Persistent denials, rising numbers of accounts in 90+ day A/R buckets, and overwhelmed billing staff are all early warnings of a dental revenue cycle that’s leaking cash.
For dental service organizations (DSO), these revenue inefficiencies compound and can eventually impact EBITDA, growth plans and enterprise value.
As dental practice management coaching firm NextLevel Founder Gary Kadi warned in a Beckers Dental & DSO Review interview last year:
“There has been such wild growth with consolidation in the last few years, that I believe we’ll start to see some small groups fail…What started as highly successful practices are now struggling to scale because they didn’t have a plan in place and, almost more importantly, don’t have anyone to spot inefficiencies and proactively course correct…Everyone is so focused on putting out daily fires that nobody takes the time to step back, look at data and make a plan for the future.”
Proactive dental revenue cycle management isn’t just an operational necessity, it’s a strategic growth lever. With the right processes and technology, it becomes a roadmap for a DSO’s future, streamlining collections, boosting margins, ensuring consistent revenue, and equipping leadership to scale with confidence.
So, what improvements can growing DSOs make to improve cash collection, reduce denials and build a defensible story for investors?
In this guide to dental revenue cycle management, we’ll review what fuels DSO financial and operational efficiency. Both manual and automated dental revenue cycle management processes can improve net revenue and reduce collection costs, provided they are executed consistently.
What is Dental Revenue Cycle Management?
Dental revenue cycle management (RCM) is the end-to-end process dental practices use to oversee financial activities related to patient care. When revenue cycle leaders optimize every step in the revenue cycle--from appointment scheduling and insurance verification, through coding and claim submission, to payment posting and final collections--the aggregate improvement reinforces revenue and streamlines operations.
Dental RCM ensures all billable services are captured and reimbursed accurately and efficiently, helping practices maintain steady cash flow, minimize errors, and reduce payment delays from both insurers and patients.
Here are the key steps in dental revenue cycle management:
- Patient Scheduling and Registration: Collect accurate patient demographics and insurance details during appointment booking.
- Insurance Verification and Authorization: Confirm eligibility and obtain necessary pre-authorizations before services are rendered.
- Treatment Planning and Cost Estimates: Develop and communicate clear treatment plans and financial estimates, outlining patient and insurance responsibilities
- Coding and Charge Capture: Document procedures and code them correctly, using standardized CDT or CPT codes for billing.
- Claims Submission: File claims promptly with complete documentation to payers.
- Claims Follow-up and Denial Management: Track claims, address denials or delays, and take corrective action to ensure payment.
- Payment Posting and Reconciliation: Record received payments accurately and match them against claims.
- Patient Billing and Collections: Bill patients for outstanding balances and manage follow-ups for collections, offering payment options when needed.
- Reporting and Continuous Improvement: Track KPIs and metrics to monitor financial health, spot inefficiencies, and refine processes for greater efficiency.
Diligence at every step builds a reliable financial foundation for your organization.
The DSO Revenue Cycle Management Landscape Today
Planet DDS’s most recent Dental Industry Outlook reports that large DSOs have become particularly diligent in their revenue cycle management. Their wide range of locations, processes, and systems demands robust, integrated platforms to ensure consistency, scalability, and financial control across the entire organization. Many have adopted automation to manage high volumes of claims, appeals, eligibility verifications, and prior authorizations.
On the other hand, it is conceivable that smaller DSOs with five to 10 locations and limited payer contracts can manage revenue cycle manually. It can be done. Below, we outline what each approach involves.
Whether you choose a manual or automated dental revenue cycle management approach, just establishing, documenting, and tracking processes puts you in control of your revenue and costs. It is a critical first step toward financial control that DSOs need to scale.
Key Indicators of Dental RCM Inefficiency
You may be wondering whether your revenue cycle is truly optimized or whether undetected inefficiencies are eroding profitability. Many practices still rely on fragmented, outdated legacy systems that obscure critical performance data. A lack of transparency makes it challenging to identify bottlenecks and financial blind spots before they’ve already impacted the bottom line.
Use these common red flags to detect warning signs of dental RCM breakdown:
- High Rate of Claim Denials and Rejections: Repeated denials due to coding, documentation, or eligibility issues signal systemic problems in billing and insurance processes.
