THE ECONOMICS OF THE AI ECONOMY ON DENTISTRY (AND BEYOND)

AI-Driven Unemployment, the Dental Economy, and the Case for Economic Restructuring

Derek Hill, CPA │ Derek Hill Advisory Group Inc. │ February 2026

Abstract

Dental practice owners tend to think of their businesses as insulated from macroeconomic shocks. Teeth still hurt during recessions. Hygiene recall persists. And unlike retail or hospitality, dental demand is driven by biological necessity, not consumer sentiment.

That assumption has been largely correct through every economic downturn since the profession industrialized. But the disruption now building in the broader economy is not a cyclical recession. It is a structural transformation of how work is organized, who gets paid, and how those payments flow into healthcare spending. Artificial intelligence is poised to displace employment across virtually every sector of the economy, at a pace and scale that historical precedent does not capture. The downstream effects on dental practices will be profound, and they will arrive faster than most practice owners expect.

This article examines the transmission mechanism from AI-driven unemployment to dental practice revenue, with particular attention to highly leveraged practices and dental service organizations (DSOs). It concludes by introducing the MOSAIC economic framework as a policy response that directly affects how dental practices should plan for the next five to ten years.

If you read my article on “Where Have All the Patients Gone?” on LinkedIn, you will find that this piece is an expansion of that analysis. Here we look in more detail at the economics of the disruption and introduce MOSAIC—one of the solutions many of the smartest thinkers believe may be the most viable.

The Employment-to-Dental Revenue Pipeline

The financial health of every dental practice in Canada rests on a chain of dependencies that begins far outside the operatory. That chain runs: employment → employer-sponsored dental benefits → patient visits → treatment acceptance → collections. Break any link, and revenue degrades.

Today, approximately 60 to 65 percent of Canadians with dental coverage receive it through employer-sponsored plans. When patients lose their jobs, they don’t just lose income—they lose their dental benefits. And when an employee loses their job, not only do they lose their dental benefits, but so does their entire family.

The data from the 2008–2009 recession is instructive: dental offices experienced an average income decline of approximately 13 percent, with the impact concentrated in restorative and elective procedures, while hygiene production remained relatively stable. Case acceptance rates fell sharply as patients’ disposable income declined and they became selective about non-emergency care.

That downturn saw unemployment peak at roughly 10 percent. Current projections for AI-driven displacement suggest something far more severe. The World Economic Forum’s 2025 Future of Jobs Report estimates that 92 million jobs will be displaced globally by 2030, with particular concentration in administrative, clerical, and professional services roles—precisely the white-collar employment base that carries private dental insurance.

Why This Disruption Is Different

Previous recessions were cyclical. Employment fell, then recovered. Dental practices that managed cash flow through the trough emerged intact as patients returned with restored benefits and confidence. The 2010–2014 recovery bears this out: average dental production increased 12 percent, and collections rose 8 percent as unemployment dropped from 10 percent to 7.5 percent.

AI-driven displacement is structural, not cyclical. Jobs eliminated by artificial intelligence are not coming back when the economy recovers, because the economy recovers precisely by replacing those jobs with AI systems. The occupations most immediately at risk—administrative support, data processing, financial services, customer service, legal research, accounting—are disproportionately held by the demographic that sustains private dental practice revenue: employed adults aged 25 to 55 with employer-sponsored benefits.

The scale of projected displacement compounds the problem. Conservative estimates suggest 20 to 30 percent of current occupations face substantial automation within the next decade. More aggressive projections, including those from McKinsey and various AI research groups, place the figure at 40 to 60 percent of current tasks. Even taking the conservative end, the implications for dental practice economics are severe.

The General Effect on Dental Revenue

As employment contracts, dental practices face a cascade of interlocking effects.

• Loss of employer-sponsored dental benefits. As companies downsize or restructure, benefit coverage shrinks. The shift from fee-for-service to PPO models, which accelerated after 2008, would intensify, further compressing reimbursement rates.

• Reduced patient volume. Research consistently shows that economic downturns reduce dental care utilization by up to 30 percent, with patients postponing elective and non-urgent treatment. In a structural displacement scenario, this reduction is not temporary.

• Collapsed case acceptance. Treatment plans requiring significant out-of-pocket investment—crowns, implants, cosmetic work, orthodontics—face sharply declining acceptance rates. Revenue shifts toward lower-margin preventive and emergency care.

• Expansion of government coverage at lower fee schedules. Canada’s emerging dental care plan signals the direction. As private coverage erodes, public programs expand—but at reimbursement rates that are 20 to 40 percent below current private fee schedules. Practices will become increasingly dependent on high-volume, low-margin government work.

• Shift in procedure mix. The revenue mix tilts toward lower-margin essential services, away from high-margin discretionary procedures. A practice currently generating 30 to 40 percent of revenue from elective work could see that shrink to 10 to 15 percent.

