Should Your Orthodontic Practice Be In-Network or Out-of-Network?

By Jill Allen | Hey Docs! Podcast, Just Jill Episode

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Deciding whether to participate in insurance networks is an important business decision for any orthodontic practice. For startups, being in-network can provide an opportunity to attract new patients and establish a consistent flow of consultations. For established practices, those same insurance relationships may eventually become less financially beneficial as the business grows.

The challenge is determining whether the value of participating in a network outweighs the cost.

Insurance contracts can influence patient acquisition, treatment fees, collections, and overall profitability. While being listed as an in-network provider may help bring patients through the door, the associated write-offs can have a significant impact on the practice's revenue.

On this Just Jill episode of the Hey Docs! Podcast, Jill Allen explores how orthodontic practice owners should evaluate their insurance participation. From determining whether a startup should begin in-network to understanding when an established practice may benefit from reconsidering its contracts, the conversation focuses on making decisions based on financial performance, market conditions, and long-term business goals.

The right insurance strategy is not necessarily the same for every practice, and it does not have to remain the same throughout the life of the business.

Should an Orthodontic Startup Begin In-Network or Out-of-Network?

For a new orthodontic practice, one of the biggest challenges is establishing a consistent flow of new patients. Without an existing patient base, referral network, or established reputation in the community, startups need to be intentional about how they introduce themselves to prospective patients.

Participating in insurance networks can be one way to accomplish that.

When families search for an orthodontist through their insurance provider, being listed as an in-network practice may help create visibility and encourage patients to schedule consultations. For a startup working to build awareness in its market, that exposure can be valuable.

However, insurance participation comes with financial considerations. Contracted fee schedules may require the practice to accept reimbursement arrangements that are lower than its standard treatment fees, creating write-offs that affect revenue.

Jill encourages startup owners to evaluate these trade-offs before deciding which networks to join.

The practice's location, competitive environment, target patient population, and overall business model should all influence the decision. A startup entering a highly competitive market may benefit from participating in selected networks to help establish patient volume. Another practice with a different market opportunity or positioning strategy may determine that extensive network participation is unnecessary.

The goal is to understand how insurance participation fits into the startup's patient acquisition strategy without overlooking its financial impact.

JA&A Insight: For a startup, insurance participation can be a patient acquisition strategy, but it should still be evaluated as a business investment. Understand what the practice is giving up financially in exchange for the potential patient volume.

How Does Your Practice's Business Model Influence Insurance Decisions?

Not every orthodontic practice is built around the same business model, and insurance participation should reflect those differences.

A practice focused on serving a broad patient population may view in-network relationships as an important way to increase accessibility and attract families who prioritize insurance coverage when selecting a provider.

A practice pursuing a more boutique or highly differentiated patient experience may approach insurance participation differently, particularly if contracted fee schedules do not support its intended pricing structure.

Neither approach is inherently better. What matters is whether the insurance strategy supports the practice's financial goals and the patients it intends to serve.

Jill emphasizes the importance of considering these decisions during the early stages of practice planning. Doctors should understand their anticipated treatment fees, operating expenses, and competitive position before entering agreements that may influence future revenue.

It is also important to recognize that insurance participation does not have to be permanent. A startup may choose to participate in certain networks while building its patient base and reevaluate those relationships as the practice becomes more established.

Making that decision intentionally provides greater flexibility as the business evolves.

What Are Insurance Write-Offs Really Costing Your Orthodontic Practice?

One of the most important financial considerations associated with in-network participation is the amount of revenue a practice writes off under its insurance agreements.

When an orthodontic practice participates in a network, it may agree to accept a contracted fee that is lower than its standard treatment fee. The difference represents revenue the practice does not collect under that agreement.

These write-offs can become substantial, particularly when a large portion of the patient base is associated with discounted insurance contracts.

Jill encourages doctors to consider insurance write-offs from a different perspective: What if you treated those write-offs as a patient acquisition or marketing expense?

Being in-network may provide visibility through insurance directories and help attract patients who are searching for participating providers. In exchange, the practice accepts the financial impact of the contracted fee schedule.

Looking at insurance participation this way creates an opportunity to evaluate its return.

If a particular insurance relationship brings a meaningful number of patients into the practice, the associated write-offs may represent a reasonable cost of acquiring those patients.

However, if the practice is writing off significant revenue while receiving relatively few new patients through that network, the financial value of participation deserves closer examination.

This does not mean insurance write-offs are literally recorded as marketing expenses in the practice's financial statements. Rather, it is a useful framework for evaluating whether the patient acquisition benefits justify the revenue being surrendered.

