Have you ever heard the term “boiling a frog?”

Yeah, I know. It’s a little gross.

But it’s particularly applicable to what’s happening right now with overhead and profitability in dentistry.

The metaphor is simple:

If you drop a frog into boiling water, it jumps out immediately.

But if you put it in cool water and slowly heat it up, it stays there… until it’s too late.

It’s often used to describe how humans react to obviously bad situations but fail to react when things gradually worsen.

And that’s exactly what’s happened to overhead in dentistry.

When 50% Overhead Was “Normal”

Back when I started out in the dental industry (the early 1990s), if you asked any dental management guru what overhead should be in a solo GP practice, you would hear the same answer:

50%.

If you collected $60,000, you should net $30,000.

Simple.

Now?

Google “ideal dental overhead” and you’ll see 61–65% listed as “normal.” And if it’s a newer practice? Even higher. 

So here’s the question:

How, why and when did this become okay?

What changed?

Let’s Start with Basic Math

Before we go any further, we need to ground ourselves in some very basic truths.

1. Profit in its simplest sense: Revenues minus Costs (What you spend).      

2. Income is directly tied to what you charge and what you collect. 

3. To increase profit, you either:                       

• Increase income
• Decrease expenses
• Or do a combination both

That’s it. This isn’t complicated.

So, if overhead as a percentage keeps rising, either:

• Costs are rising faster than income
• Income is stagnating
• Or a combination of both

Let’s look at what’s actually happened.

The Elephant in the Room

We could talk about waste. We could talk about inefficiencies.

We could talk about rising costs, new software, equipment, services, etc.,

And yes, those things matter. We do overhead sort outs with clients all the time.

But for the average U.S. dentist?

The primary reason overhead has steadily climbed is simple:

Most practices are in-network.

And when you’re in-network, you don’t control what you charge.

You charge less than you otherwise would (and do with your “Private” Fees).

That distorts the income side of the profit equation.

And Here’s the Part Most Doctors Don’t Realize

Even many dentists “private fee” fees aren’t high enough.

When we evaluate fees with new clients, we frequently find they aren’t even at the 40th percentile in their area.

Some aren’t even at the 30th percentile.

That means 70% of the offices around them are charging the same or more.

And then, on top of that, they’re in-network.

So they’re discounted twice:

• Once by underpricing private fees
• Again by PPO adjustments

They don’t have a cost problem. They have an income control problem.

How This Crept Up Over Time

When PPOs gained real traction in the mid-1990s, things didn’t look catastrophic.

Write offs weren’t near as brutal as today.

For some of the better plans, you might have had a 10–15% reduction. It might have felt like a marketing fee.

And the software made it obvious. Most software didn’t have the ability to generate multiple fee schedules. There was just your fee. So, if your crown was $750 and the PPO allowed $650, you saw the $100 write off immediately.

• You billed your normal fee.
• You saw the write-offs at the end of every month.

But here’s what changed:

Reimbursements (and in-network fees) didn’t track anywhere near as closely as they should have with costs.   

That’s how the water got warmer.

Not through dramatic cuts. at first, but through stagnation.

Meanwhile:

• Staff pay increased.
• Rent increased.
• Utilities increased.
• Lab costs increased.
• Supplies increased.
• Everything else went up…

But reimbursements didn’t. Or didn’t do up enough.

And little by little the “acceptable” overhead percentage got higher and higher. Year after year.

The water began to get warmer.

The Last Five Years Changed Everything

Then came the period between 2020 and now.

Let’s talk data.

From September 2014 to February 2020:

• Overall combines Inflation?: 9%

From March 2020 to August 2025:

• Overall combines “Official” inflation: 26%

If it’s officially 26%, not to sound like I am wearing a tin-foil hat: it’s probably higher in reality.

And during that same period?

Some insurance companies lowered reimbursement rates. Not kept them the same. Lowered them and your fees.

I know of one carrier in the Northeast that negotiated an overall 8% reimbursement reduction then marketed it to employers as a “win.”

Let’s connect this to actual dentist income.

What Happened to Dentist Net Income?

According to the ADA Health Policy Institute data, for the years,

2014–2019

• Dentist Median net income went from $160,000 → $186,620
• An increase of $26,000 per year or (17%)
• Inflation during that period was: 9%

Dentist’s income outpaced inflation. The average doctor was spending a 17% increase (average) in income into 9% inflation. They were ahead. Well, what happened after that? For the years:

2019–2024

• Dentists Median net income went from: $186,620 → $190,500
• An Increase of 2% or roughly $3,400 per year.
• Inflation during that period: 23%

So, the math? Doctor’s were spending a 2% increase in net income into a 23% inflationary environment…let that sink in.

