Financial steps that help dentists reduce PPO pressure

In this article, Jim Alley shares practical strategies for dental practice owners looking to reduce insurance dependence. Whether you're at the beginning of your journey or well on your way, these insights will help you take meaningful next steps.

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01:20 – Guest introduction and episode focus

Helps dentists understand numbers and plan smarter

Topic: financial steps to reduce PPO pressure

Now, today I’m excited to welcome Jim Alley. Jim is our dental CPA, who helps dentists understand the numbers and make smart financial decisions that support real growth.

So in this episode, Financial Steps That Help Dentists Reduce PPO Pressure, Jim will share the signs of heavy PPO dependence, the key numbers dentists should watch, and the steps that help practices move towards a stronger fee for service model.

So, to begin, what signs do you see that show a practice is too dependent on PPO plans?

Sure. You know, PPO dependence usually shows up as a busy practice that doesn’t feel financially rewarding. So, you know, kind of that owner burnout feeling. You know, the dentist is producing more clinically, but not seeing proportionally those financial rewards. So, I mean, that’s kind of the first thing—if that’s the way you’re feeling in your practice and you are PPO-based, then maybe you’re there already.

Some other things to think through are just kind of a high PPO mix with thin margins. So if you’re, say, 70 to 80% plus of collections are tied to PPOs, and while you’ve got compressed net income, that can be a good sign—or, you know, a problem.

03:11 – Why production doesn’t equal profit

PPO fees don’t adjust with overhead increases

You know, other things to think through are: is your production not equating to profitability? So, as the practice gets busier, schedules are full, but cash flow and owner compensation feel tight. And then you’ve got rising overhead—sorry, grabbing a little sip of water here.

You know, rising overhead as a percentage of collections, especially labor and supplies, which PPO schedules aren’t really adjusting for. So, it’s thinking those things through. And then sort of your inability to raise fees meaningfully—because you’re PPO-reliant, you’re limited in what your actual revenue or collections can be. You’ve lost some flexibility.

So, are you on that top end of the reimbursement rates, and now it’s a volume game? Those are kind of the things I think to start out looking for.

Yeah. Just to follow up on that—so, out of the signs that you just mentioned, which ones do you think are the most critical?

I mean, I think that burnout feeling. Because if you’re just feeling burnout and don’t like what you’re doing, I mean, that’s just not good all the way around. I think that impacts more than just your practice—that bleeds into your personal life. So for me, that’s a huge thing.

Probably the next highest one would be that production doesn’t equal profitability. Because that could be a sign of a couple of different things. So I think if that’s the way things are looking, then it’s like, yeah, you probably need to just maybe look into your practice generally—not just the PPO versus fee-for-service. You might have some other procedural issues going on within your practice, or process issues that maybe you need to fix.

05:25 – Numbers dentists must track before dropping PPOs

Overhead benchmarking against healthy practices

Amazing. So now that we know the warning signs, let’s talk about planning. When a practice wants to reduce PPO—sorry, many dentists fear dropping PPO plans because of loss of revenue. Now, what numbers should they track to see the real financial impact?

Yeah. So that reduction of PPO reliance—you want that to be sort of a calculated financial decision and not an emotional one. I know there’s a strong debate out there all the time. I see it in Facebook like crazy. It’s just fee-for-service versus PPO, and people are butting heads like mad. So yeah, there’s a lot of emotion wrapped up, but really, you want to make it a calculated change.

So, I’d say understand profitability by procedures and by hour—not just your total production. Because it could be a very targeted thing that’s causing your profitability issues.

You want to normalize your financial statements, so clean up the P&L so it reflects your true operating performance. And then benchmark overhead against healthy dental practice standards, just so you can easily identify those inefficiencies.

You want to build up your cash reserve so you can absorb any short-term volatility that comes with PPO participation changes. And then just model out different scenarios—so what happens if 10 to 20% of PPO patients leave? Can the practice still cover fixed costs? Knowing those sorts of things.

So, it’s all about being prepared and then targeting what you want to change.

07:13 – How budgeting and systems support fee-for-service

Budgeting creates discipline and predictability

Scheduling, hygiene, and case acceptance support higher-value care

Alright. Alright. I think basically now, when it comes to systems, how can budgeting, cash flow planning, and strong systems help a practice feel ready to move towards fee-for-service?

Yeah. So, you know, a fee-for-service practice doesn’t happen—doesn’t work—without discipline. So budgeting sort of provides that discipline. Budgeting creates predictability—knowing your monthly targets so you can help reduce fear around those insurance changes.

The systems reduce dependence on volume. So strong scheduling, case acceptance, and hygiene systems just support higher value care. And then controlled overhead, which is sort of a byproduct of budgeting—it’s critical. When you’re shifting away from the PPO model, that volume-based type business can sort of hide a lot of issues you may have from budgeting.