Projected Impact on a Representative Ontario Practice

The following analysis illustrates what these forces could mean in concrete financial terms for a representative Ontario general dental practice currently producing $1.5 million annually.

Current EBITDA margins for well-run Ontario general practices are realistically in the 20 to 25 percent range, meaning this practice generates $300,000 to $375,000 in annual earnings before interest, taxes, depreciation, and amortization. At prevailing acquisition multiples of 5.75 to 6.25 times EBITDA, the practice is worth approximately $1.73 million to $2.34 million today.

The operating leverage inherent in dental practices—where a significant portion of costs are fixed, including rent, staff, debt service, and equipment leases—means that revenue declines translate into disproportionately large EBITDA compression.

In a moderate scenario involving a 20 percent revenue decline, gross revenue falls from $1.5 million to $1.2 million. Because fixed costs don’t contract proportionally, EBITDA margin compresses to 11 to 13 percent—generating only $132,000 to $156,000 in annual earnings. That represents approximately a 47 percent decline in EBITDA. At the same valuation multiples, practice value falls to roughly $759,000 to $975,000—a decline of 54 to 58 percent from current levels.

In a severe scenario involving a 35 percent revenue decline, gross revenue falls to $975,000. EBITDA margin collapses to just 4 to 5 percent, generating only $39,000 to $49,000 in annual earnings—an approximately 80 percent reduction. Implied practice value at prevailing multiples falls to just $224,000 to $306,000, representing an 87% to 90% decline from today.

Note: Valuation multiples themselves would likely compress further in a severe scenario, as buyer confidence declines and acquisition financing tightens. The figures above may actually understate the damage.

The operating leverage math is unforgiving and worth repeating plainly: a 20 percent revenue decline produces roughly a 50 percent decline in practice value. A 35 percent revenue decline destroys 87 to 90 percent of what the practice is worth today.

The Leverage Problem: Dentistry’s Structural Vulnerability

The Debt Architecture of Modern Dentistry

A newly graduated dentist in Canada carries, on average, over $300,000 in student debt. Practice acquisition adds another $500,000 to $1.5 million, depending on practice size and market. Equipment financing, leasehold improvements, and technology investments layer additional obligations. A typical practice owner in their first five to ten years of ownership may carry total debt of $800,000 to $2 million against annual revenue of $1 million to $2 million.

This leverage is manageable when revenue is stable and growing. It becomes catastrophic when revenue contracts structurally. At current EBITDA margins, a practice producing $1.5 million generates $300,000 to $375,000—adequate to service acquisition debt. Under the moderate displacement scenario, that same practice generates $132,000 to $156,000—a figure that may no longer cover debt service after income taxes.

The DSO Amplification Effect

The dental service organization model has introduced an additional layer of leverage into the industry. Private equity-backed DSOs finance acquisitions with significant debt. S&P Global reported that one major DSO platform operated at an adjusted leverage ratio of 5.3x EBITDA in 2025, with leverage expected to remain above 5.0x through 2026. As of mid-2025, approximately 130 private equity-backed DSOs operate across the dental services landscape—more than in any other healthcare vertical.

This leverage model works in an environment of stable or growing revenue and low interest rates. When revenue contracts due to erosion of the patient base, the debt service remains fixed. The operating leverage dynamic described above becomes devastating in a high-leverage DSO structure.

• Fixed debt service against sharply declining EBITDA creates immediate cash flow pressure.

• EBITDA compression triggers loan covenant breaches—a pattern already observed in 2023 when rising interest rates alone caused technical defaults.

• Acquisition multiples for add-on practices have already declined 1 to 3 times EBITDA from peak levels.

• Roll-over equity held by selling dentists loses value as parent organizations struggle, potentially wiping out a significant portion of the seller’s transaction proceeds.

Solo and Small Group Practices

Independent practitioners face a different but equally serious leverage challenge. Practices financed at or above their annual revenue face a situation in which the asset securing their debt—the practice’s revenue stream—is structurally declining. Unlike a building or piece of equipment, a dental practice’s value is almost entirely tied to its future cash flows. When those cash flows are threatened by permanent changes in the patient’s ability to pay, the asset underpinning the debt erodes.

For dentists approaching retirement who plan to fund their retirement with proceeds from a practice sale, the implications are stark. A practice expected to sell for $1.7 to $2.3 million under current conditions could be worth a fraction of that in a post-displacement economy—precisely when the owner needs liquidity most.

The Broader Economic Context: Why Policy Matters for Practice Owners

This is the point at which the discussion necessarily expands beyond dental practice management into macroeconomic policy. The challenges described above cannot be solved at the practice level. No amount of operational efficiency, marketing optimization, or case acceptance training can compensate for the structural erosion of the patient’s capacity to pay for dental services.

