The major reason, in my opinion, that medicine succumbed to HMOs while dentistry did not is that there is generally more at stake in medical patients than dental patients. What I mean by that is that refusing patients as a physician results in much more harm than in dentistry. As one of the above posters mentioned, many dentists would stop taking insurance if HMOs moved in. If doctors did this peoples lives would be at stake, not just the health of their teeth. Can you imagine the public uproar if a big chunk of doctors refused to help people if they couldn't pay out of pocket? "Sorry sir, I can't take out your appendix, I don't take insurance" is a lot harder to say than "I can't fill your cavities, I don't take insurance." I am not trying to underestimate the service that dentists provide, just pointing out a major difference between them and physicians that has led to the current situation.
As a side note, HMOs are not that terrible, especially if you are a younger person. They are much less expensive to be a part of. My options for medical coverage included 3 HMOs with monthly payments of $0-$20 / month ($200 is covered by employer) or 2 regular insurance plans which would have cost me $120 or $200 per month (on top of the $200 my employer picks up). I almost forgot, all three HMOs covered basic dental coverage.