Captive Dental Financing: The Key to Boosting DSO Profits on High-Value Treatments

High-value dental treatments like implants generate significant revenue for Dental Support Organizations (DSOs), but a surprising number of hidden costs can quietly erode margins. A $20,000 full-arch case might seem like a windfall—until you account for third-party financing fees, lab expenses, and patient defaults. After it all, practices may retain just 25–30% of that amount.

The solution? Smarter patient financing strategies. And one of the most powerful among them is captive lending, a model that allows DSOs to regain control, reduce costs, and boost profitability.

The Implant Profitability Puzzle

Implants are highly profitable on paper—$3,000–$5,000 for single-tooth cases, and up to $20,000 for full-arch procedures. But net profits are much lower than sticker prices suggest due to:

• Lab & Materials (20–30%): Implants involve costly prosthetics, abutments, and lab work that often consume a quarter of the case fee.
  
  
• Third-Party Financing (5–15%): Popular providers like CareCredit or LendingClub charge hefty merchant fees, sometimes slicing $2,000 off a single large case.
  
  
• In-House Plan Defaults: Offering your own financing can backfire if patients stop paying—especially without formal underwriting or servicing systems.
  
  

Factor in operational overhead, marketing costs, no-shows, and training, and the result is a consistent squeeze on margins.

Why DSOs Still Use Third-Party Financing

Despite the cost, third-party financing remains the norm. Why? Because it solves a critical problem: many patients can’t pay out-of-pocket for $5,000–$20,000 procedures. Financing drives case acceptance by making care accessible.

Companies like CareCredit offer instant approvals and fast provider payouts, but they take a cut, often 10–14%. A $10,000 treatment financed through a 0% 12-month plan might net only $8,800 after fees. Multiply that across a DSO’s annual volume, and the revenue lost to financing costs can be staggering.

Some DSOs adjust prices to absorb fees or nudge patients toward cheaper plans, but neither option is ideal. That’s why more are exploring innovative alternatives like captive finance.

In-House Financing: Appealing But Risky

Some DSOs have attempted to offer in-house payment plans to bypass third-party fees. While the idea of keeping the 10–15% finance margin is attractive, the reality is complex:

• High default risk without formal underwriting or collections support.
  
  
• Operational burden, including billing, legal compliance, and loan servicing.
  
  
• Distracted staff and potential legal exposure from mishandling credit processes.
  
  

For most, the DIY approach leads to inconsistent results and increased risk. But there’s a third path—a hybrid model that offers both control and scalability.

Captive Lending: A Better Way Forward

Captive lending enables DSOs to become their own financing provider. Instead of routing patients through third-party lenders, DSOs can set up a financing entity—“ABC Dental Finance,” for example—that approves, funds, and services loans internally or through a partner.

The approach mirrors what car companies like Toyota or Ford have done for decades—create financing arms that increase sales, generate interest income, and foster brand loyalty.

Key Benefits of Captive Lending

1. Reclaim Lost Fees

Instead of paying 10–15% to a third-party lender, DSOs retain that margin. A $2,000 fee saved on a $20,000 case lifts profitability instantly, improving margins by up to 10 percentage points.

2. Earn Financing Revenue

Patients paying over time with interest create a new income stream. Rather than handing that interest to banks, the DSO can earn 8–15% APR directly.

3. Higher Case Acceptance

Control over approval criteria allows DSOs to design patient-friendly programs and approve cases that third-party lenders might reject. This flexibility can drive more patients to say “yes.”

4. Improved Patient Experience

Patients enjoy a seamless, branded financing journey without being redirected to unfamiliar lenders. The continuity builds trust and long-term loyalty.

5. Actionable Data Insights

Owning the financing arm gives DSOs access to real-time credit behavior, allowing for optimized marketing, risk management, and underwriting—insights simply not available with third-party providers.

Enter FinMkt: Powering Captive Finance for DSOs

While the benefits of captive finance are clear, the setup can be daunting without the right expertise and infrastructure. That’s where FinMkt comes in.

FinMkt is the leading technology partner for DSOs seeking to launch and scale captive lending programs. With its turnkey platform, DSOs can offer custom-branded financing while FinMkt handles the heavy lifting:

• Credit decision-making and loan servicing infrastructure
  
  
• Payment processing and regulatory compliance
  
  
• Custom promotional terms and approval logic
  
  
• Reporting, analytics, and support
  
  

In short, FinMkt offers “captive finance in a box”—enabling DSOs to rapidly roll out an in-house financing solution without building a bank from scratch. FinMkt’s white-label-ready platform integrates seamlessly into the patient journey while giving the DSO complete control over the economics.

Why Partner with FinMkt?

• Reduce or eliminate third-party financing fees
  
  
• Gain a new revenue stream through patient interest payments
  
  
• Strengthen patient retention with an integrated financing experience
  
  
• Ensure full compliance with lending regulations
  
  
• Accelerate time-to-market with a proven technology stack
  
  

By partnering with FinMkt, DSOs can transform financing from a profit drain into a growth lever, improving case acceptance, lifting margins, and deepening patient engagement. Learn more about how FinMkt’s captive lending platform is helping DSOs unlock new revenue and deliver frictionless patient experiences.

The Future of DSO Profitability Starts with Captive Lending

For DSOs, high-value procedures like implants will remain cornerstones of revenue. But to fully capitalize on them, it's not enough to innovate clinically—payment innovation is now just as critical.

Third-party financing solves accessibility, but costs DSOs a significant portion of their revenue. In-house DIY financing is risky and operationally complex. Captive lending offers the optimal middle ground, combining revenue retention, flexibility, and control.

And with technology partners like FinMkt, launching your own financing arm no longer requires a massive upfront investment or internal buildout. You focus on patient care—FinMkt powers the financial engine behind it.

Final Word

High-value cases deserve high-value returns. By embracing captive lending with a trusted partner like FinMkt, DSOs can:

• Boost margins by 10–15% per financed case
  
  
• Convert more treatment plans into completed cases
  
  
• Provide a differentiated, branded patient experience
  
  
• Unlock new revenue through interest earnings
  
  

In today’s competitive landscape, the DSOs that control the full patient journey—from treatment planning to financing—will outpace the rest. Captive finance isn’t just a good idea—it’s a strategic imperative.

‍

Sources: Goodrx | Groupdentistrynow‍