Editor's Note from Dr. Joe Blaes:
The Managed Care Debate: As a result of reductions in class size, the closing of seven dental schools and faculty shortages, combined with the impact of part-time females in our profession, the pendulum of supply and demand has tilted in the favor of dentists, concerning managed care in dentistry. The concept of "filling the chair" used by many PPOs and HMOs will be altered considerably by fewer practitioners in the foreseeable future, as many sellers today cannot find buyers. In some cities and states managed care has already reached critical mass, strangling the ability of dentists to freely opt out of various plans. In other areas, those with higher demand for their services are already opting out of lower paying or restrictive plans.
Dr. Charles Blair, a contributing editor to our magazine, wrote a business strategy article in our July issues, which I titled, "Bye, Bye Managed Care". Dr. Blair has written several books, given hundreds of lectures, and written a multitude of articles over his 30+ year career and is nationally known for his conservative views and business strategies.
Mr. Michael Walsh, CEO of Minnesota Delta Dental subsequently wrote a letter to the editor questioning the ideas and suggestions of this controversial and obviously thought-provoking article. On a personal basis, I'm glad Mr. Walsh is stepping into the public arena for debate. I've asked Dr. Blair to respond to Mr. Walsh's comments and concerns on a point-by-point basis (similar to the previous formats we used in the "Amalgam War" and "Occlusion War" debates in this magazine.
We feel dialogue is good for dentistry and I am open to article submission from all -- the insurance industry, consultants, and dentists. Dental Economics will provide much more on insurance issues in the future, hopefully with Mr. Walsh as a periodic contributor.
To see Dr. Blair's article from the July issue, use the search box on the left side of the screen and type in "Blair." Following is Mr. Walsh's letter, followed by Dr. Blair's response.
From Mr. Walsh:
I am writing in response to your article, "Bye, Bye Managed Care" that was published in the July 2001 issue of Dental Economics. While dentists have a right to determine whether or not to see patients covered under a dental plan or even be a part of a dental network offered by organizations such as Delta Dental, the tone and some of the remarks in your article concern me.
My primary concern was your disregard for the improvement of oral healthcare for the individual patient. Your entire article focused on how to exploit patients and dental insurance companies: "Furthermore, it's critical that protocols be established for X-rays, fluroides, etc. The idea, obviously, is to provide more needed dentistry on the doctor's existing full-fee patient base." (page 76)
You go on to state that the "clinical goal should be both a high-dollar, per-hour rate and a high-dollar, per-visit rate."
I found this to be highly alarming and especially disturbing for the consumer. Patients, groups, and insurance companies trust dentists to make appropriate treatment decisions based on the individual needs of the patient -- not on whether an individual is a full-fee patient, covered under a plan or by the level of coverage a patient has within his or her specific plan.
You also encourage dentists to cut their losses by terminating "highly-paid, money-losing associateships" and "simply maximize their productivity by concentrating on more profitable upper-level procedures." (page 105)
Your article also states, "In many cases upgrading or remodeling the existing practice facility is a wise investment. Patients are more apt to increase their acceptance of upper-level procedures when the environmental surroundings match the quality of dentistry offered." (page 105)
This seems to imply that dentists need to be positioned (and perceived) in a certain manner to "sell" certain services, irrespective of teir need. Expensive refurbishing to an office, as you suggest, can only drive the price of services higher, creating higher overhead costs which ultimately impact the consumer.
According to the American Dental Association, a 1998 survey of dental practices showed that the average net income of general practitioners was $133,430. According to the Dental Practice and Finance magazine 1999 national fee survey, more than 55 percent of dentists increase their fees on an annual basis. The fee increases, according to the publication, have resulted in more than eight out of 10 general practitioners reporting that their gross practice income expanded in 1998 over the prior year. While dentistry continues to generate a significant stream of revenue for practitioners, I found your disregard for the individual patient to be offensive.
At Delta Dental Plan of Minnesota, our mission, as a nonprofit, oral health benefit organization and as stewards of public funds, has always been to provide individuals access to affordable yet top-quality oral health care. Contrary to the assumption in your article, we do not intervene in the clinical decisions made by our dentists; instead, we rely on and trust their professional judgment -- as do patients, employers, and regulators.
