How was your first quarter production, and especially January? I know it has been six months since January but I have spoken to a lot of doctors whose year to date numbers for the first six months of 2014 are down from the same period in 2013. In a few cases the numbers are down as much as 10%-15%! In most cases, the second (April-June) quarter of 2014 was better than the first quarter, something that has happened only very rarely for quite a few years. Basically January’s 2014 production crashed, often with declines of 20% to 30% from January of 2013. In some practices the decline in production continued into February and even though there was recovery from March on, still the total YTD production has been worse than that of 2013.
What happened? Mr. Obama and the ACA happened, and no this is not a Fox News political editorial! A few years ago the administration decided to limit flex plans/HSA’s to $2500. That limit became effective in January of 2013 and many practices saw only a small decline in the use of flex plans in that month. Most people who had flex plans never dedicated more than $2500 a year to their flex plan and this new limit only impacted “the 1%” – or so the administration thought!
During 2013 the ACA kicked in. Many people whose private health insurance policies were not “qualified” under the ACA regulations lost those insurance policies but they were fairly easily replaced with compliant policies. Many employers’ group health policies had to be replaced with ACA compliant policies as well. So what’s the connection to the first quarter’s crash in production?
These new health policies almost all have higher deductibles, greater co-pays and a higher out of pocket maximum, and the out of pocket maximum for 2015 will be even greater than that for 2014. There are also new rules that make medical expenses paid by the plan to out of network providers not count toward the patients’ annual out of pocket maximum. Quite a few of the new “compliant” policies have higher monthly premiums as well.
So a significant reason for the decline in production during the first quarter of this year was patients’/parents’ unwillingness to use their flex plans for dental/orthodontic care because of the certainty of increased out of pocket medical expenses during the coming year. A contributing factor was the elimination of flex plans greater than $2500.
There’s more to the story though. Some employers have dropped their dental coverage for employees in order to cover the significant additional cost of their medical plans. Dental plans, whether privately purchased or provided by employers, have never been considered to be cost effective. The annual premiums have been very high related to the limited annual or lifetime benefit so dropping dental coverage, or dropping fee for service plans in favor of a PPO plan, has been an easy decision for employers to make. There is even some evidence of unions being willing to give up dental plans as part of the negotiation to maintain health insurance and other work benefits – and since when are unions willing to give up benefits? So, there are fewer patients with dental insurance today than in 2013 and earlier.
Of course, it is different for kids 18 and under. Dental care for children is considered an Essential Health Benefit (EHB) under the ACA and although it is too early to know for sure, it appears that many/most of these new ACA policies are Exchange related and only “medically necessary” dental care qualifies. The only dentists who will benefit are those who are participating with the Exchange PPO’s. Again, too early to say but we are also probably looking at Medicaid level fee schedules for Health Exchange related children’s dentistry.
For orthodontists the situation is worse. Only “medically necessary” orthodontics will be covered by the ACA policies and less than 10% of all orthodontics done, especially if you read the definitions of “medically necessary” orthodontics, is medically necessary! There is still plenty of traditional dental/ortho insurance out there but less than there was a year ago. Fewer people with dental insurance combined with the decline in flex plan usage for dental/orthodontic care created the perfect storm that the profession experienced during the first quarter of this year. It is likely that next year will be worse than this year.
As I have said so many times, fee for service dentists and orthodontists need to ramp up their marketing (not advertising!) to build new patient flow to replace the low dental IQ patients who only accept treatment when it is well covered by insurance.
On an entirely different subject, I have known, been a client of, and a friend of, Joan Garbo for many years. She has assisted me and my family in dealing with a few of life’s crises and she has also taught me and my team how to conduct productive staff meetings and how to stay in communication and in relationship with my team. Joan’s training and support is one of the greatest reasons why my staff has been with me more than 20 years! I thought I would include in this newsletter an excerpt from Joan’s most recent email newsletter.
“Do you or do people you know argue for their limitations? Do you believe the past predicts the future? If so, change your alliances! Choose to make the people who see greatness in you right! When doubts and fears come up, ask yourself “So what? Now what?” and make a plan for the future that you want! Do you want a true breakthrough in your ability to achieve your dreams? The Freedom of Self Expression Workshop acts as a catalyst for success. Hundreds of people have taken the workshop and become better leaders, better parents, created more love in their lives, and led the life of their dreams as a result of the workshop. To learn more about the workshop, go to http://www.joangarbo.com/SelfExpressionWorkshop.php.
Betty, Cheri, Becky, and I have all attended Joan’s Workshop (I had to do it twice!), and our results speak to the value of this event!
