Episode #368: How today’s insurance and legislative environment are affecting dental practice sales and valuations.

Intro: This is the Less Insurance Dependence podcast show with my good friend Gary Takacs and myself, Naren Arulrajah.

Intro: We appreciate your listenership, your time, and most of all, we appreciate your intention to reduce insurance dependence in your practice. Our goal is to provide information that will help you successfully reduce insurance dependence and convert your practice into a thriving and profitable dental practice that provides you with personal, professional, and financial satisfaction.

Lester De Alwis: Welcome to another episode of the Less Insurance Dependence podcast, your trusted source for insights, strategies, and expert advice to help dental professionals take control of their practices and careers. I’m your co-host, Lester de Alwis, and today we are diving into a topic that’s top of mind for many practice owners: how today’s insurance and legislative environment are affecting dental practice sales and valuations. Joining me is Ryan Mingus, managing director at Tusk Partners, one of the leading advisory firms for dental practice transitions, valuations, and M&A. With years of experience guiding dental professionals through complex sales and partnership processes, Ryan brings a unique perspective of how insurance dependence and regulatory changes are shaping practice values in today’s market.

Before we jump in, a quick message from our sponsors. Ekwa Marketing is offering a complimentary marketing strategy meeting. If you are ever wondering where your online visibility is at for your practice, the experts will show you how to attract high-value, high-quality new patients on Google locally, and grow your patient flow organically and sustainably. So if you ever want to have that health checkup for your online visibility, you can visit lessinsurancedependence.com/marketing-strategy-meeting  to book your complimentary session.

If you’re ready to take your practice to the next level, or if you’re looking for mentorship, schedule a complimentary coaching strategy meeting with Gary Takacs at thrivingdentist.com/csm. 

Now, let’s get started. Ryan, we’re excited to have you here. Thank you so much for joining us.

Ryan Mingus: Thank you for having me, Lester. Looking forward to it.

Lester De Alwis: Alright, so to kick things off, how is today’s insurance environment influencing dental practice sales and valuations across the industry?

Ryan Mingus: Well, it’s certainly been an interesting time with federal budget cuts coming down at the federal level. Obviously, Medicaid is a state-run platform. However, many states rely on government subsidies—some states more than others. Looking at Illinois versus Indiana, two states right next to each other, two very different Medicaid programs within those particular states. So it varies widely from state to state.

We are located here in North Carolina, and we are actually one of the earliest states to experience a cut—an across-the-board cut—in Medicaid reimbursements for dentistry as a result of some of the funding being taken away with respect to Medicaid. So it’s a very tumultuous time. A lot of folks don’t know what’s going to happen, and we’re trying to find answers. They’re trying to look around corners to see what other states are doing so that they can kind of stack their state up against states that are actually taking action, so they can learn from that and potentially look for ways to mitigate the impact to their practices.

Lester De Alwis: Alright. That’s a great overview of the current market. Now let’s go a bit deeper. When evaluating a practice, what are the main financial and operational signs that insurance dependence may be lowering its overall value?

Ryan Mingus: So, from a Medicaid perspective, any buyer looking to acquire the business—whether it’s a private buyer or a DSO-type buyer—they’re all looking at what the business is going to do. They’re going to value the business based on, and mostly focus on, the trailing 12-month period or the trend of the last three years, depending on how the buyer is assessing the practice. But if there is a known or a likely landmine sitting out in front of them once they take ownership, they’re going to account for that in the form of the valuation.

So even if Medicaid cuts haven’t happened in your state and it hasn’t personally impacted your business, from a valuation perspective, I have to take that into account as a buyer when I’m looking at your business. Because the business in my hands might look very different than the business in your hands, due to the operating environment you had versus the one I’m going to have.

Ryan Mingus: So it’s 100% creating headwinds for sellers to get their deal done at maximum valuation. And it’s also creating an environment where buyers are trying to account for that future risk in the structure of the deal. So whereas maybe they might have been able to give you a higher percentage of the offer or the purchase price in cash at close, they’re now carving out dollars and setting that aside to come to you when and if certain revenue benchmarks are achieved—or maybe it’s just if certain legislation doesn’t happen, then those dollars are released to you. But they’re trying to find ways to mitigate the risk for them while also giving sellers an opportunity to reach the valuation that they would have achieved if these cuts weren’t coming into place.

