About

Welcome and Happy New Year! The big news in dentistry is the announcement of Aspen Dental-branded Offices opening in 2 Walgreens located in Florida. This collaboration, brings together Walgreens, a leader in understanding the intersection of retail and health care, and Aspen Dental, a brand that has made dental care affordable and accessible to millions of patients for more than 20 years.” The announcement of the Aspen/Walgreens partnership will serve as an example for the experts to repeat the rhetoric that the solo dental practitioner is a lone wolf and dying breed and that the dentistry of the future will be delivered through a DSO corporate structure with an employee dentist, rather than an owner dentist. It has already been predicted that since physician practices have followed this trend, dentistry will too. I wish to use this podcast episode as an opportunity to dig little deeper and maybe go down some rabbit holes to say, like Mark Twain said, “The news of my death has been greatly exaggerated!” I believe there is an exciting future for dentists and dentistry. Yes, the future will look different from the present, but a dentist with an entrepreneurial mindset directed at continuously creating value for the patient will always be welcome in the market. The data presented here is gleaned from the ADA Health Policy Institute analysis of Distribution of Dentists, along with CMS, the Center for Medicare and Medicaid Service. There are 2 distinct areas which are important here; Utilization by the consumer, and Practice Ownership. The ADA research shows that dental care utilization patterns are changing dramatically in the United States. Over the past decade, important trends were identified. One, the pattern of dental care utilization was very different for adults compared to children. The percent of adults with a dental visit in the last 12 months decreased from a peak of 41 percent in 2003 to 37 percent in 2010. For children, this increased from 42 percent in 2000 to 46 percent in 2003 and roughly held steady through 2010. Stated alternatively, in 2010 63% of adults did not go to the dentist, compared to 54% of children who did not seek routine dental care. Two, trends were different based on income. Utilization declined for middle-income adults from 38 percent in 2003 to 34 percent in 2010, and for higher income adults from 54 percent in 2003 to 51 percent in 2010. Again, that means for middle-income adults, 66% did not seek care, while 49% of higher income adults did not seek care. The main driver of the decline in utilization among adults and the increase in utilization among children is shifting dental benefits. Basically, more and more children are covered by some form of dental benefits (mainly Medicaid), while more and more adults are finding themselves uninsured for dental care. The Landmark Healthcare Legislation, the Patient Protection and Affordable Care Act, will expand dental benefits for children. Pediatric dental benefits are one of 10 essential health benefits mandated by the law. The ADA's analysis estimates that up to 8.7 million children will gain extensive dental benefits because of health reform. About one-third of these children will gain Medicaid coverage, and two-thirds will receive private dental coverage. For adults, however, nothing in the Act will reverse the current decline in dental benefits coverage and utilization. The third trend is the aging of the population. Dental care use among those 65 and older is holding steady. On a per-patient basis, this age group also spends the most on dental care—$796 in 2010, a large portion of it out of pocket. Per-patient spending levels for seniors also are on the rise. Given that there will be a lot more people in this age group as the U.S. population ages, seniors are going to become an important driver of the dental care economy. That’s very important so let’s say it again….. SENIORS ARE GOING TO BECOME AN IMPORTANT DRIVER OF THE DENTAL CARE ECONOMY! Digging a little deeper, for seniors the biggest barriers to care are: Cost, no teeth, fear, inconvenient location or time, trouble finding a dentist, as well as no perceived need are the greatest barriers. Let's change gears and look at Practice ownership, which has shown similar changes. Overall, 80% of dentists in private practice are owners, according to the data. This is considerably higher than the rate among physicians which is now less than half. But the more interesting aspect is the trends over time. Practice ownership rates in dentistry are declining slowly and steadily. They are declining for almost every age group. Male dentists are seeing declining ownership rates, although for female dentists there has been no change. These data indicate that the decline in practice ownership rates in dentistry is not being driven solely by the “de-aging” and “feminization” of the dentist workforce. Older male dentists are also less likely to own a practice. Among physicians, the decline in practice ownership is much more pronounced from 61% to 47%. The greatest changes for dentistry are in the younger age group (<35) along with the 35 to 44 age group. There is a multitude of theories; for example, rising student debt, the emergence of “corporate” dentistry, shifting work-life balance preferences to name a few. Questions that this data can not answer include: Are recent young graduates joining established practices at a greater rate? Are they joining DSO’s or Corporate Practices? Do these same dentists transition into ownership roles as they mature in their practice career? Are group practices on the rise or decline? Dentists hold the belief that practice ownership is highly coveted. Physicians, on the other hand, are under the thumb of large hospital groups, insurers, and the immense bureaucracy of the government payers principally Medicare, and are therefore less likely to work for themselves because of this. Dentists see dentistry as an attractive alternative to medicine, allowing them to essentially be their bosses. The ability to own their practices is one of the top 3 factors attracting dentists to dentistry, and most dental school graduates intend to work in private practice. All else being equal, owner dentists earn more, although overall career satisfaction differences are not clear-cut. Whatever one’s perspective on the trend of declining