The critical question is not whether AI will displace employment—the evidence strongly suggests it will, and at a significant scale. The question is whether economic policy adapts quickly enough to maintain consumer purchasing power, including purchasing power for healthcare services, through the transition.

The Policy Landscape

Several frameworks have been proposed to address AI-driven economic disruption. Universal Basic Income provides a floor but faces fiscal feasibility challenges at scale. A modest UBI of $12,000 per adult would cost approximately $3 trillion annually in the United States alone. In Canada, with 11.5 percent of the US population, that would amount to $330 billion—compared to total federal income tax revenues of $315 billion in 2023. The math doesn’t work.

Robot and AI taxes risk discouraging the productivity gains that generate the surplus needed to fund redistribution. As Brookings has noted, taxing automation capital is counterproductive if it slows the very innovation that creates economic value—and is counter to the need to stay competitive with China.

Sovereign wealth funds modelled on Alaska’s Permanent Fund Dividend offer a proven mechanism but require enormous initial capitalization and decades to reach meaningful distribution levels. Tax code reform addresses part of the transition problem but does not solve the income replacement challenge for displaced workers. The Digital Sustainable Growth Model proposes publicly owned AI platforms and data-as-currency, but requires a radical restructuring of the digital economy that faces enormous political and practical barriers.

The MOSAIC Framework: Practical Architecture for the Transition

The MOSAIC model, developed by Daniel Schreiber (CEO of Lemonade and Chair of the MOSAIC AI Policy Institute) in collaboration with Peter Diamandis, offers what may be the most implementable approach to funding economic security through the AI transition. Its relevance to dental practice owners is direct and specific.

How MOSAIC Works

MOSAIC is a multi-channel funding architecture designed to capture the economic surplus generated by AI and redistribute it as guaranteed income—without raising taxes on workers or businesses. The acronym reflects its component mechanisms.

• M — Multi-channel Mechanism. No single revenue source funds the system; it requires a mosaic of multiple bases working together.

• O — Over-trend Ring-fencing. Earmarking approximately 85 percent of windfall capital income tax receipts—profits and capital gains that exceed historical trends—without raising statutory tax rates.

• S — Savings from Government Automation. Redirecting cost savings from automating government bureaucracy directly to citizens.

• A — AI-linked Deflation Capture (Dynamic VAT). As AI drives production costs down, the VAT rate adjusts upward to capture the “deflation gap,” keeping consumer prices stable while generating revenue. This is the largest funding tile in the model.

• I — Income Distribution (Negative Income Tax). A guaranteed minimum income that tapers smoothly as earnings rise, ensuring work always pays with no welfare trap.

• C — Consolidation. Rolling existing overlapping welfare transfers into a single payment to avoid double-spending.

Why MOSAIC Matters for Dental Practices

The critical insight for dental practice owners is this: the two core MOSAIC mechanisms—the Dynamic VAT and the Over-trend Ring-fencing—capture only about one quarter of the AI-generated economic dividend. Yet that alone is projected to be sufficient to fund a lower-middle-class guaranteed income floor, even under very high unemployment. Capturing a larger share through additional mechanisms could raise the floor toward median income levels.

For dental practices, this translates directly. If displaced patients retain meaningful purchasing power through a MOSAIC-type income floor, the dental revenue pipeline does not collapse. Patients without traditional employment would still have income sufficient to maintain dental care—perhaps not at today’s full fee-for-service rates, but at levels that sustain practice viability. The alternative—mass displacement without income replacement—leads to the severe scenario described earlier, in which practice valuations could decline by 87 to 90 percent from current levels.

The Window Is Closing

The MOSAIC framework’s political economy analysis identifies a critical dimension of timing. The feasibility of implementing redistributive mechanisms is highest early in the AI transition, before capital consolidates opposition, before technology incumbents organize lobbying efforts against redistribution, and before the political status quo hardens around the interests of those who benefit from concentrated AI wealth—sound familiar? Every year of delay narrows the political window.

For dental practice owners, this translates into a sense of urgency in strategic planning. The practices that will navigate this transition successfully are those whose owners understand the macroeconomic forces at work, engage with the policy discussion, and position their practices for multiple scenarios—including those in which the policy response is inadequate or delayed.

Strategic Implications for Practice Owners

Understanding the macroeconomic risk landscape leads to a set of practical strategic imperatives.

• Maximize EBITDA now. Every dollar of incremental EBITDA generated in the current environment compounds into significantly higher practice value at 5.75 to 6.25 times—value that may be harder to achieve as the economic transition unfolds. Identify and capture underutilized revenue opportunities in periodontal services, hygiene optimization, patient reactivation, and specialty services referrals.

