Here's what keeps me up at night as a chief financial officer: watching dental organizations leave millions on the table because they're waiting for the "right time" to modernize their revenue cycle management (RCM). There is no right time. Every month you delay is another month of denied claims, burned-out staff, and cash flow you'll never recover.
Stephen Fong.
The numbers are stark. By some estimates, inaccurate insurance verification alone costs practices up to 2.9% of production -- $29,000 per $1 million in lost revenue. Add manual claims follow-up and denial rework, and you're looking at 0.6% to 8% of revenue consumed by RCM headcount costs. For a DSO doing $100 million annually, that's potentially $8 million in operational drag.
Yet I still hear, "We'll get to automation next year." Meanwhile, the cash bleeding continues.
Today, the question isn’t whether to adopt automation and AI, but how quickly can practices implement these technologies to stay competitive? Let’s explore why AI-driven RCM tools are fast becoming a make-or-break technology for DSOs and dental groups.
The growing burden of traditional RCM
Traditionally, RCM processes have been fragmented, manual, and frustrating. Staff spend 20+ minutes verifying eligibility through phone calls. Treatment estimates rely on outdated fee schedules and guesswork. Claims sit in queues waiting for manual attachments. Payment posting requires hours of reconciliation. Denial management means paying staff to chase payments that should have been collected correctly the first time.
This inefficiency is compounded by outdated systems and siloed processes, making it difficult to capture real-time data and track performance across multiple locations. As a result, DSOs struggle to gain a clear picture of their financial health, making it nearly impossible to make informed, strategic decisions in a timely manner.
The promise of automation and AI
Enter AI and automation. By automating key elements of the revenue cycle, from eligibility verification and claims processing to payment posting and denial management, DSOs can drastically reduce the administrative burden placed on staff. This not only improves efficiency but also reduces human error, speeding up the billing process and improving cash flow.
For example, automation can verify insurance eligibility in real time before treatment begins, reducing the risk of unexpected patient balances and enabling more accurate treatment plans. Claims processed through AI-driven workflows can be automatically scrubbed for errors, reducing the likelihood of denials and the need for rework. This means faster collections, fewer denied claims, and a smoother patient experience, which ultimately results in better financial outcomes for practices.
Automation can also help DSOs scale their operations without hiring additional staff. With many DSOs already facing labor shortages, automation allows them to do more with less. For example, automated denial management systems can track claims and identify trends in real time, ensuring swift, consistent follow-up without manual intervention. This is a game changer for practices looking to expand while managing costs effectively.
Hidden revenue and reducing burnout
As a CFO, I measure investments in what they unlock, protect, and enable. RCM automation delivers on all three. Reducing write-offs by 1% can mean hundreds of thousands for midsized DSOs. Improving collections from 95% to 98% expands margins without adding chairs or providers.
You also protect your people. By automating routine tasks, teams are freed up to focus on more strategic and value-added activities, such as improving patient engagement and optimizing practice performance. Staff who are no longer bogged down by manual data entry and claim follow-ups can redirect their efforts toward patient care, leading to a more satisfied workforce and a more efficient practice.
That efficiency becomes critical as you scale. Manual processes don't scale. Try doubling your location count without doubling your RCM headcount, and you'll see what I mean. Automated systems, on the other hand, handle volume growth with minimal incremental cost while providing the enterprise visibility investors expect.
What DSOs need to know before implementing automation
Here's the myth: AI-driven RCM implementation is too disruptive, too complex, too risky. The reality? That's what your competitors said last year … right before they automated their revenue cycle and left you behind. Yes, integration takes planning. However, with the right approach and the right technology partner, these challenges can be mitigated.
To get the most out of RCM automation, DSOs should focus on a few key areas:
- Integration. Ensuring that the automation tools can seamlessly integrate with existing practice management software and other key systems is critical. Centralizing data from all locations into a single cloud-based system can enhance visibility and support more efficient management of the revenue cycle.
- Customization. Not all practices are alike, and neither are their RCM needs. A good automation solution should be flexible enough to tailor its features to the organization's specific workflows and goals, minimizing disruption during implementation and ensuring long-term success.
- Training. Successful automation adoption depends on effective change management. Offering role-specific training that demonstrates how automation will alleviate administrative burdens and improve job satisfaction is key to gaining staff buy-in.
The cost of waiting
Every month you delay is a month you pay the "waiting tax” -- lost revenue, inefficient operations, and mounting competitive disadvantage. Your competitors are automating. Your staff is burning out. Your investors are asking harder questions about operational efficiency.
The dental organizations that will thrive are the ones that have modernized their financial infrastructure, eliminated revenue leakage, and built scalable operations. As CFOs, we can't control insurance policies or labor markets. But we can control whether our organizations operate efficiently.
So, will you modernize RCM proactively, on your own terms, or reactively after the damage is done? Choose wisely. Your margins depend on it.
Stephen Fong is the chief financial officer of Planet DDS. As CFO, Fong oversees strategic finance, business analytics, accounting, financial operations, and legal functions.
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.