- Delayed Payments and High AR Days: Excessive time to collect payments—seen as high AR days—indicates poor claim submission, slow follow-up, or ineffective patient collections.
- Frequent Billing Errors: Mistakes in charges or statements frustrate patients and require costly rework, leading to payment delays or write-offs.
- Poor Insurance Verification and Authorization: Inadequate eligibility checks and missed prior authorizations result in unnecessary denials and revenue loss.
- Low Collection Rates: Collecting only a small percentage of billed amounts points to issues in both insurance and patient payment processes.
- Lack of Performance Reporting and Transparency: The absence of actionable reporting or KPI tracking means the practice cannot proactively identify or address inefficiencies.
- Inconsistent or Inaccurate Coding: Coding errors lead to underpayments, denials, and compliance risks, particularly with frequent changes in CDT codes.
- Stressed Staff and Poor Patient Experience: Staff regularly overwhelmed by billing tasks and patients frustrated by billing errors or communication breakdowns are strong signs of an inefficient revenue cycle.
You can rectify all of these challenges with diligent dental revenue cycle management.
Benefits of Diligent Dental Revenue Cycle Management
As DSOs invest in clear, well-documented RCM, they pave the way for measurable improvements in practice efficiency, cost control, and financial performance.
Case studies from leading DSOs point to these improvements:
Improved Topline Revenue
Many DSOs and dental practices feel insurers dictate rates and care caps, leaving them little room for negotiation. Diligent revenue cycle management doesn’t just streamline operations and find missing revenue, it renders performance data. Take this data into contract negotiations to improve reimbursements and watch your topline improve.
Dental services organizations can track the following payer performance metrics to strengthen their negotiation position and optimize revenue:
- Denial rates by payer: Track the frequency and reasons for claim denials across different payers to pinpoint problematic contracts and advocate for improved terms.
- Payment timeliness: Monitor how quickly each payer reimburses claims, highlighting delayed payments and providing leverage for discussions.
- Underpayment frequency and amount: Identify patterns where payers systematically pay less than contracted rates, supporting evidence-based negotiations for payer compliance or contract enhancements.
- Contract adherence and variances: Track whether payers are complying with contract terms and where deviations occur, such as missed deadlines or incorrect reimbursement.
- Reimbursement rates by CDT code: Analyze specific codes to detect which procedures are routinely under-reimbursed by a given payer.
- Clean claims and first-pass yield rates: Assess the proportion of claims accepted and paid without rework, which highlights payer and internal performance bottlenecks.
- Comparative payer performance: Benchmark each payer’s performance metrics—such as denial, timeliness, and underpayments—against other payers and industry averages.
- Appeal success rates: Measure how frequently appeals are required and the outcomes by payer, helping identify those with particularly high resistance or procedural issues.
- A/R aging by payer: Break down accounts receivable by payer and time bucket (e.g., 0-30 days, 31-60 days) to identify chronic late payers and address bottlenecks.
- Predictive analytics on denial or payment risk: Use historic payer data to model and anticipate future underpayments or likelihood of denials, allowing for proactive contract and claim strategies.
By presenting these data-driven insights—showing, for example, which payers are consistently slower or costlier to work with—DSOs can make a compelling case for higher rates or improved contract terms, backing up their requests with clear, actionable financial evidence rather than anecdotal reports.
This objective approach puts DSOs in a stronger position at contract renewal time when they can advocate for better reimbursement, accelerated payments, or operational concessions tailored to their network’s true payer experience.
Ultimately, by accessing accurate revenue cycle management analytics and reporting, DSOs can improve top-line revenue.
Improved A/R and Reduced Bad Debt via Proactive Claims Management
A dental practice may have high patient volume, but it must collect to succeed. When teams lack efficient dental revenue cycle management, overdue balances inevitably rise and collections become unpredictable.
Efficient RCM processes allow dental teams to act quickly on outstanding receivables, fix errors before they become costly, and maintain consistent, predictable cash flow essential for financial health and growth. Efficient claims management is the backbone of strong accounts receivable performance in any dental organization.