• Reduce leverage exposure. Practices with high debt-to-revenue ratios face existential risk in a revenue contraction. Given that a 20 percent revenue decline drives a 47 percent EBITDA reduction, practices with debt service consuming more than 60 percent of current EBITDA have little margin for error. Accelerate debt repayment where possible and avoid financing decisions predicated on continued revenue growth.

• Evaluate DSO transaction timing. Practice owners considering a DSO sale should understand that current valuations—while moderated from 2021 peaks—still reflect an economy with stable employment and robust dental benefits coverage. If displacement accelerates, both revenue multiples and buyer appetite will contract. The window for premium valuations may be narrowing.

• Build resilience in patient payment models. Membership plans, flexible payment structures, and reduced dependence on employer-sponsored insurance create revenue stability that withstands benefit erosion. Practices with predictable recurring revenue streams are more valuable and more resilient.

• Invest in AI adoption within your practice. AI-enabled diagnostics, automated scheduling, and streamlined administration can reduce overhead by 20 to 40 percent, partially offsetting revenue contraction by improving margins. Practices that adopt early will be competitively advantaged and more attractive to acquirers.

• Engage with the policy discussion. The outcome of the policy debate—whether governments implement MOSAIC-type mechanisms, traditional UBI, or nothing at all—will determine whether dental practice revenue contracts modestly or catastrophically. Practice owners and dental associations have a direct financial interest in advocating for effective economic transition policies.

Conclusion

The dental profession has survived every economic disruption of the past century by relying on the essential nature of oral healthcare. That resilience is real, but it has limits. When the disruption is not a cyclical downturn but a structural transformation of how income is distributed across the economy, the old playbook is insufficient.

AI-driven employment displacement will erode the financial foundation on which dental practice revenue is built—employed patients with dental benefits and disposable income for out-of-pocket care. The speed and scale of this transformation will determine whether it is manageable or devastating. For highly leveraged practices and DSOs, the margin for error is thin.

The reality of operating leverage is unforgiving: at current EBITDA margins of 20 to 25 percent, even a moderate 20 percent revenue decline translates into a practice worth roughly half its current value. A severe scenario of 35 percent revenue loss destroys 80 percent of EBITDA—and with it, 87 to 90 percent of practice value at prevailing multiples.

The MOSAIC framework offers a credible, non-invasive mechanism to maintain consumer purchasing power during the AI transition. Its success or failure—along with whatever alternative policy responses emerge—will have more impact on your practice’s five-year valuation than any operational improvement you can make. Understanding that reality is the first step toward preparing for it.

References and Further Reading

On Technological Unemployment and AI Impacts

The work of Erik Brynjolfsson and Andrew McAfee, particularly The Second Machine Age and Machine, Platform, Crowd. Carl Benedikt Frey’s The Technology Trap provides historical context. Daron Acemoglu’s research on automation and labor markets offers rigorous economic analysis.

On Economic Pluralism and Alternative Ownership Models

Mariana Mazzucato’s work on mission-oriented economics and the entrepreneurial state. Elinor Ostrom’s Nobel Prize-recognized research on commons governance. Gar Alperovitz’s writings on community wealth building and democratic ownership.

On Wealth Concentration and Democracy

Thomas Piketty’s Capital in the Twenty-First Century and subsequent works. Martin Gilens and Benjamin Page’s research on political influence. Ganesh Sitaraman’s The Crisis of the Middle-Class Constitution.

On Universal Basic Income and Alternative Distribution Mechanisms

Philippe Van Parijs’s foundational work on basic income. Andrew Yang’s The War on Normal People. Annie Lowrey’s Give People Money.

On Institutional Design for the AI Age

The AI governance work of the Future of Humanity Institute, Partnership on AI, and similar organizations. Policy proposals from the Brookings Institution, the Roosevelt Institute, and the Berggruen Institute.

The MOSAIC Model

The MOSAIC Model presented in this brief was initially created by Daniel Schreiber—co-founder and CEO of Lemonade (the AI insurance company) and Founder/Chairman of the MOSAIC AI Policy Institute, an Israeli nonprofit he established in July 2024 dedicated to ensuring AI benefits Israeli society broadly. Peter Diamandis then co-published a piece on his Metatrends Substack (approximately late January 2026), written in collaboration with Schreiber, presenting the MOSAIC Model as a concrete framework for Universal High Income, funded by AI abundance.

Derek Hill Advisory Group Inc.

For more on this topic, see Derek’s briefs “Where Have All the Patients Gone” and “Navigating The Great Disruption: A MOSAIC Economic Strategy for the Age of Artificial Intelligence and Robotics.” For a Preparedness Assessment of your practice, reach out to Derek Hill at derek@derekhill.ca — Derek Hill Advisory Group Inc.