ownership, it is important to understand this will continue, or so the experts say. Exactly when (and even if) most dentists will eventually be employed up for debate. For example, if the trend continues, the 50% threshold will be reached in 2090, the ADA estimate. This is quite a prediction made with only a few data points. The trend that more and more dentists will be employed is not up for debate. Experts with different views on this issue agree that the trend will continue. Let's dig deeper here with some additional data from the ADA Health Policy Institute, and you can decide for yourself how big this tsunami is! Wait times for dental appointments have been increasing since 2012 and are at 7 days for a new patient and 5.4 for an existing patient. Regarding Busyness, 37% of dentist said patient volume went up, 43% stayed the same and only 21% declined. Dentist's net income is on the rise for the past three years, but not at pre-Great Recession Levels, interestingly specialists net income is going down. With regard to ownership: 8.3% of dentists were affiliated with a DSO in 2018 vs 7.4% in 2016, a 0.9% difference, hard a seismic shift. The differences are even less when looking at Dental Offices VS Dentists with only 2.8% of dental office participating in DSO’s. 91.6% of dentists were non-DSO affiliated, with 97.2% of practices non-DSO affiliated. When asked about receiving dental care in a retail setting, only 11% of respondents were very interested with 61% not interested. That is timely information considering the Aspen Dental/Walgreens announcement. Practice management is one of the areas today’s new graduates feel least prepared for, and the dental care environment is about to get a lot more complex. There will be more competition for patients, and increased pressure to do more with less if reimbursement continues to decline and demand for dental care remains sluggish. An emerging emphasis on quality and value will spur changes in the care delivery model. For physicians, big health reforms like the health maintenance organization movement in the 1990s and the Affordable Care Act accelerated trends away from practice ownership; 72% of physicians were practice owners in 1988, now less than half, 47% are practice owners. Dentistry has been insulated from a lot of this, but that could change. The Affordable Care Act has led to modest increases in medical and dental coordination. Other potential game changers, like adding a dental benefit to Medicare or shifting the payment model to reward outcomes, the ADA says, would accelerate the trend away from practice ownership. These are all some big “what if’s!!” The coverage for “Teeth and Gums” have never been a benefit of Medicare. Let’s dig deeper here: CMS tells us that in 2017 Health Care Expenditures were 3.5 trillion dollars, 17.9% of GDP. Physician and Clinical Services were 20% of that at $694 Billion dollars. By comparison, Dental Services were 4% at $129.1 billion. That’s a 5 fold difference! Also significant is that there are about 950,000 physicians compared to 195,000 dentists. A nearly 5 fold difference again. I would hypothesize that the Market and Industry Forces that affect the nearly $700 billion dollar Physician and Clinical services industry will be different than those that influence the much smaller $129.1 billion dollars dental industry. No one knows for sure, but it does point out that dentistry is not identical to medicine and maybe, just maybe will not succumb to the same trends. In a nutshell, a lot more finance, data, marketing, and managerial expertise is going to be needed to run a successful dental practice. Will dental schools attempt to cram a mini–MBA into an already stretched dental school curriculum? Will dentists increasingly pursue training to improve managerial and organizational leadership skills? Or will we increasingly see the separation of clinical and management functions, with fewer dentists engaged in the business side, leaving that to people with MBA degrees? The ADA is convinced it will be primarily the latter. To this last statement, I would disagree. More on the business aspects in the next Episode, Part II. Take away points to ponder for change are: The Utilization of dental care is changing. The delivery setting of care is also changing. The payment method of dental care is changing. With Healthcare Reform, a large potential market, especially children has been created. Seniors are going to become an important driver of the dental care economy. Cost, no teeth, fear, inconvenient location or time, trouble finding a dentist, as well as no perceived need are the greatest barriers. Corporate dentistry as well identified under-severed market segments and has created offerings to meet these needs. 63% of adults do not see a dentist, that is a huge market of potential patients. Your job is to make the “non-dental patient” into a patient in your practice. If we can do that there is plenty of care we call can deliver. You can start by addressing the barriers in point #5; cost, fear, convenience, time, no teeth, no perceived value. There is no canned, boiler-plate solution, each practice is different, with different market and challenges. To be continued….. So that wraps things up for this Podcast. We hope that this information has created an “Ah Ha” moment, or stimulated some additional questions you can direct to your advisors and tax professionals. We welcome your inquiry here too at OmniStar Financial. Our contact information can be found on our website OmniStarfinancial.com. You will also find a link to sign up for our newsletter. Please share this podcast if you found it helpful, and leave a review on iTunes too. We welcome your feedback and suggestions for future podcast sessions. Thank you so very much for tuning in and listening. We are very grateful for your time and attention. Happy New Year! We wish you an amazing start to your 2019! references: https://success.ada.org/en/practice-management/dental-practice-success/spring-2014/shifts-in-utilization> https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/downloads/highlights.pdf> https://www.aegisdentalnetwork.com/news/2018/12/17/new-aspe-dental-office-opens-in-collaboration-with-walgreens> https://www.ada.org/en/science-research/health-policy-institute/publications/infographics> https://www.physicianleaders.org/>