So that’s on a Medicaid front. Not all practices accept Medicaid, but most do accept PPO policies. On that front…

Ryan Mingus: We’re seeing—not necessarily budget cuts coming to fruition in the practice—but changes to ACA could likely impact how many people have dental insurance and how that might be implicated in your practice. So that’s something that’s out on the horizon that, again, is a landmine that they’re going to try to navigate either through structure or by discounting the purchase price and using that as a reason why.

Alternatively, with the tariffs—again, it is legislation, but it is impacting the valuation of businesses. So the tariffs legislation there—if you’re a PPO-heavy business, you can’t control your reimbursement rates. You’re contracted in. And as supply expenses go up and labor expenses go up, you can’t just raise your fees like a fee-for-service practice.

Ryan Mingus: And if I see that your profitability is trending downward for the last two years because of this higher inflationary environment, naturally the EBITDA that your business is valued on—and perhaps even the revenue that your business is valued on—is being affected. So it’s not just Medicaid businesses that are being impacted. The inflationary environment is heavily affecting PPO practices because they can’t control their revenue, and their expenses are going up.

So that ultimately leaves sellers in a precarious situation: do I sell now before it gets too bad, or do I wait until this environment changes or I’m able to renegotiate my insurance contracts and then take my business out to market for sale?

Lester De Alwis: Yeah, I mean, that’s eye-opening. We’ve had a lot of guests talk about the mindset shift when it comes to insurance, and with your expertise, you bring in this whole valuation side of the topic, which is very, very interesting to see and hear from you. This is something very eye-opening.

Now, as you know, legislation is always evolving, and I see recent legislation is expected to impact dentistry. Can you walk us through how these changes might affect practice profitability or transition readiness?

Ryan Mingus: Well, I think we touched on how it can impact profitability, but just a quick recap: if you’re a Medicaid-centric business or a large percentage of your revenue is Medicaid, and you have active reimbursement being cut or pending reimbursement being cut, either you’re directly impacted from the profitability or revenue perspective because the cuts are already coming to fruition in your business, or they’re looming. Depending on what state you’re in, you have a higher or lower likelihood of them happening.

As such, a buyer is going to take that into account. The more knowledgeable you can be on your business and how your state’s going to be handling Medicaid, the more negotiating power you have when trying to push back on a buyer trying to say that your business is worth less as a result of these pending cuts.

From a PPO perspective, the tariff environment and, in general, the inflationary environment over the last two years—tariffs didn’t come into effect until April 1st, 2025—but the inflationary environment was high before that.

Ryan Mingus: So wage inflation, expense inflation—that was all happening for a year and a half prior to tariffs. Then it just got exacerbated with tariffs. What’s happening there from a profitability standpoint is, those of you that have heavy PPO businesses are not able to change your top-line revenue number unless you’re able to effectively negotiate contracts in a timely manner. But your ability to negotiate those, and when they go into effect, versus how fast inflation can hit your business—they’re not one-to-one.

So you might want to wait to go to market. In terms of how the folks on this call can utilize this information: you might want to time going to market to reflect once—if you’re successful in negotiating higher insurance reimbursement—you might want to wait until that’s maybe six months bearing out in your last 12 months.

Ryan Mingus: You don’t need to wait a full year, because a good advisor will get you one year’s credit on four to six months’ worth of data. We can point to that contract and say, “These other six months would look like this if these contracts were in place.” So let’s normalize the numbers in our client’s favor and help the buyer come to terms with that adjustment.

And then also, from a timing perspective—if you want to take a deep look at your business and determine if your current insurance mix is optimal for you, your patient base, the community in which you serve, and your goals in terms of what you’re trying to achieve in a transaction.

