Insurance Contracting: Just Another Marketing Expense?

Here's a question most dentists have never been asked: what if your insurance contracts aren't a clinical obligation — they're a marketing strategy?

The American Marketing Association defines marketing as "the activity, institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value to the consumer."

By that definition, participating in an insurance plan is exactly that — a tactic for delivering your services to a defined group of patients. And if it's a marketing tactic, it belongs on your marketing budget. More importantly, it should be evaluated the same way you'd evaluate any other patient acquisition strategy: by its return on investment.

Let's say your practice produces $1,000,000 annually, and you're adjusting 15% of your fees to meet insurance contractual obligations. That's $150,000 in write-offs — meaning you spent $150,000 to collect $850,000.

That's a 5.6x return on your marketing investment. Depending on what else you're spending on marketing, that may or may not be a good deal.

But here's where it gets more useful.

That 5.6x figure is an average across your entire patient base — and averages hide a lot. Not every patient in your practice was referred by an insurance plan. Some came through word of mouth, your website, or a community referral. Lumping them all together distorts the picture.

Most modern practice management systems let you break this down by plan. You can pull:

• How many active patients are associated with a given plan
• The revenue generated by those patients
• The write-off amount attributable to that plan

Divide the revenue by the write-off cost and you have the ROI for that specific plan. Do this across all your contracted plans and you'll likely find a wide range — some plans delivering strong returns, others barely breaking even, and a few that are quietly costing you more than they're worth.

Once you're looking at insurance participation through a marketing lens, the decision of whether to stay in-network with any given plan becomes much clearer. You're no longer making an emotional or administrative decision — you're making a business decision based on objective data.

Ask the same questions you'd ask about any marketing channel:

• What is this plan actually returning per dollar of write-off?
• Are the patients it brings in the kind of patients I want more of?
• Could I redeploy that $150,000 — or even a portion of it — into a different patient acquisition strategy and get a better return?

There's no universal right answer. Some practices will find that certain plans are genuinely worth the discount. Others will discover they're subsidizing a patient base that isn't aligned with the kind of dentistry they want to practice. Either way, you'll be making the decision with clear information rather than habit or assumption.

This reframe matters beyond the math. Dentists who think of insurance as a fixed cost — something that just happens to them — tend to feel trapped by it. Dentists who think of it as a controllable marketing investment tend to feel empowered by it.

You get to decide which plans you participate in, how aggressively you pursue fee-for-service patients alongside your insured base, and how you allocate your overall marketing budget. That's a business decision, and it's yours to make.

The first step is simply running the numbers — and looking at what they're actually telling you.

Want a clearer picture of where your practice's revenue is going — and where the real growth opportunities are? Download the free Practice Profitability Audit Guide or book a strategy call with Liz.