a lot from associates evaluating their first acquisition. They’ve heard that fee-for-service practices are unstable, that patients will leave for an in-network provider the moment a new owner takes over. The fear is that you’re paying a premium for a patient base that isn’t sticky and could leave at any time.

Ten years ago, there may have been some truth to that concern. But the market is shifting dramatically, and what was once considered risky is now one of the most attractive opportunities in dentistry today.

When I sat down with Marie Chatterley from CTC Associates on our podcast, she said something that was interesting: “I’ve never seen this many practices transition off of PPO participation and move toward fee-for-service – like I have been seeing in the last five years.”

That trend is changing everything when looking at practice valuations. It’s creating a window of opportunity for buyers who understand what’s happening in their perspective markets.

Why Dentists Drop Insurance

The shift didn’t happen overnight. It’s the result of years of compounding pressure.

First, real estate prices surged. Then staffing costs exploded, especially post 2020, when finding and keeping a qualified team became one of the biggest challenges in dentistry. Overhead climbed while PPO reimbursements stayed flat or plans started declining more procedures for the same plans a year ago.

Marie put it bluntly: “When you actually analyze production by procedure code against PPO fee schedules, many practices discover that 20% or more of the procedures they perform are underwater.” “They’re not just making less money, they’re losing money on certain treatments.” “The math simply isn’t adding up.”

So doctors started making a choice that felt risky but turned out to be rewarding: dropping the worst-performing insurance plans and raising their fees to reflect the actual cost of quality care.

And here’s what happened patient attrition ended up being minimal (on a case by case scenario). The fear of mass exodus never fully materialized at the scale everyone predicted. As it turns out patients value their dentist more than they are loyal to insurance networks, especially in middle and upper-income demographics.

What This Means for Practice Values

The financial impact has been significant. Marie shared how she now sees practices with net incomes of $600,000, $700,000, even $800,000 or more. Where a decade ago, she said, seeing a practice net above $400,000 was pretty uncommon. But now it’s becoming a norm in certain markets. Also considering those practice are well-run fee-for-service offices.

That’s not just good news for sellers. It’s also massive opportunity for buyers.

When you acquire a practice that has already done the hard work of transitioning off PPOs, you’re inheriting a business with stronger margins, less insurance dependency, and a patient base that has already demonstrated loyalty through a fee change. The risk of attrition isn’t theoretical, it’s already been tested.

Compare that to buying a heavily PPO-dependent practice where you’re inheriting thin margins, administrative headaches, and the difficult decision of whether to keep participating or go through the transition yourself.

Various Billing Models for Dental Practices

As you evaluate opportunities, here’s how to think about insurance participation and what it means for your purchase:

Scenario 1: The Practice Has Already Transitioned to Fee-for-Service

This is increasingly the most desirable scenario. The previous owner has done the heavy lifting; renegotiating or dropping plans, adjusting fees, weathering any short-term patient attrition. What you’re buying is a stabilized, high-margin business with proven patient loyalty.

Yes, the asking price may be higher. But when practices sell for 150-200% of net income, a practice netting $700,000 is worth significantly more than one netting $350,000 on similar collections. You’re paying for profitability, not just revenue.

Scenario 2: The Practice Is Partially Transitioned

Some practices are mid-journey, they’ve dropped a few plans but still participate in others. This can actually be an opportunity if you know how to evaluate it.

Look at which plans remain and what percentage of production they represent. Assess whether the remaining PPOs are viable long-term or candidates for elimination. If you have a clear roadmap for completing the transition post-acquisition, you may find a practice priced below its true potential.

This is where understanding practice management fundamentals becomes critical. You need to know how to communicate fee changes to patients, retain your team through the transition, and maintain production while shifting your payer mix.

Scenario 3: The Practice Is Heavily PPO-Dependent

This isn’t automatically a bad opportunity, but you need to go in with realistic expectations. Margins will be tighter. You’ll face a choice: continue accepting lower reimbursements or undertake the transition yourself.

If you choose to transition, plan for 12-24 months of intentional work, analyzing contracts, communicating with patients, potentially losing some volume in exchange for better margins. It’s doable, but it’s not passive. Factor that effort and timeline into your valuation.

The Attrition Fear Is Manageable

Let’s address the underlying concern directly: Will patients leave if I buy a fee-for-service practice?

In 20 years of brokering transitions across every model (fee-for-service, PPO, Medicaid,…) Marie had exactly one buyer report significant stress over patient attrition. Just One. It’s important to notes that Marie works in the Rocky Mountain region of the country.

The lesson is this, that patient loyalty in dentistry is strong. People don’t just switch dentists casually. Especially if they are getting taken care of. They have relationships with their hygienist, trust their doctor, and value continuity. As Marie stated on the podcast, “I’ll see anyone at my dermatologist, but there’s only one person I want working in my mouth.”

When you first buy a practice, the patients will give you a fair chance. Your job in the first six months is simple, take great care of them and treat the team well. Do that, and retention takes care of itself. Work with NEXT LEVEL CONSULTANTS acquisition and transition team. We have helped docs do this. flawlessly again and again

The Window of Opportunity

Here’s why I believe this is one of the best times to pursue dental practice ownership:

The practices hitting the market today are more profitable than they were a decade ago. The doctors who weathered the overhead increases and made hard decisions about insurance participation have built businesses that cash flow significantly better than their predecessors.

At the same time, student debt has pushed many buyers to wait, working as associates for three to seven years before purchasing. That means when you do step into ownership, you’re coming in with clinical experience, financial stability, and a clearer picture of what you want. You’re not guessing. You’re executing.

The combination of higher-margin practices and more experienced buyers is creating transitions that work. Sellers are confident in their successors. Buyers are walking into profitable operations. And the old fear of fee-for-service risk? It’s being replaced by a recognition that insurance dependency was the real risk all along.

Buy a Fee For Service Practice

If you’ve been waiting for the “right time” to buy, consider that the market conditions may never be better aligned than they are now. Fee-for-service practices are more profitable and more prevalent. The playbook for successful transitions is well-established. And the tools to evaluate opportunities [production analysis, valuation modeling, clinical fit assessment] are available if you have the right team in your corner.

At NEXT LEVEL CONSULTANTS, we’ve guided hundreds of dentists from associate to owner. We help you analyze opportunities, understand what you’re really buying, and build a transition plan that sets you up for long-term success.

If you’re ready to stop waiting and start building, reach out. Let’s talk about what ownership could look like for you.