Lester De Alwis: Exactly. Exactly. Now, for dentists who plan to sell or transition in the next few years, how can they strategically reduce insurance participation without hurting their patient base or short-term revenue?

Ryan Mingus: I’ll say—very delicately.

Ryan Mingus: If you’re a PPO-based business, you’ve chosen to be a PPO-based business, and that is your marketing source. For most practices, that is, in fact, a marketing expense—choosing to be in-network. So what you ultimately need to balance is, on a per-insurance-company basis, you need to look at what your reimbursements are, how they compare and stack up to all your other insurance companies, what is the percentage of revenue coming through your business, or the percentage of patients spread across each one of those insurance companies.

And ultimately determine if you have any insurance companies that are more or less profitable—ones that you want to do more of, ones that you want to do less of, or ones that you might want to completely cut ties with. That way, maybe you can stay a PPO provider but just change your operational flow and your new patient exam process, and try to get more patients in the door from the insurance companies that give you the greatest profitability.

Ryan Mingus: That way, you don’t have to completely cut ties with certain insurance companies—but you might elect to completely cut ties with some. It’s a pretty in-depth assessment, and there are certainly professionals out there who do that and specialize in it. We don’t. But that is ultimately what you need to do.

You need to take a scalpel approach to this situation, because if you do start dropping insurance companies, you’ve now lost that portion of your new patient funnel. You’re going to have to replace that—likely with marketing dollars—if you can’t replace it with another insurance company that you like. Maybe you market more to that plan or do more employee fairs or whatever it is to get more patients from a particular insurance company.

You’re going to have to backfill that with self-marketed patients, which then you need to assess: how much is that going to cost you, and what is the net impact relative to that insurance provider you’re debating cutting ties with?

Lester De Alwis: Amazing. It’s such a smart approach. And now finally, what practical steps can practice owners take now to prepare financially and operationally for a smooth transition in the current market?

Ryan Mingus: Well, I think ultimately, if you’re talking about Medicaid first, you need to be aware of what the pending implications are. Some of these state websites are already listing out “no change to 2026.” We’ve already got the budget for keeping reimbursements the way they are. If you can get that material, keep that on hand—formalize that letter or announcement in some way. That’s a good card to have in your hand when you’re out there negotiating with buyers.

That’s what we’re doing right now on all of our clients’ deals that are in the process of closing. We’re going out to the websites, digging through every resource available to find out what the likely implications, if any, are in 2026—and even trying to get a look at 2027.

So, for example, I’m dealing with a practice right now that we’re trying to close next month. The buyer’s bank was saying, "Hey, we just want to confirm what we’re seeing in the market from Medicaid with respect to implications in 2025 and to be seen in 2026." No change in 2025, no change in 2026 in this particular state. However, 2027—they’re tilting their hand that there are going to be implications to the tune of a 4% cut across the board.

Ryan Mingus: And that’s across the board, but if you’re a pedo-centric business, some states will prioritize pediatric over adult. So you want to be aware of how your state is going to treat any Medicaid cut to dentistry, because usually they cut adult Medicaid first and then pedo second. In North Carolina, they just did a carte blanche—everything. But what we were expecting to see was adult Medicaid cut, not pediatric. We were wrong in our assumption; however, it didn’t materially impact our client’s business.

But all these things—those are just a couple of different examples of information that can be your friend and be really valuable. One, so you can prepare for what a buyer is going to say. And two, so you can develop a plan. You can say, "Look, we’re going to just drop Medicaid, and we’re going to backfill it with all these patients from PPO plans. We really don’t want to drop Medicaid—it’s part of our philosophy—but economically and viably, it just doesn’t make sense right now."

So you can materially change the operations of your business and then go to that buyer and say, "We’ve already accounted for this, so you can’t discount us the way you’re trying to discount our business."

Ryan Mingus: So Medicaid—there’s a lot to unpack there. Probably enough for one-on-one calls where we can talk to individuals and assess what they’re dealing with and ultimately what they want to achieve.