As an organization, we have worked hard to keep our administrative costs down (last year, we had the second-lowest administrative cost of all 39 Delta plans nationwide). Recently, in response to market forces, we provided our dentists with a very liberal reimbursement increase -- all in an effort to continue our mission of providing individuals with access to affordable, yet top-quality dental care.
Implicit in your advocacy of "high-dollar" dentistry is an obvious but unspoken message that dentists should avoid serving the economically challenged or those covered under publicly funded programs. Dentists who receive their education at tax-supported dental schools receive a significant subsidy. At Delta, we have always believed that one way dentists can repay the public is to devote a percentage of their chair time to serving those who are coveted under public programs. Your position, if shared, by the majority of providers is indeed a sad commentary on the state of the dental profession.
Overall, your article raised some very serious concerns and questions. Are we as consumers to expect the highest quality of dentistry or are we to expect being victimized into buying services that are either totally unnecessary or are "upper level" procedures that can be avoided?
Just as regulators closely monitor the actions of insurance companies, regulators should also pay closer attention to the actions of dentists and enterprises such as yours -- especially if they follow the advice outlined in your article or attend/purchase one of your programs.
I hope you carefully reconsider the advice you choose to disseminate in the future.
Michael F. Walsh
President and CEO
Delta Dental Plan of Minnesota
From Dr. Blair:
Mr. Walsh, since receiving your letter, I have spent some time researching your company, Delta Dental of Minnesota. I recognize your company as a leading edge innovator in the dental benefits administration industry. My perception is that you are directing the industry into new arenas, which will greatly impact both patients and the dental profession at large. Presently we have the finest highest quality dental care system in the world, and operating at moderate cost and inflation compared to other healthcare. Let's hope the public will continue to reap the reward of the current system.
..."While dentists have the right to ... see patients covered under networks ... tone of the remarks concern me..."
1. I agree that the fundamental principal for dental insurance plans should be freedom of choice for patient, dentist, and employer. Employers should have the right to purchase a plan of its own choosing, as well as the level of benefits and reimbursement coverage. The public should have the freedom to choose their provider of care, either in or out of their employer-mandated network.
Additionally, dentists should have the freedom to join a network or to opt out. They should also be able to position themselves at various customer and clinical levels in the marketplace, as they deem appropriate, based on local market conditions and their own individual philosophy of practice.
Additionally, a free market should exist where insurance plans compete for both employer and dentist providers. Unfortunately the insurance industry's consolidation is resulting in several companies gaining large market share, and thus controlling dentists ability to enter or exit these plans, particularly when they constitute a large percentage of their practice. This type of situation does not give the dentist freedom of choice in participation, but rather no choice at all. Simply put, no Microsoft-like domination should exist, and regulators should examine those areas.
2a. Top-quality clinical care is a given in our profession and is implied to the reader of this magazine (who by the way is the dental professional). My entire dental career of almost thirty (30) years has been dedicated to teaching that customer service, communication, on-time performance, and technical quality are the hallmark of a successful practice. Your claim that my article "disregards the improvement of oral healthcare" is simply unsubstantiated. Perhaps your "concern of my tone" is in reality, concern that my article educates dentists as to their choices in a free market, and this threatens the insurance companies stranglehold.
... "Your entire article focused on how to exploit patients and dental insurance companies?"
2b. Rather than explaining how to exploit patients and insurance companies as you indicated, the article instead focuses on preventing the exploitation of dentists by informing them as to their freedom of choice to participate (or not) in certain plans, and the basic business strategies to accomplish such.
Is it not true, from a business perspective, dentists are exploited when they don't have a choice? The definition of "exploit" means "to use, to manipulate, to take advantage of". Are patients not manipulated when they are told which dentists they can and cannot see, based solely on those who meet or do not meet a carrier's arbitrary criteria? Let's not overlook the insurance companies growing restrictions on procedure mix, utilization profiling, fee limitations, low reimbursement increases (if any), administrative hassles, and intrusions on the doctor-patient relationship.
