Introduction
Purchasing a dental practice is an exciting milestone — but what many first-time buyers don’t realize is that insurance credentialing can be one of the most frustrating and time-consuming challenges after closing.
Without proper planning, delays in credentialing can lead to months of lost revenue, patient confusion, and cash flow headaches.
In this post, we’ll break down what dental insurance credentialing is, why it matters when buying a practice, and how to avoid common pitfalls that can disrupt your transition into ownership.
What is Dental Insurance Credentialing?
Dental insurance credentialing is the process of becoming an approved, in-network provider with dental insurance companies.
Without being properly credentialed:
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You cannot bill insurance on behalf of patients.
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Claims may be denied or delayed.
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Patients may have to pay out-of-network fees — causing frustration or lost business.
Why Credentialing Becomes a Challenge in Dental Practice Sales
1. Credentialing is Linked to the Individual Dentist — Not the Practice
One of the most misunderstood aspects of dental insurance is that provider credentialing typically applies to the individual dentist for a specific location.
This means that even if you buy a fully established, insurance-participating practice, you (as the new owner) must go through the credentialing process with every insurance company the practice participates with. It also means that even if you are credentialed with a provider at a location where you work as an associate, you still must get credentialed with that provider again at the new location you are purchasing.
2. Credentialing Timelines Are Unpredictable
On average, it can take 60 to 90 days to complete credentialing with insurance companies. Factors that slow down the process include:
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Incomplete paperwork.
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Background checks or license verifications.
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Backlogs at insurance companies.
Delays can leave new owners in a difficult position — operating the practice but unable to receive insurance reimbursements for patient care.
3. The “Gap Period” Problem
Many buyers mistakenly assume that they can immediately bill under the selling dentist’s provider number while waiting for their own credentialing to complete.
This is rarely permitted unless:
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The seller stays on as an associate dentist during the transition and is the treating doctor.
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The insurance carrier allows a “billing under previous owner” grace period (which is becoming less common).
Without these measures, the buyer may be forced to treat patients as “out-of-network” until credentialing is finalized.
How Credentialing Challenges Impact New Practice Owners
|
Challenge |
Impact on New Owner |
|---|---|
|
Delayed Reimbursement |
Cash flow strain — difficulty paying expenses, staff, or loans. |
|
Patient Retention Risk |
Patients may leave if they can’t use their insurance benefits immediately. |
|
Administrative Burden |
Increased stress managing paperwork and follow-ups with carriers. |
How to Plan for Credentialing During a Practice Purchase
1. Start Credentialing Early — Before Closing
If possible, begin the credentialing process as soon as the asset purchase agreement is signed. Some carriers will allow pre-credentialing contingent on closing.
2. Work with a Credentialing Specialist
There are companies that specialize in dental insurance credentialing and can:
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Submit all applications on your behalf.
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Track progress with insurance carriers.
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Avoid common paperwork errors.
The fee is typically small compared to the cost of delayed reimbursement. Make sure, however, that they are initially focused on just getting you credentialed. Some credentialing companies may try to get you negotiate fees at the same time as credentialing. We do not recommend this as it can add a significant amount of time to the process. You should first focus on getting credentialed and then negotiate fees at a later date, once you have been in the practice for a period of time.
3. Structure the Transition Thoughtfully
To avoid the gap period:
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Consider having the seller stay on as an associate dentist temporarily. The seller can complete treatment in progress and handle any urgent treatment. Patients that do not need immediate treatment can be scheduled after the buyer completes the credentialing process.
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Verify with each insurance carrier whether “billing under seller” is allowed during credentialing. You may be able to bill under the seller, however it must be clear that the seller is the “billing doctor” and you are the “providing doctor”. This may result in out of network fees so be sure to ask the carrier.
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Communicate with patients in advance if there will be any temporary insurance limitations.
4. Verify All Participating Insurance Plans
As part of due diligence:
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Request a list of all insurance plans the practice currently participates with.
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Understand which plans are essential to the patient base.
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Prioritize those plans during credentialing.
Conclusion
Dental insurance credentialing is a hidden but critical part of purchasing a dental practice. Without a proactive plan, it can create costly delays and operational challenges for new owners.
Working with an experienced dental practice broker can help identify potential credentialing obstacles early and develop a transition plan that protects both patient retention and cash flow.
Ready to Buy a Dental Practice?
At American Practice Consultants, we help buyers navigate every aspect of the purchase process — including the credentialing challenges that can derail your transition.
Contact us today for a confidential consultation and let us guide you to a successful ownership experience.