JA&A Insight: Insurance write-offs are not simply numbers on a financial report. They represent revenue the practice has agreed not to collect. Understanding what the business receives in return is essential to evaluating the value of each contract.

How Can You Tell if an Insurance Contract Is Worth Keeping?

An insurance relationship should be evaluated based on its contribution to the practice, not simply because the office has participated in that network for years.

Jill encourages orthodontic practice owners to examine how much patient volume is associated with each carrier and whether that volume justifies the financial impact of the agreement.

Several questions can help guide the evaluation:

• How many new patients are coming to the practice through each insurance network?
• How many of those patients move forward with treatment?
• How much revenue is being written off under each contract?
• What percentage of the practice's overall patient base is associated with each carrier?
• Would some of those patients have chosen the practice regardless of its in-network status?
• Does the financial value of the relationship support the practice's current business goals?

These questions help distinguish between insurance participation that actively contributes to practice growth and participation that continues primarily out of habit.

For example, a practice may discover that a particular carrier accounts for a relatively small percentage of new patients but creates significant write-offs. That information may justify a closer review of the contract.

Another carrier may consistently introduce new families to the practice and represent a meaningful portion of new patient starts. In that situation, maintaining the relationship may continue to make financial sense.

The important thing is to evaluate each contract individually rather than assuming every network provides the same value.

Why Established Orthodontic Practices Should Reevaluate Insurance Participation

For established orthodontic practices, insurance relationships often become part of the normal operating structure. Contracts may have been negotiated years earlier, and participation may continue without much consideration of whether those agreements still benefit the business.

However, the financial and competitive environment can change significantly over time.

Reimbursement arrangements, operating expenses, patient demand, and the practice's reputation may all look different from when the original contracts were signed.

A practice that initially relied on insurance directories to attract new patients may now generate much of its business through referrals, online visibility, and its established reputation in the community.

Jill encourages established practice owners to evaluate whether their insurance participation still reflects the needs of the business.

This begins with understanding the financial impact of existing contracts and identifying how many patients are choosing the practice specifically because it is in-network.

If patients are primarily selecting the office because of the doctor, patient experience, reputation, or referrals, the practice may have an opportunity to reconsider certain agreements.

However, leaving a network can also affect patient decisions, new patient flow, and collections. Those potential changes should be evaluated before making adjustments.

The objective is not to eliminate insurance participation simply because the practice has become established. It is to determine whether each relationship continues to provide sufficient value.

Why Tracking New Patient Sources Is Essential to Insurance Strategy

One of the most valuable pieces of information an orthodontic practice can collect is how new patients are finding the office.

Without accurate patient acquisition data, it becomes difficult to determine whether an insurance network is generating meaningful business or simply providing benefits to patients who would have selected the practice anyway.

Jill emphasizes the importance of consistently tracking new patient sources and understanding the relationship between those sources and case acceptance.

For example, a family may have orthodontic insurance through a participating carrier but learn about the practice through a friend's recommendation. In that situation, the insurance network may not have been the primary reason the patient selected the office.

This distinction matters when evaluating the financial value of a contract.

Practices should work to understand both how patients first discovered the office and whether insurance participation influenced their decision to schedule or begin treatment.

Over time, this information can help owners identify which networks contribute to patient acquisition and which relationships may be less important than previously assumed.

Accurate tracking also provides a stronger foundation for making future insurance decisions. Rather than relying on assumptions about patient behavior, practice owners can use their own data to evaluate the potential impact of changing participation.

Should an Orthodontic Practice Go Out of Network as It Grows?

As an orthodontic practice becomes more established, the financial impact of insurance participation may begin to outweigh some of its original benefits.

A growing reputation, consistent referral relationships, and stronger patient demand can change how much the practice depends on insurance networks to attract new patients.

However, growth alone is not a reason to terminate contracts.

Jill encourages doctors to evaluate whether the practice has reached a point where certain insurance relationships no longer support its financial goals.

This requires understanding the amount of revenue being written off, the patient volume associated with each carrier, and the potential effect of changing participation.

A practice may determine that maintaining some networks continues to be beneficial while others no longer provide sufficient financial value.

It is also important to consider the operational implications of a transition. Team members need to understand how to communicate insurance benefits, explain financial arrangements, and answer patient questions accurately.

Insurance participation should be approached as an evolving business strategy rather than a decision that must remain unchanged throughout the life of the practice.