Rather, our strategies urge dentists to expand their available services for patients, to increase the time spent with each new patient thoroughly diagnosing needed treatment, to offer more flexible payment arrangements through third parties, to improve patient communication and efficiency, and yes - - to reasonably upgrade the facility -- each to benefit, not exploit the patient.
Offering discretionary services, such as cosmetic dentistry or orthodontics (based on the findings of the doctor exam) is not only expected, but also demanded by today's educated consumer. Dentists should be trusted to make appropriate treatment decisions based on the individual needs of the patient and to determine the level of care and treatment sequences. Whether the patient is full fee or not should never alter the treatment plan or be the basis of diagnosis. My stance is that dentists should charge a fair and full fee based on time, care, skill and judgment involved in the procedure. I am not promoting "gouging", but rather promoting to charge a fair fee. In many cases it's only a 5% or 10% adjustment in gross but results in a 15% to 30% increase in net.
However, insurance reimbursement levels are fee standardized and relative-value based, and vary greatly. Moreover, insurance companies generally pay a flat reimbursement for a given procedure, for the sake of easy administration and control, regardless of the doctor's clinical complexity, time, or lab expense. My article attempts to level the playing field by bringing down the "Berlin Wall" regarding fee, coding and procedure mix information critical to the doctor's success. Insurance companies have long refused to provide data to doctors regarding how their UCR fees were set or determined.
"Furthermore, it's critical protocols be established for xrays, fluorides, etc. The idea, obviously, is to provide more needed dentistry on the doctor's existing full-fee patient base"
3. Protocols should be established by the dentist for all aspects of the practice. What constitutes the clinical criteria for that practice regarding X-ray frequency, type of X-ray, etc? When is fluoride indicated? What's the fee and time allotted for various types of prophys (brief, extended, teen, and regular)? Are the child and adult exam fees the same? What's the fee for a one-hour quadrant scaling versus two quadrants in an hour and a half? These types of clinical and fee protocols and others should be established and the doctor should establish and monitor their compliance. Obvious periodontal disease should be appropriately addressed, regardless of insurance coverage. I am merely recommending that all necessary (clinically justified) services be provided to patients in order to deliver the highest quality of care possible. I believe what you really resent is that dentists might establish protocols that differ from yours, and would result in a higher quality of care.
"You go on to state that the "clinical goal should be both a high-dollar, per-hour rate and a high-dollar per visit rate."
4. Hourly production and dollars per visit should be considered and monitored. From a business-standpoint, I'm very surprised that you would question the basic business principal of monitoring efficiency, with a goal of improving dollar-per-hour production. Most busy consumers/patients prefer completing needed treatment in the fewest number of visits necessary. Quadrant dentistry, where indicated is most appropriate. The benefit to the patient is fewer visits and the convenience of more dentistry completed at each visit. The reduction in patient count means less clinical and office staff is needed and operatory setups and OSHA costs are decreased. Increasing dollars-per-visit is a win-win scenario for both patient and doctor. We are in dentistry to deliver dental care -- we want patients to utilize dental services, we want them to have the best possible dental health and appearance.
... "You also encourage dentists to cut losses by terminating ... associates ... and maximizing with more upper-level procedures..."
5. There are numerous factors to consider when determining the need for an associate. I pointed out that doctors should cut their losses if they were employing an associate simply to perform low-level (often unprofitable) procedures as a direct result of participation in a given plan.
Our company has worked in the dental transitions business for over 20 years. It is particularly troublesome when an associate is brought into a practice with an inadequate patient base or potential for growth. This type of associate relationship does not last long term, since it does not make sense economically for either doctor. In hindsight, after the owner-doctor pays overhead expenses and associate doctor and staff wages, the bottom line is often an insufficient reward. Furthermore, the owner doctor must manage and supervise increased staff as well as the associate doctor, adding the stress of a greater managerial commitment, which most do not want. It is fact, not speculation, that the owner-doctor would have been better off "simply maximizing their own productivity" by concentrating on more profitable upper-level procedures, charging fair and non-discounted fees, and providing a mix of clinical services they enjoy. The doctor should optimize the practice procedure mix by evaluating what they clinically do and do not enjoy, what to refer to the specialist, and what services to emphasize. They must also deliver outstanding customer service with excellent clinical delivery and on-time performance. These are basic business strategies.
