131: 2025 Q3: State of Dental Industry (ADA Report)

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Welcome, everybody, to another episode of the Dental Boardroom podcast. As you know, every quarter I do an update on the status of the dental industry using the ADA report that they put out to the public. And I'm using AI to summarize it, which will honestly just do a much better clear job than me on this. It's the one area where I do use AI for a full episode. Hope you enjoy.

Welcome to the Deep Dive. Today we're digging into a really important economic snapshot. It's the Q3 2025 State of the U.S. dental Economy Report. Comes straight from the ADA Health Policy Institute.

Yeah. And this is one you'll want to pay attention to. It blends what dentists are actually seeing on the ground day to day with those big federal economic stats.

The headline finding it sounds a bit, well, stalled. They're calling the dental autonomy a holding pattern.

Exactly. A holding pattern. Sounds neutral maybe, but underneath, there are some real contradictions bubbling up.

That's what jumped out at me. How can consumer spending be going up while dentists are telling the ADA they're less busy? It just doesn't quite add up on the surface.

That's a core tension. You're right. And that's our mission today, really. We need to unpack the reports, four main parts. You've got economic confidence, consumer spending, practice, economics, and then the jobs market.

Okay.

And try to figure out what's actually driving this stagnation. We'll talk a lot about something called the fiscal squeeze.

Right, the fiscal squeeze.

It's this intense pressure where cost, supplies, staff, everything are rising way faster than what insurance, public or private, is paying out.

Which forces some tough choices for practices, I imagine.

Exactly. Painful choices, strategic choices. We'll see why some are dropping insurance plans, what tech they are investing in.

And the hiring thing, especially hygienists. Why has that been such a persistent headache?

Yeah, it's a huge piece of the puzzle. So let's look at this not just as numbers, but as you know, the reality for thousands of dental practices out there. Small businesses trying to navigate this.

Okay, let's do it. Where do we start? Confidence levels.

Yeah. Let's start with the mood. How are dentists feeling looking at Q3, 2025? Confidence sort of stabilized a bit, but the overall feeling is still pretty cautious.

Stabilized, but from a lower point. Right. Like things didn't get worse in Q3, but they weren't exactly great either.

That's the perfect way to put it. We saw tiny little upticks confidence in the overall US economy. It nudged up, but still only about a third. 33.4% felt confident.

Wow. Only a third.

Confidence in their own practice did better. 67.5%. And then confidence in the whole dental care sector was basically flat. 56.3%.

Okay, but the key takeaway here, the thing to really focus on is that all three, the US Economy, their own practice, the dental sector, they're all still down. Compared to the beginning of 2025, Q1 was more optimistic.

Absolutely. It's like a very slight bounce in Q3, but the trend for the year is, well, it's eroded optimism.

So why, what are the specific worries driving this caution, especially about the broader economy?

Well, it connects the dental office to like, global headlines. When dentists are skeptical about the national economy, the top things they mention are concerns about tariffs, just general uncertainty. You know, domestic political or social unrest comes up too. And geopolitical turmoil, basically external shocks they can't control.

That makes sense. Fear of the unknown, really. But not everyone was pessimistic, right? Some felt confident.

Right. It's definitely a split view.

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The more optimistic dentists pointed to.

A belief in the fundamental strength and resiliency of the US economy. And some mentioned being okay with current trade and tax policies.

Okay, so that's the big picture view. What about when they look specifically at the dental sector? Does the skepticism change focus?

Oh, absolutely. It gets much more specific, much more, well, operational. And this is where that fiscal squeeze really starts to show its teeth.

Uh, okay, so what are the top dental specific worries?

Number one, by far, low insurance reimbursement rates. That came up again and again. Also the general state of the US economy impacting patients and then critically, patient inability to pay for care, patient affordability, and even patients maybe not prioritizing dental care as much right now.

There were some quotes in the report that really hit this home, weren't there?

Yeah, really powerful ones. One dentist said something like the cost of running a practice has far outpaced reimbursement rates and then added whether from third party payers or the ability of patients to self pay.

Oof. So they feel squeezed from both sides. Insurers aren't paying enough and patients are struggling too.

Exactly. And another quote pointed to patient behavior changing, saying people, quote, see dentistry as not important and are cutting back on discretionary spending.

That perception that dentistry is discretionary, that's gotta hurt. And it links right back to the busyness question we need to tackle later.

It absolutely does. But you know, even with all this caution, there is some optimism specifically about the dental field.

Okay, what's driving that?

It seems rooted in the long view, a fundamental belief that, well, people will always need dental care. You know, teeth need cleaning, cavities need filling, basic resiliency.

Sure. Demand is somewhat constant.

And interestingly, some look ahead and see opportunity. There was a quote about boomer dentists retiring and difficult to replace, suggesting that this will actually increase the patient Pool for those who remain.

Ah, so a potential future supply and demand shift working in their favor. Interesting. So immediate cost pressures now versus maybe, maybe more patients down the road. Given that tension, what are they doing right now? Are they investing? Pulling back?

Well, the report shows they're largely sticking to their 2025 plans, especially for major investments they seem to be trying to adapt.