You know, if, say, your office manager is buying supplies just willy-nilly, kind of like whenever a deal pops up—it’s like, yeah, in general, getting a good price is good, but do you need it? That sort of thing. So controlling that kind of stuff.

Then it’s just tracking your KPIs monthly so that you’re ensuring detection for needed adjustments early, and you’re catching things quicker. And then outside of that, it’s just being intentional with the reinvestment back into your practice—whether it’s marketing, technology, the patient experience—and making sure all that aligns with your financial modeling.

Exactly. Exactly. Anyways, key takeaway from that is discipline is what matters at this point of the conversation when you’re talking about taking the decision on reducing PPO.

09:18 – Common financial mistakes with PPOs

Ignoring overhead creep, especially staffing

Focusing on collections instead of true profit

Exactly. So, exactly. So better systems make a big difference, but mistakes can still happen as well. So what are some common financial mistakes dentists make when dealing with insurance plans, and how can they avoid them?

Yeah, I think it gets back to kind of what I was saying when we started about the emotional side. It’s kind of the biggest mistakes I see—dentists making these PPO decisions without going through the numbers. So it’s not really a hundred percent thought through.

Along with that would be dropping the PPOs without that financial modeling and without having adequate cash reserves. So you’re kind of at this whim, and then you find yourself stuck short term as you’re switching over from that PPO to fee-for-service, possibly.

Some other mistakes are just ignoring overhead creep—especially staffing levels relative to collections. That’s probably the biggest. And when they’re looking at things, they’re focusing purely on collections versus profitability.

So it could be possible that you’ve got a low-paying PPO, but maybe it is profitable for whatever reason. If you’re just looking at collections and not the pure profit per procedure, or by staffing, or whatever, that could be an issue.

And then just maybe not adjusting the clinical mix to support higher fees and value-based care.

Right. So what three steps can—two or three steps—that they can take to avoid these things?

Sure. Because you don’t reduce that insurance pressure overnight. You reduce it by taking small, smart financial steps and wins.

So, I’d start with financial clarity—know your real margins, not just your production. Review your PPO fee schedules and identify those worst-performing ones.

I’d say optimize hygiene, because that often carries a lot of PPO inefficiencies—so optimize that department. And then tighten your overhead before changing the insurance participation, so you’ve got that tied down and under control.

And then it’s taking into account all these things and putting together a phased plan—not an all-or-nothing approach.

And then, I think most importantly, it’s just work with advisors who understand dentistry—not just your CPA, and not just me, knowing general accounting. You want someone that understands what your business is.

So whether it’s, say, a consultant like you guys that can help move you to that fee-for-service, or if it’s relying on your CPA or someone else, just make sure they understand what you’re going through.

12:34 – First steps dentists should take now

Identify the real problem before making changes

Build a plan, budget, and stay disciplined

Exactly. Great insights. Now to wrap it up—for a doctor who wants more control and less insurance stress in 2026, as we start this new year, what first steps should they take right now?

I mean, I think it’s starting with getting an understanding of what your PPO situation looks like. Get those numbers and start putting together the data so that you can put a plan together, and then you can implement that plan.

That sort of goes back to the discipline side. That’s what you want to do—look at the data and see, is it really that you have a PPO problem, or do you have another problem? So identify that, and then put the plan together for your change, make that budget, and start implementing—and be disciplined.

Amazing. Amazing. Now, James, if any of our listeners want to get in contact with you or talk to you and get some consultation about this, what is the best way that they can reach out to you?

Yeah, so the best way would be my email, and that’s just jim.Alley@proactivetaxadvisory.com. Or you can give me a call—my office number is 202-350-0542. And you can check us out on the internet at proactivetaxadvisory.com.

Exactly. So to anyone listening in, you can also find James’s details on the show notes of this episode and on the website as well. So, Jim,

14:41 – Final takeaway and calls to action

Understanding numbers leads to confidence and control

So here’s the key takeaway: when dentists understand the numbers and plan ahead, they can reduce PPO pressure with confidence and build a stronger, more predictable practice.

This podcast is all about taking action. So firstly, if you are looking for a health checkup on your website, you can schedule a complimentary

And secondly, if you’re looking for mentorship, book a

Now, all these sessions are complimentary and will help you build a practice with more control and less insurance stress.

If your practice is busy but it doesn’t feel financially rewarding, that’s often a clear sign of heavy PPO dependence.

When dentists understand their numbers and plan ahead, they can reduce PPO pressure with confidence instead of fear.

With over 2,200 coaching clients, Gary has first-hand experience transforming insurance-dependent practices into thriving and profitable practices.