Accounts receivable in the revenue cycle involves tracking aging balances, sending timely reminders, and offering flexible patient payment options to limit days in A/R. It's generally accepted that the longer an account goes uncollected, the less likely it is.
When one DSO with 49 dental offices found manual processes wasting time and budget, they sought support from a claims management automation partner. The ability to prioritize claims by insurance carrier, amount expected, and age improved their ability to manage and process claims. These improvements helped it cut claim management time by 50%, reduce A/R by $565,000, and cut days to collect from 44 to 24, nearly a three-week difference.
Lower Denials
Dental practice management resources commonly cite a dental claims insurance denial rate of 10–15%, and some sources cite average claim collection rates of just 84%. For a typical practice, this can add up to tens of thousands or more in annual lost revenue.
Complying with correct payer restrictions, thoroughly documenting procedures, and following up on submitted claims can be executed consistently manually to help DSOs limit denials.
On the other hand, automated, AI-assisted claims management solutions digitize, quantify, and analyze claims and denial trends. It catches errors and missing information before a claim is submitted, increasing claim accuracy and first-pass acceptance rates.
AI systems review documentation, validate coding and attachments, and confirm insurance eligibility, steps that prevent the most common causes of denials. By flagging inconsistencies or high-risk claims in real time, AI empowers dental teams to resolve issues proactively, reducing the need for appeals and costly rework.
Over time, the software learns from past denial trends and payer rules, continuously improving its ability to prevent repeat denials and streamline the revenue cycle.
Underpayment Identification and Recovery
Unlike denials, underpayments arrive unannounced, with no notification from the payer. Payers depend on DSO overwhelm to float these shortpays by.
In aggregate, underpayments can amount to millions. Diligent dental revenue cycle management identifies underpayments. A sharp staff member can list them in a spreadsheet.
Still, automated, AI-assisted dental revenue cycle management solutions compare each incoming payment to the contracted amount and automatically list the variance in a dashboard. It identifies the worst underpayers, the amount they’re underpaying, and the dental codes most likely to result in underpayments.
With this information, DSOs can look into dental procedures to find any root causes stemming from their locations or providers.
By identifying and recovering underpayments, DSOs can sweep in revenue without taking budget from other initiatives.
Manual vs. Automated Dental Revenue Cycle Management
The above benefits result only from diligent dental revenue cycle management conducted either manually or with the help of software and even services.
Manual dental revenue cycle management relies on staff-driven tasks such as entering claims, verifying insurance, posting payments, and following up on denials by hand.
In contrast, automated dental RCM uses software and technologies like AI, RPA, and machine learning to streamline and centralize these tasks, enabling real-time claim tracking, automated eligibility checks, faster payment posting, and reporting.
What Manual Dental Revenue Cycle Management Looks Like in Dental Practices
Manual dental revenue cycle management (RCM) relies on staff-driven, hands-on processes throughout the billing, claims, and collections workflow. This section provides an overview of the tasks in store.
Claims Submission and A/R Follow-Up
Staff manually enter claim information into practice management systems or insurer websites, print and mail claims, or upload PDFs. Follow-ups involve making calls to insurance companies to check claim status and resolve issues one claim at a time.
Portals and EOB/EOB Retrieval
Team members log into multiple payer portals to manually download Explanation of Benefits (EOBs) or Electronic Remittance Advice (ERAs), then print them or save files for later posting.
Payment Posting
Staff cross-reference EOBs/ERAs line-by-line against claims in the software and manually update patient ledgers and account balances, entering payments, adjustments, and write-offs by hand.
Denial Management
Rejected or denied claims are tracked using spreadsheets, sticky notes, or color-coded files. Staff review denial reasons, prepare appeal letters, and resubmit claims via phone, fax, or portal, monitoring each step manually.
Patient Billing and Collections
Bills/statements are generated in batches and mailed. Phone calls are placed to patients for outstanding balances, with payment plans tracked in paper files or spreadsheets.
Reporting and Analytics
Key data—such as A/R aging, collection rates, and denial trends—must be compiled manually by exporting reports from disparate systems, then hand-calculating KPIs for leadership review.