Okay, like what?

The two areas with the biggest follow through compared to plans made back in late 2024 were. Number one, investing in new software. But 41% did that.

Trying to boost efficiency, maybe?

Seems likely.

Yeah.

And number two, adding staff. Almost half. 47.5% acted on plans to hire.

Okay, so they're trying to streamline with software and potentially increase capacity with staff, even with all this economic uncertainty swirling around.

Yeah, it suggests they're trying to control what they can control inside the practice walls.

Right, let's get to that paradox. The money versus the busyness. What are the hard numbers on consumer spending?

Okay, so looking at the money first, it's definitely up. Consumer spending on dental care as of August 2025 was up 4% just for this year so far.

4% this year. Okay.

And maybe more importantly, compared to before the pandemic, January 2020, it's up a solid 10%. Yeah, and that's adjusted for inflation.

Wait, hang on. 10% more inflation adjusted spending on dental now than pre pandemic? That. That sounds like things should be booming, right? How are dentists not busy?

Well, see, that's where the context matters. 10% sounds good, and it is growth, but. But it's lagging badly lagging behind the rest of healthcare spending. Overall health spending is up 20% since January 2020. Physician services up 21%.

Ah, so dental's 10% growth is only half the pace of doctor's offices. And overall health spending, it's losing ground relatively precisely.

It's playing catch up and not very successfully compared to other sectors.

Okay, that provides some perspective. But still, 10% real growth. You'd think that would fill some empty appointment slots. Yet the report says the share of dentists reporting they're not busy enough actually surged in Q3.

It really did jumped significantly. It went from about 1/4, maybe 25% in Q2, feeling not busy enough, up to more than 1/3 35% in Q3.

And I jumped from 25% to 35% in 1/4. That's a big shift in sentiment.

It is, and it shows that this modest spending growth, it's just not translating into packed waiting rooms. The capacity seems to be easily handling it.

And we can see that in the wait times too. Right. That's usually a good indicator of how slammed practices are.

Exactly. Appointment wait times for new patients. They've dropped for the second quarter in a row.

How low are they?

They hit a three year low. The average wait is now just over 12 days.

12 days in many places. You could probably call today and get in next week. That's. That's really not long.

No, it's not. And it confirms the picture. Whatever spending growth is happening, it's being easily absorbed by the current system. Capacity practices aren't stretched thin at all. There's no backlog building up like we saw maybe a year or two ago when things were hotter.

So more money flowing overall, but it's not leading to more patient visits, or at least not enough to make dentists feel busy. Maybe it's concentrated on higher cost treatments for fewer people. Or maybe. Maybe there's just too much chair time available right now relative to demand.

It could be a mix of both. It's a really complex picture.

Okay, let's dive deeper into that fiscal squeeze because it feels like this is the engine driving a lot of these contradictions. Costs up, but busyness down. Something's gotta give.

Absolutely. And the cost side is. Well, it's relentless. Let's break it down. First, just the basic inputs. Dental equipment, supplies. Prices for that stuff are up 5% just since the start of 2025.

5% in about eight months. Okay.

And then there's labor. While overall hiring is flat right now, the cost of labor isn't over the longer term. Hourly pay for dental office staff has consistently crept up slightly faster than general inflation. So your team costs more, your supplies.

Cost more, everything costs more. So how are practices responding? They can't just absorb that forever.

They're not. They're raising their prices. The data is really clear here. Two thirds of dentists that 65.8% reported increasing their fees this year, 2025.

Two thirds raise fees by how much? On average?

The average reported increase across their whole fee schedule was 6.7%.

Wow. Nearly 7%. That's. That's a significant hike for patients to potentially face.

It is, but you have to see it as a defensive move. This ties directly back to the confidence section.

And.

And those reimbursement woes.

Right, because insurance payments aren't keeping up.

Not even close. Provider reimbursement rates, PPO rates, public insurance rates, they are not keeping pace with that 5% plus cost inflation, let alone overall inflation. They're Essentially flat, while everything else gets more expensive.

And that gap, Costs rising fast, payments staying flat. That's the fiscal squeeze in action.

That is the definition of it, yes. It forces that 6.7% fee increase just to try and maintain margins.

Which then, of course, circles right back to the patient affordability problem that dentists were citing as a reason for pessimism.

Exactly. It's a vicious cycle, isn't it? They raise fees because costs and low reimbursements give them no choice. But doing so might make care less affordable, potentially suppressing demand and contributing to that not busy enough feeling.

Man, that is a tough spot. So what's the strategic escape hatch? If raising fees has its own downsides, what else are they doing?

Well, the report highlights a pretty drastic step some are taking. This fiscal squeeze is directly pushing practices to start dropping out of certain insurance networks altogether.

Really? Just refusing to accept specific PPO plans anymore?

Yeah, it's a way to regain control over their pricing. They're essentially saying to those insurers, look, your reimbursement rate is below our cost to provide the service. We can't afford to accept it anymore. We'll charge our full fee instead.

That's a huge decision. It could mean losing patients who have that insurance.