... "You also state, upgrade or remodel ... is a wise investment ... " this seems to imply that doctors need to be positioned to "sell" certain services, irrespective of their need. Expensive refurbishing can only drive prices higher?"
Upgrading or remodeling a facility within reason is indeed a wise investment. I recommend a $300/square foot per year production goal to keep facility overhead in balance with revenues (i.e. 2,000 square foot facility should produce at least $600,000). No more than 11% of gross revenues should constitute total facility/equipment expense. With new technology constantly emerging, 2-5% of gross revenues should be allocated for new equipment and technology to provide state of the art high quality dental care. My experience is that the typical insurance company's facility is much more upscale than the typical dentist's facility. Most dentists have moderate facilities. Every business should "position" itself to "sell its services". Doesn't Delta? This is about selling needed dentistry, not about selling unneeded dentistry, as you imply. The insurance industry "positions" itself to "sell its services" as it has a different and customized message for employer, patient, and provider. Each are told "what they want to hear".
Undoubtedly, "Bye, Bye Managed Care" focuses on reducing or getting out of discounted fee plans. With many practices facing overheads of 65% and even as high as 75%, each discounted dollar that can be recovered is all-important. One can see that legitimately pricing fees or limiting across-the-board discounted plans is critical with the reality of today?s overhead costs. What?s wrong with opting out of inferior fee plans?
"... According to ADA, 55% doctors increased fees ... 8 out of 10 GPs report income expanded in 1998?" and "...I found your disregard for the individual patient to be offensive."
Thanks for pointing out that only 55% of dentists increase their fees on an annual basis. This means 45% do not! From an economic standpoint, should this 45% not reconsider? Most dentists focus on the clinical aspects of their practice and fail to address it from a business perspective. Accordingly, if 8 of 10 practitioners increased revenues in 1998 as you stated (assuming the same mix of services), this means a significant number of dentists didn't raise fees, but simply had to work harder to raise revenues. Meanwhile, practice overhead costs (which you ignored) continue to rise, especially for staff salary increases in this tight labor market. In comparison, my experience is that almost 100% of dental insurance companies are raising premiums annually! An exception is those that promote a two-year level premium to get their "foot in the door". For years dentistry has been congratulated for holding down the increasing cost to patients.
" ... at Delta of MN our mission as non-profit?to provide access to affordable oral health. Contrary to assumptions in your article, we don't intervene with clinical decisions made by our docs..."
I agree that while insurance companies don't directly interfere with clinical decisions, a definite "intervention" exists when an insurance company notifies the patient that his doctor's fees are "unusual, not customary and therefore excessive and unreasonable". By doing so, they harm the dentists reputation and "disparage the value of the services rendered". When a service is not covered under insurance, the patient naturally assumes it may not be "necessary". Therefore, patients might choose unwisely to forego treatment altogether. Moreover, Minnesota Delta's Prime program specifically identified dentists with certain treatment patterns, rewarding higher fees for some while freezing fees for others. A recent press clipping indicates Delta is evaluating Prime dentists, which "save patients from overtreatment". Dentists have enjoyed a top level of trust over the years, according to surveys. Recently, the public's perception of dentists has slipped, but remains high nevertheless. I think some of this slippage is the result of intrusions into the doctor-patient relationship.
" ... we have kept administrative costs down ... recently we provided our dentists with very liberal reimbursement increase ... in efforts to providing individuals with affordable top quality care?"
According to a recent article I read, Minnesota Delta has indeed kept administrative costs down in part, by establishing a lower-wage customer service center in Iron Range and exporting USA jobs overseas to lower-cost Ireland. I'm not criticizing those business practices, but would point out that the Minneapolis city dentist caught in a tight labor market, with reimbursements not covering labor increases, doesn't have those same options.
