It is interesting to note that in 1980 only a tiny percentage of the population had dental insurance and almost no one had orthodontic insurance. Today, while I do not know exactly what percentage of the population has dental insurance, it is much greater than in 1980, and 40% to 70% of case starts today are with patients with insurance, yet overall case acceptance rates today are less than they were in 1980! A very good question would be: “Since there are at least three or four times more patients with insurance today than in 1980, why have case acceptance rates not improved?” Of course, all doctors with case acceptance rates lower than they want believe the problem is their competition, yet over and over again, consultants see clients in heavily competitive areas with outstanding case acceptance and clients in suburban or rural practices with no competition with terrible case acceptance. That issue can be, and has been, debated forever but a much better question is: “If there are 300%-400% more patients with insurance today than in 1980, why is that not playing a more significant role in case acceptance than it is and has?”
Is it possible that the fact patients have or do not have insurance is not a significant factor in the case acceptance decision, or that insurance is not as significant a factor as we may have thought? Let’s hope so because dental and orthodontic insurance is probably going the way of the Mauritian Dodo bird! Consider the following:
Delta is rapidly in the process of cutting dental benefits, while also restricting fee increases, of providing doctors. Consider these edited snippets taken from the minutes of a 2011 Delta board of directors meeting: Between 2009 and 2010, 10 million people lost their dental coverage due to employers dropping dental plans from their benefits package. We (Delta) expect to lose an additional 40,000 this year just in this state alone. We must reduce benefits to our providing doctors in order to retain market share.
Delta of California recently announced that Delta Premier members are automatically enrolled in and bound by the reimbursement rates and the EHB’s (Essential Health Benefits) portion of the new ACA. Without going into all of the detail, “medically necessary” dental and orthodontic treatment for minor children is an EHB under ObamaCare. While reimbursement rates have not yet been published, there is very strong suspicion that reimbursement will be at or very close to Medicaid rates. The recent Delta of California letter advised member doctors that the only way of avoiding participating in the EHB requirements of the ACA is to withdraw entirely from the Delta Premier program! Unfortunately, a practice with 30%-40% or more of new exams insured through Delta will find quitting Delta to be seriously problematic if not impossible.
Historically, dental/orthodontic insurance coverage for minors was made available only to employees who had chosen to have dental coverage for themselves and their spouse. A very recent change (probably due to ACA) is that employees are now allowed to reject dental insurance for themselves and their spouse and only obtain the insurance – the “medically necessary” insurance for their children. So even though employers may choose to provide traditional dental/orthodontic insurance to their employees, employees may well opt out of all but the required EHB insurance for their children. In addition though, in order to meet the requirements of the ACA, and pay the higher medical premiums, many employers are choosing to no longer provide dental/orthodontic insurance to their employees other than the EHB for minors required by the ACA. There is even some evidence that unions, the organizations that essentially got dental insurance to become common, have started to negotiate dental benefits away in order to preserve their medical and other benefits.
The rate of decline in the percentage of insured dental/ortho patients is increasing and it is entirely possible, and I believe it is likely, that the number of insured patients in five years will be significantly less than half of what it is today! Does that bother you? It shouldn’t. In fact, the demise of traditional dental and orthodontic insurance could well be, over the long term, the best thing to happen to the profession. Remember, case acceptance rates are worse today than they were when there was little to no dental insurance!
Are all practices going to experience serious damage if dental and orthodontic insurance goes away? Well, certainly the high volume, clinic-type, practices are going to suffer because they depend so heavily on insured patients and low fees. The non-clinic practices that are heavily invested in PPO’s (and yes, Delta Premier is a PPO!) will also be seriously damaged. While the PPO’s may last a bit longer than traditional fee for service dental insurers (a few of the employers that have historically provided traditional insurance will first switch to PPO’s before ultimately cancelling dental benefits altogether), eventually they will go away as well. I think the traditional fee for service model that has served the profession for so many generations is going to do just fine.
Again, this process has already started and there are no signs it is going to be reversed. So what is there to do about it? As I mentioned, there is little hope for the high volume, low fee clinic and PPO practices because there is little chance those practices can change their entire business model in time. However, the non PPO, fee for service practice, has only some relatively minor changes to make. Your current business model is probably just fine! You are going to have to do a much better job of educating your patients that dental and orthodontic care is worth the cost. Also, patients must be well educated about the cost of not having the recommended treatment, something that most doctors do a terrible job of. You are going to have to remember what I have taught for 34 years – that the quality of your new patient exams is much more important than the quantity of your new exams – and that will become exponentially more important in the coming 3-5 years. Your marketing plans may have to change substantially as well in order to become more targeted than ever in the past. Your Treatment Coordinators must be far better trained and far more skilled than most are today. Financial policies – the type of financial arrangements you make with your patients and the willingness to be highly flexible financially with quality patients – will become more important than ever. While new models of patient financing schemes will come on the scene frequently just as they have in the past, the results with those companies will be as poor as they have been in the past. If you expect to enjoy a high rate of case acceptance in the future, your own sophisticated internal financing program is going to continue to be as important as it is today.
Is the sky falling and am I Chicken Little? I don’t think so but time will certainly tell. I will be writing about this issue a lot in the future. Perhaps I’ll have to eat my hat in one of those future emails!