That’s the squeeze.

That’s why profitability pain has exploded the past few years.

We’re seeing more overhead-related pain in newer clients than ever before.

And it’s not because they went out and bought a bunch of new equipment. It’s because the water is now boiling.

What Would Any Other Business Do?

Let’s step outside dentistry.

If a restaurant’s food and labor costs rise, what do they do?

They raise prices.

They pass it on to the consumer.

If you’re in-network, you can’t.

You can only do it for out of network patients. And with some offices carrying 80% of their patient base in-network, you see how this doesn’t make all that big of an impact.

Imagine running a restaurant where:

• Some customers pay $2 for a Coke
• Others pay $5

And you’re expected to stay profitable.

That’s dentistry right now.

The Core Issue: Control

If you cannot control what you charge, you cannot control profitability. That’s just math.

And the only real long-term solution?

Get. Out. Of. Network.

“But That’s Scary.”

I get it.

In 1993, when PPOs first gained traction, I saw tons of doctors signing up for every plan contract they could get their hands on. When I asked why, more than a few explained they were terrified of being “locked out,” because “HMOs and PPOs are taking over.”

Well, it never really got that bad. But I could see their worry. The pain. And I see it in doctors today. This is livelihood. How will this affect you, your family, your team, your patients.

It feels risky.

But here’s what we’ve proven repeatedly:

While not a guarantee, on average, when dropping a PPO plan, a practice loses no more than 30% of those patients.

And often less, if you do it right.

And back to the overhead. Here’s the part most doctors miss:

If you were charging full fee across the board?

Your overhead would probably be… 50%. Tada!

You just don’t see it because write-offs distort the math.

If you produce $150,000 but collect $100,000 after adjustments, and your expenses are $75,000…

It looks like 75% overhead.

But at your actual (private) fee?

It’s 50%.

When doctors do this, the frog just stopped noticing the temperature. The water begins to cool off.

Where Is This Going?

Be honest.

Where do you see these trends leading?

I didn’t even get into umbrella networks. Which seems to be the latest and greatest troll from the insurance industry.

You know, you join, get a better fee schedule with a major carrier or two, and suddenly you’re bundled into 30–40 smaller plans you’d never heard of. Many of which don’t pay at that well. And out of these umbrella networks? Much harder than dropping a single plan.

So, with this mind – and the developments of the past few years? Where is all this going?

More umbrella networks? More stagnant reimbursements? More downward fee pressure.

Maybe? Can’t guarantee anything, but this wouldn’t surprise me.

The insurance industry has enormous resources.

They do this full-time. They have tons of lobbyists, lawyers and marketing experts at their disposal.

If you keep playing the game, where do you think you’ll be in five or ten years?

I’m not trying to be dramatic about it.

Just being realistic.

How Do You Get Out?

This isn’t a “drop everything tomorrow” strategy.

It’s individualized.

If 5% of your patients are in-network? You could probably drops these plans immediately.

If 85% are in-network? You need a strategy.

And here’s the good news:

When done correctly, revenue and profit often go up immediately.

Margin improves instantly.

We’ve done this with hundreds of practices.

There are tools:

• Marketing adjustments
• Reactivation
• Fee strategy sequencing
• Staff scripting
• Patient communication
• Phased plan exits

It’s not magic.

It’s structured.

The Iceberg Is Visible

Here’s how I see it.

The iceberg is there.

You’re not the Titanic.

It’s still far enough away.

You have time to steer.

But you can’t pretend it’s not there.

If your net income has risen 2% while costs have risen 23-26%, that’s not sustainable.

You can:

• Negotiate fees (temporary relief)
• Join umbrella networks (often worse long-term)
• Cut expenses endlessly (limited runway)

Or you can regain control of income.

That’s the lever that actually matters.

Final Thought

A lot of people depend on you.

• Your team.
• Your family.
• Your patients.

This isn’t about being anti-insurance. It’s about being pro-control.

If you cannot control what you charge, you cannot control your business’s future.

Small steps now prevent painful steps later.

The frog doesn’t jump because the water is slightly warmer today.

It waits.

Don’t wait.

If you want help mapping out an individualized plan to get your practice out of network, we offer a Free Fees & Plans Analysis. We’ll go through your specific situation and outline realistic next steps. Click here to get scheduled or call us at (800) 640-1140.

Take action.

Have a great week.