It’s clear that once a DSO exceeds five locations, the manual approach leads to higher labor costs, increased errors, and slower cash flow. Staff are stuck chasing claim status and conducting constant payer calls, where they may remain on hold for hours. Staff are also faced with juggling multiple payers and clearinghouse portals with little guidance.
In addition, the numerous systems necessitate repeated data re-keying, leading to an exponential increase in menial work.
What Automated Dental Revenue Cycle Management Looks Like Dental Practices
Unlike manual workflows that require time-intensive data entry and constant staff intervention, automated dental revenue cycle management fuels every step with digital intelligence and real-time coordination.
Automated solutions handle claims, payments, denials, billing, and reporting in the background, limiting manual bottlenecks, repetitive portal logins, and the risk of missed revenue.
The dental revenue cycle management software industry arose to address these common RCM challenges:
- A wide variety of complex payers and plans
- Inaccurate documentation
- Incomplete or inconsistent clinical records
- Long hold times, outdated payer portals, and payer communication failure
- Siloed clinical and billing teams
- Lack of claims and contract data visibility
- Decentralized financial and tracking systems
These challenges affect more than just the bottom line. They reduce staff productivity, increase patient frustration due to billing confusion or unexpected costs, and make it harder to maintain consistent care delivery.
Today, it’s the large DSOs that have become increasingly sophisticated with revenue cycle management, rapidly adopting automated RCM solutions supported by artificial intelligence, RPA, and machine learning. These cloud-based platforms drive efficiency and maintain financial health. They enjoy modernization in each of these steps in the revenue cycle:
Claims Submission and A/R Follow-Up
Claims are auto-generated from treatment records and submitted electronically to payers directly from the practice management system.
Automated reminders and real-time claim tracking tools follow up on outstanding claims, flagging delays or denials for staff review—without the need for constant phone calls or individual status checks.
Most systems auto-follow claim status, flag tasks, and reduce hold time with payers. A single portal consolidates EOBs, claim communications, and payments. Timely follow-up and payment posting are built into automated workflows, reducing mistakes and missed claims.
Portals and EOB/ERA Retrieval
Automated systems connect to payer networks and clearinghouses, consolidating Explanation of Benefits (EOBs) and Electronic Remittance Advice (ERAs) in one dashboard. Payments, remits, and denial notifications are batched, imported, and stored centrally—eliminating the need for staff to log into multiple payer portals.
Payment Posting
Payments, adjustments, and write-offs are auto-posted to patient accounts based on ERA data. Smart matching engines reconcile payments with open claims, instantly updating patient ledgers and accounts receivable, minimizing manual entry.
Denial Management
Automated workflows identify, categorize, and route denied claims for review. The system highlights denial trends; appeal letters can be generated with one click and re-submissions tracked through an integrated task manager. Staff work from prioritized digital worklists.
Patient Billing and Collections
Automated billing software delivers electronic statements, payment reminders, and easy online/text-to-pay links directly to patients. Collection efforts are queued and tracked, and all payment plans are managed digitally, reducing manual follow-up calls and paperwork.
Reporting and Analytics
Practice and DSO leaders review accurate, real-time dashboards on A/R aging, clean claim rates, net collections, and other KPIs. Customizable analytics automate benchmarking and data aggregation, providing actionable insights for continual improvement and growth decisions.
Automated dental RCM uses integrated software and artificial intelligence to streamline claim submission, EOB/ERA retrieval, payment posting, denial workflows, patient billing, and analytics—reducing manual work, improving accuracy, and accelerating cash flow for DSOs and dental organizations.
Reduced Costs Generated by Dental Revenue Cycle Management
Automated RCM enables DSOs to reduce operational costs while maximizing profitability, collections, and patient satisfaction.
Here are several areas in a dental practice where an effective RCM process can save on costs:
- Excess administrative payroll and overtime
- Delayed cash flow due to slow manual processes
- Costs associated with billing errors and denied claims
- Lost or overlooked collections due to inconsistent follow-up
- Mailing and printing costs for statements and collections
- Staff training and turnover from burnout on repetitive tasks
- IT and compliance costs associated with managing multiple disconnected systems
Dental Revenue Cycle KPIs that Reflect Progress and Success
“If it isn’t measured, it isn’t managed,” claimed business management expert and author Peter Drucker.