Absolutely. It's high stakes. Yeah. But for some practices, it might feel like the only way to stay financially viable to avoid actually losing money on insured patients.

Okay, let's switch to the last piece, the jobs market. It connects to the cost squeeze through labor expenses. But there's this whole other riddle happening here, too, right?

Yeah. The labor situation is unique. First, the big picture. Hiring was basically flat in Q3, 2025. That's true for the overall US economy and specifically for the dental care sector, too.

Clack growth.

Yeah. Looking back over the past year, dental sector employment is only up by a tiny amount. Like 0.5%, half a percent.

And are the people who are employed working fewer hours?

Slightly. Yeah. There's a small downward trend in the average weekly hours for dental staff, down about 0.4 hours compared to a year ago. So flat employment, Slightly fewer hours on average.

Okay, so you hear flat employment, fewer hours, and you might think, okay, so demand for workers must be low. But that's not the case here, is it?

Not at all. That's the riddle. Despite the stagnant growth numbers, the need for staff, their recruitment activity is actually really high.

How high?

About 1 in 3 dentists were actively trying to hire in Q3. Specifically, 37.5% were recruiting dental assistants, and 32.5% were recruiting hygienists.

So a third of practices are looking for people, but overall employment isn't growing. That means they're just not finding them or not finding them fast enough.

Exactly.

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The market isn't flat because demand is low. It seems to be flat because the hiring process itself is incredibly difficult, especially for one key role.

Let me guess. Hygienists.

I knew dental hygienists. It remains the single hardest position to fill in a dental office. Period.

How hard are we talking?

The number is just staggering. 90%. 9 0. 90% of dentists who were recruiting for a hygienist rated the process as very or extremely challenging.

90%. That's. That's basically everyone finding it incredibly difficult. And has it always been this bad?

That's the other alarming part. That 90% figure. It's been virtually unchanged for the last three years. This isn't some temporary blip. It's a deep structural problem in the dental workforce pipeline.

A three year crisis in hiring hygienists.

Wow.

And does this difficulty show up in the actual success rates? Are they managing to fill these roles eventually?

You can see the struggle clearly in the hiring outcomes. Compare hygienists to assistants practices. Recruiting for dental assistants. Nearly 2/3.62.3% managed to fill the open position.

Okay, so still challenging. Maybe, but doable for most.

Right, but for hygienists, only about 2 out of 5, 42.8% successfully filled their open position. That's a massive difference in success rates.

Less than half are succeeding in hiring a hygienist they're looking for.

Which means many practices are operating short staffed and in a really critical revenue generating role.

And even when they do finally hire someone, how long did that take? I remember seeing something about that.

Yeah, the time to hire data really underscores the struggle for the hygienist positions that were successfully filled. One fifth of them, 21.5%, had been open for more than six months.

Six months, half a year trying to fill one crucial position. Think of the lost production, the scheduling headaches.

Exactly. Half a year of deferred patient care, potentially lost revenue, and extra stress on the rest of the team. It puts a hard cap on the practice's ability to grow or even just handle the existing, albeit modest, demand effectively.

So the fiscal squeeze is hitting costs, Reimbursement isn't keeping up, forcing fee hikes. And then the inability to hire key staff like hygienists means they can't even fully capitalize on any potential patient volume to offset those rising costs. What a tangle.

It's a real tangle. Every piece seems connected in this uneasy holding pattern. Hashtag tag tags out of Chuck.

Okay, so wrapping up this deep dive into the Q3, 2025 dental economy, the picture is definitely one of, like you said, an uneasy holding pattern.

Yeah, I think that's the right term. We've seen how the high costs for supplies and staff combined with flat insurance reimbursements really create that intense fiscal squeeze.

Right, and that squeezes forcing difficult decisions.

It forces those nearly 7% fee increases, which then bumps up against patient affordability concerns. Something dentists themselves are worried about.

Which might explain at least partly why busyness is down and wait times are shrinking, even though overall consumer spending is technically up a bit from pre pandemic levels.

Exactly. And layered on top of all that economic pressure is the persistent, really acute difficulty in hiring dental hygienists. That acts like a governor on the engine, limiting the practice's ability to actually deliver care and generate revenue, even if demand were stronger.

So the system seems kinda stuck. Costs go up, fees go up, potentially pushing some patients away or making them delay care, while the inability to staff properly prevents practices from efficiently handling the patients they do have.

It's a tough balancing act. Right now.

So thinking about all this, here's something for you, our listener, to consider. If two thirds of dentists are raising fees significantly because of this squeeze and affordability is a top concern, what happens next? Beyond just dropping insurance plans, what other maybe more fundamental changes might the dental sector need to embrace?

Yeah, what immediate shifts in technology, maybe in how care is delivered, maybe in the workforce model itself, are needed to break this cycle, to balance the rising cost of providing care? We with the very real limits on.

Staffing before this holding pattern, maybe tips into something worse, like a real headwind for the sector.

It's a critical question. Lots to think about there regarding efficiency, workforce development and the future shape of dental practice.

Definitely something to mull over. That's all the time we have for this deep dive. Thanks for joining us.

Thanks, everyone.