What Should You Consider When Acquiring an Orthodontic Practice?

Insurance participation is also an important consideration for orthodontists purchasing an existing practice.

An acquisition may come with established insurance contracts, existing patient relationships, and a financial structure built around particular reimbursement arrangements.

Before purchasing the practice, doctors should understand how those relationships influence revenue and patient volume.

Jill encourages prospective buyers to evaluate the existing insurance strategy rather than assuming they should continue every agreement under the same conditions.

Important considerations include the percentage of patients associated with each carrier, the amount of revenue being written off, and how changes in participation could influence future collections.

It is also important to understand that existing contracts may not automatically transfer to a new owner. Participation requirements and credentialing arrangements can vary by insurer and transaction structure.

A new owner may have different long-term goals for the practice, but significant changes should be evaluated carefully, particularly during an ownership transition when maintaining patient relationships and operational consistency is already important.

Understanding the practice's insurance relationships before the acquisition can help the buyer make more informed decisions about the financial and operational strategy moving forward.

How Often Should Orthodontic Practices Review Insurance Contracts?

Insurance participation should not be a decision that practice owners make once and never revisit.

Jill compares the process to managing an investment portfolio. Just as financial investments require periodic evaluation, insurance relationships should be reviewed to determine whether they continue to support the practice's goals.

A practice's needs change as it grows, and the value of individual insurance relationships can change with them.

Reviewing contracts as part of an annual financial and strategic planning process can help owners identify changes in write-offs, patient volume, and overall performance.

Practices may also benefit from reevaluating participation when significant changes occur, such as an acquisition, a shift in patient demand, or changes to reimbursement arrangements.

The goal is to make insurance decisions proactively rather than waiting until financial pressure forces the practice to reconsider its strategy.

Frequently Asked Questions About Orthodontic Insurance Participation

Should a new orthodontic practice be in-network with insurance companies?

A new orthodontic practice may benefit from participating in selected insurance networks to attract patients and establish initial patient volume. However, the decision should depend on the local market, competition, target patient population, contracted reimbursement rates, and the practice's financial goals. Not every startup needs the same insurance participation strategy.

What is the difference between in-network and out-of-network orthodontic practices?

An in-network orthodontic practice has a contractual agreement with an insurance company that may establish negotiated fees and other participation requirements. An out-of-network practice does not participate under that same contract and generally has greater flexibility in setting its own treatment fees. Patients may still have out-of-network benefits, depending on their insurance plans.

How do insurance write-offs affect orthodontic practice profitability?

Insurance write-offs reduce the amount a practice can collect compared with its standard treatment fees. While participating in a network may help attract patients, the associated reductions in revenue can affect financial performance. Practice owners should compare the value of patient volume generated by each network with the financial impact of its contracted fees.

When should an established orthodontic practice consider going out of network?

An established orthodontic practice should consider reviewing its network participation when insurance write-offs become significant relative to the patient acquisition benefits of the contracts. Owners should evaluate new patient sources, patient volume by carrier, financial performance, and the potential impact on collections before making changes.

How can orthodontic practices determine whether an insurance contract is profitable?

Practices can evaluate insurance contracts by reviewing patient volume, new starts, contracted fees, write-offs, and collections associated with each carrier. They should also consider whether patients are choosing the practice because of its in-network status or for other reasons. This information helps owners assess the financial value of individual insurance relationships.

How often should orthodontic practices review their insurance contracts?

Orthodontic practices should consider reviewing insurance participation at least annually as part of their financial and strategic planning. Additional reviews may be appropriate when reimbursement arrangements change, the practice experiences significant growth, or ownership transitions occur. Regular evaluation helps ensure insurance relationships continue to support business goals.

Final Thought

The decision to participate in insurance networks is not simply a choice between being in-network or out-of-network. It is a business strategy that should reflect the practice's stage of growth, financial position, patient acquisition needs, and long-term goals.

For startups, participating in selected networks may provide valuable opportunities to attract new patients and establish a presence in the community. For established practices, those same relationships may need to be reevaluated as the business develops stronger referral sources, a more established reputation, and greater financial stability.

The most important consideration is understanding what each insurance relationship contributes to the practice and what it costs in return.

By tracking new patient sources, evaluating write-offs, and reviewing participation regularly, orthodontic practice owners can make more informed decisions about which contracts support their business.

Insurance strategy should evolve alongside the practice. Whether you choose to participate in multiple networks, maintain only selected contracts, or operate primarily out-of-network, the decision should be intentional, financially informed, and aligned with the practice you want to build.