Delta did indeed increase reimbursements to the Minnesota Prime/"value dentists" (2,400 of them) who received a small increase, while 464 "non-value" dentists fee structure was frozen, due to their procedure mix, referral patterns, fee profile, etc. Recently, Delta also squeezed out 71 dentists from its network, because they felt these dentists did not represent a good value. Interestingly, a disproportionate number of these 71 dentists were AGD members. The obvious correlation is the more educated and higher level of services offered, the less a "value" dentist for Delta.
Recently your attention has been to further scrutinize procedure mix (utilization) issues for your participating dentists. The idea is to reward the "value" dentist, or one who does fewer procedures (or lower level procedures) on a given patient base. It appears a dentist may have a higher fee profile and still be rewarded if they have the correct (lower) treatment modalities. For the dentist who is "super value", what protection does the patient have for neglect or undertreatment? Are they identified like the "low value" dentists? Dentists are kept entirely in the dark as to how UCR methodology has been determined by insurance companies, nor will the companies make this known, claiming it to be proprietary. As you are aware, the ADA currently has filed a lawsuit against AETNA to force them to disclose their fee data and the methods employed.
" ... you send unspoken message that docs should avoid seving the economically challenged ... Delta subsidizes dental schools ... Delta thinks docs can repay by serving ... under public programs ... if your position is shared ... it is sad commentary on dental profession ... "
First, you are to be commended for your public service activities including to tobacco cessation and child abuse. However, in 1999 non-profit Delta forwarded a $4 MILLION surplus to its parent company, DeCare. Why wasn't this surplus used to "subsidize" our dental schools, used for needed dentistry for Delta's subscribers, or used in Delta's non-profit mission to provide oral health to the needy? If deductible fees are imposed on a non-profit organization, it will remain non-profit. Do you have statistics for the multi-millions of dollars of dentistry that are given away by our profession every year? Do insurance companies request from dentists the number of procedures and the fees for these procedures that are never charged to the less fortunate, or "economically challenged" as you put it? Subsidizing a dental school in order to use this for your marketing advantage as well as expecting dentists to one day "repay" by giving chair time to Delta's subscribers is found wanting when compared to the countless dollars donated (given away with no expectations of reciprocation) by the dental community. I have this to say about the economically disadvantaged. Each dentist should provide free, charitable dentistry routinely. In fact we have a business monitor for doing so. I did in my ten-year clinical career.
" ... are we as consumers to expect the highest quality care or to be victimized ... buying totally unnecessary or "upper level" procedures that can be avoided? ... "
2. Here, Mr. Walsh, you are stretching it again. At no time do we promote "unnecessary dentistry", but offering comprehensive and discretionary dentistry. Cosmetics may be "unnecessary", but an esthetic service the patient desires. Sure, some patients could go ten years without a prophy, X-rays, or checkup. Treatment could be deferred or "watched" indefinitely. One train of thought is that starting treatment starts a cascade of treatment?small filling increases to a large one, then endo, then a crown, etc, so lets not start treatment at all. Is that the standard of treatment we really want? Do patients want their insurance companies or their physicians and dentists deciding what?s "necessary or unnecessary" or which upper-level procedures can "be avoided".
The patient (not the insurance company) should make the choice after the dentist presents the ethical choices! Are hardworking patients (including Dentists) victimized by expecting to pay increasing insurance premiums in return for decreasing benefits? It is preposterous for the annual dental benefit limit to be $1,000 to $1,500 ... the same limit as established in the 1970s, while premiums continue to escalate!
" ... Just as regulators closely monitor the actions of insurance companies ... regulators should pay close attention to actions of dentists and enterprises (like you), especially if they follow ... your advice ... I hope you carefully reconsider the advice you choose to disseminate in the future?
3. I would first ask why is it that regulators monitor the actions of the insurance companies so closely? Could it be that our legislators were forced by the cries of the public to put such regulation for insurance companies in place?
Our country was built on the concept of freedom, which includes freedom of choice in making economic decisions. Dentists need to be educated as to their options, as should patients. They should not be punished for offering patients a full range of high-quality treatment options. I look forward to the day that patients and doctors can make informed choices about options in needed treatment and fees based upon full and complete disclosure of all information currently in possession by insurance companies and which they refuse to share.
