Under Medicaid and Tax Pressure, Pediatric DSOs Are Turning to AI

On May 22, 2025, the U.S. House of Representatives advanced a sweeping bill that includes $880 billion in proposed savings, of which $715 billion will come from healthcare, primarily Medicaid (AP News). For pediatric dental service organizations (DSOs), these cuts could create ripple effects that are felt across clinical operations, patient access, and long-term growth.

Medicaid plays a vital role in pediatric dentistry. Nearly 40% of children in the U.S. rely on Medicaid or CHIP for dental coverage (ADA Health Policy Institute). Pediatric DSOs often serve as the backbone of care for these children, especially in underserved communities. The House’s proposed cuts include tighter eligibility requirements, increased documentation burdens, and reductions in federal funding to states. This signals a future where access to care could decline, reimbursements could shrink, and operational pressures could intensify.

Compounding these challenges, the American Dental Association (ADA) has raised concerns about a provision in the House Ways and Means Committee's tax bill that would eliminate federal deductibility for state-level pass-through entity taxes (PTET) by certain service professions, including dentists. This change could result in a new tax increase on dentists who own or are partners in practices structured as S corporations or partnerships, especially in high-tax states. Approximately 30% of dentists nationally would be directly impacted. The ADA warns that this could reduce parity between pass-through businesses and large corporations, penalize healthcare providers amid rising operating costs, and jeopardize reinvestment in staffing, technology, and patient care, particularly in rural or underserved areas.

For DSOs serving pediatric populations, now is the time to act—not just to survive, but to grow.

Growth in a Time of Cuts: The Role of Dental AI

With tighter margins and fewer safety nets, DSOs must shift their strategy from expansion-by-acquisition to smarter organic growth. That means maximizing productivity, increasing case acceptance, and elevating patient (and parent) trust, without increasing chair time or staff workload.

This is precisely where dental AI can help.

AI-powered platforms like VideaAI equip providers with real-time diagnostic support and patient-facing visuals that simplify parent communication and increase treatment acceptance. At a time when transparency and trust are paramount, especially with Medicaid patients, AI helps clinicians educate, justify care, and build confidence with families.

“As a pediatric provider, I want to have every parent involved in terms of what's going on with their child's health. Having VideaHealth in the office brings so much clarity when showing parents radiographs and caries progression. It allows me as a provider to justify why something needs or doesn't need to be done, and at the same time help educate them about oral health and connect verbal information with a visual representation.”
— Dr. Deep Shah, Chief Dental Officer, Oak Dental Partners

A Real-World Example: Children’s Dental FunZone

Children’s Dental FunZone, a leading pediatric group and VideaHealth customer, is already leveraging AI to improve clinical accuracy and operational efficiency. With rising Medicaid pressures and growing parent expectations, CDFZ’s investment in AI positions it to deliver higher-quality care without adding overhead.

They were also recognized as a top 10% performer in the 2025 Catalyst Index Report, which highlights the highest-achieving dental organizations nationwide. Their success is powered by streamlined billing operations, centralized analytics, and VideaHealth’s AI, making them a model for pediatric DSOs seeking scalable, high-performance growth.

The Urgency for Dental AI is Now

The Medicaid conversation isn’t theoretical anymore; it’s happening now. As lawmakers consider reshaping Medicaid and tax policies directly impacting dental practices, pediatric DSOs must future-proof their organizations. Embracing dental AI is no longer optional—it’s a critical lever for growth, efficiency, and clinical excellence.

Schedule a meeting to see how VideaHealth can help your practices thrive, even in the face of Medicaid cuts and potential tax increases.