From a PPO perspective, if you haven’t already, over the past two years, given the inflationary environment, been digging deep on your current insurance—by provider, by payer—profitability, and making sure you’re comfortable with the mix you have, then you’re way behind the times, honestly. You need to be doing that yesterday, because inflation doesn’t appear to be going away.

We’re hovering at 3% growth a year in every single iteration we’ve been looking at on a monthly basis. We want it to be at two. That’s a hefty drop—that’s a 30% reduction in the inflationary growth rate. That’s not something that can be done overnight. So you need to prepare yourself for that and start to determine if you need to cut ties with certain insurance companies or do things operationally to get more of particular insurance companies in your payer mix to offset this environment.

Ryan Mingus: And then additionally, you need to be negotiating if you haven’t already. You need to be looking for larger resources other than yourself to see if there are some groups out there—collectively within your state’s ADA—that are going to these insurance companies and advocating. You want to be on that team. You want to be in those conversations, and you want to be first in line when those reimbursement rates change, if you’re successful, because that will also play into valuation.

And again, you don’t need to see these things play out over a full 12 months to get benefit from it. Simply negotiating a favorable increase in your contracts and your reimbursement rates will have an immediate impact on the valuation. Because as your advisor, I can re-rack all of your financials to reflect what your business would’ve looked like with each and every one of those incremental increases in reimbursement.

Lester De Alwis: Amazing advice. And just like you said, none of this is happening overnight. You’ve got to keep planning, and you’ve got to keep thinking about your next, next, next phase—next step to take. I mean, when you are in this approach of reducing insurance dependence…

Now, if anyone listening in wants to take action—this podcast is all about taking action—tell the listeners: how can they reach out to you?

Ryan Mingus: So, directly to me—in order to get our lay of the land and give you real-world examples of what we’re facing with our clients that are in market and the feedback we’re hearing from buyers. We are not a consulting resource for you with respect to contracting with payers or renegotiating things like that, but we can give people very real, tangible examples of businesses just like theirs and what we are experiencing in the market. And those stories, hopefully, will help them navigate their own environment.

Also, we can put people in touch with some trusted resources depending on what they need. We do one thing and one thing only, which is take people to market. But what we do first and foremost is give people an honest read of the valuation of their business today, based on current market dynamics.

Ryan Mingus: So reach out to info@tspracticesales.com  or ryan@tspracticesales.com  as well, and you can find me on LinkedIn.Our website has a plethora of ways to contact us and forms to fill out depending on what you’re looking to learn about, and we can put you in touch with the right person. If it’s not me, it might be somebody else on our team. But yeah, we love talking with doctors. We usually have multi-year relationships with folks before they ever decide to go to market.

Once we teach people how their business is viewed in the eyes of the buy side, they generally see an opportunity to make meaningful improvements in their business over a six-month to 24-month period before they elect to go to market. And in this environment, with so many near-term issues, I think a lot of sellers have paralysis about the idea of taking their business to market because there are just so many landmines to navigate.

But we can mitigate a lot of those, and we are mitigating a lot of those in real time.

Lester De Alwis: Ryan, thank you so much for joining us today and sharing your expert perspective on how insurance trends and legislation are shaping the future of dental practice transitions.

Ryan Mingus: My pleasure. Thanks for having me, Lester.

Lester De Alwis: Key takeaway—so the key takeaway from this Insurance Dependence podcast is: insurance dependence doesn’t just impact daily operations. It directly affects a practice’s value, transition readiness, and long-term financial freedom. Understanding these connections early allows practice owners to make smarter, more strategic decisions about their future.

As always, this podcast is about taking action.

First off, if you are looking to do a health checkup for your online visibility on Google, schedule your complimentary marketing strategy meeting with Ekwa Marketing at lessinsurancedependence.com/marketing-strategy-meeting.  Our team will analyze your website and your online presence and give you a roadmap on how you can attract the right patients and strengthen your fee-for-service base.

And secondly, if you’re looking for mentorship, book a complimentary coaching strategy meeting with Gary at thrivingdentist.com/csm for personal guidance on building a thriving independent practice.

Thank you for spending your time with us today, and thank you again, Ryan, for being part of this episode.