Measuring the success of your efforts provides data to demonstrate how diligent revenue cycle management improves net revenue and operations. The metrics reveal how well the practice manages collections, claims, and patient payments.
By routinely monitoring them, practices can proactively address bottlenecks, minimize lost revenue, and support long-term growth.
Days in Accounts Receivable (A/R): This metric tracks the average time it takes to collect payments after services are rendered; practices should keep A/R days under 30 to avoid delayed collections.
Net Collection Rate (NCR): NCR measures the percentage of collectible revenue that is actually received after adjustments and write-offs, with a healthy benchmark typically being 95% or higher.
Claim Denial Rate: This is the percentage of insurance claims that are denied, and maintaining a rate below 5% is important to ensure cash flow and minimize administrative burden.
First Pass Resolution Rate (FPRR): FPRR assesses the percentage of claims paid on first submission, with a rate of 90% or more indicating efficient claims management processes.
Bad Debt Rate: This reflects the portion of charges written off as uncollectible, and a low bad debt rate signals strong collection processes that ensure most earned revenue is collected.
Patient Payment Collection Rate: This measures how well the practice collects co-pays, deductibles, and balances from patients, with a rate above 90% reflecting effective patient financial communication and collection systems.
Cost to Collect: This represents the administrative cost needed to collect each dollar of revenue—lower costs reflect a more efficient and well-managed revenue cycle.
These numbers move recommendations away from the land of individual opinion and into the realm of objective, evidence-based decision-making that drives real improvement and accountability.
InsideDesk Helps DSOs Build Diligent Dental Revenue Cycle Management Systems
Five years ago, DSOs executed their growth plans through strategic acquisitions designed to drive top-line growth.
But macroeconomic pressure like higher interest rates, inflation, and economic uncertainty have shifted buyers’, investors’, and lenders’ focus from straight growth to profitable operations.
Samantha Strain, partner and Chief Development Officer at HealthStream Ventures, tells Dentistry Today, “Investors are drawn to well-managed, doctor-led groups with sustainable business models and strong financial fundamentals…Buyers are conducting more rigorous due diligence than ever before.”
It’s the well-run, efficient DSOs getting the best offers today.
Buyers focus on EBITDA because it offers a clear, standardized view of how much cash flow your practice generates before accounting for financing structures like loans or tax strategies.
InsideDesk’s suite of dental revenue cycle management products optimizes and streamlines DSO revenue cycle by automating critical tasks, delivering actionable analytics, and enabling faster, more informed financial decisions.
InsideAssist automates claims management, denial tracking, and explanation of benefits (EOB) retrieval, freeing up teams to focus on resolving unpaid claims instead of time-consuming follow-up work.
InsideIQ offers in-depth payer accounts receivable (AR) analytics, benchmarking, and drill-down reporting so DSO leaders can easily monitor financial health, identify bottlenecks, and target areas for revenue improvement across multiple locations—leading to more strategic actions and higher net revenue.
InsideDial uses AI-powered technology to automate payer AR follow-up calls, operating 24/7 across all payers, which eliminates manual calling workload, accelerates3 payer responses, and reduces AR days. Collectively, these products lower the overall cost to collect, enhance operational efficiency, and improve revenue realization for DSOs.
Schedule a demo to see how InsideDesk can help your DSO scale.
Frequently Asked Questions
Why do persistent claim denials and aging A/R buckets signal missed growth opportunities for DSOs?
Unchecked denials and overdue receivables indicate process breakdowns that drain cash flow and threaten long-term profitability. RCM improvements are foundational for advancing enterprise value.
What impact does diligent RCM have on a DSO’s enterprise value and investor confidence?
Consistent RCM practices drive better EBITDA, reduce financial risk, and demonstrate operational discipline. Investors and buyers scrutinize DSO P&Ls when evaluating growth potential, paying particular attention to EBITDA.
How do AI and automation elevate RCM from a cost control to a growth platform?
Automated solutions that streamline claims, payment posting, and analytics reduce manual bottlenecks and surface inefficiencies, paving the way for scalable growth. By shouldering repetitive tasks and generating useful operations data, technology frees DSOs from repetitive administrative work so they can focus on expansion.
