Financial considerations before implementing obstructive sleep apnea treatment

Treatment of obstructive sleep apnea (OSA) with mandibular advancement appliances is an area of increasing interest and opportunity for dental practices.

By Dan Bruce, DDS

Treatment of obstructive sleep apnea (OSA) with mandibular advancement appliances is an area of increasing interest and opportunity for dental practices. In addition to being personally rewarding for dentists, OSA treatment can be profitable for dental practices. Before getting started, however, you'll need to consider the financial implications of implementing OSA treatment. Below are some of the necessary considerations when calculating the return on investment (ROI) before incorporating this treatment into your dental practice.

Educational expenses

Most dentists are not properly educated regarding the causes of, or treatment options for, sleep apnea when they first graduate from dental school. While this trend is changing as some schools change their programs, most practitioners are not equipped to treat OSA without further training. Adequate training for treating OSA often starts with a two-day introductory course. The cost for an introductory course can range from $500 to over $3,000. The price depends on who provides the course, whether it is industry-sponsored, whether an appliance is fabricated at the course, and where the course takes place. I do not necessarily believe that an industry-sponsored event should be avoided, but I would recommend considering that there might be other equally valid opinions on treatment modalities beyond those presented in any industry-sponsored courses.

In addition to training yourself, you'll need to train your team. I recommend having one front office and one back office "go-to" team member for sleep apnea patients. This may involve taking your team to a course or spending time training them in the office. In the office, training will probably take eight to 10 hours to start, followed by an additional one to two hours per month.

Financial impact = $1,200 to $3,500 + travel + lodging = anywhere from $2,000 to $5,000 per year

Time expenditure for the dentist = 16 hours per course + approximately 16 hours per year in training

Time expenditure for the team = 32 hours per course + approximately 32 hours per year in training

Material expenses

At a minimum, high-quality impressions of both the maxillary and mandibular arches are required, along with a protrusive bite registration. Impressions can be fabricated with a variety of materials and poured with a highly accurate stone. Many labs will accept polyvinyl siloxane (PVS) impressions and pour them. The advantage of this service is there is no risk of the model breaking during shipping. The average cost (that I have seen) for this service is about $20. The estimated cost for impressions and models ranges from around $10 to $60 for each use, depending on the methods and materials.

The most common protrusive bite registration technique is a George Gauge, which can be purchased from a variety of vendors. The George Gauge currently costs $55, plus shipping, through Great Lakes Ortho. I estimate that a George Gauge will last for about 200 patients before it needs to be replaced, so it will cost about 25 cents per use. Disposable bite forks can also be purchased in quantities of 24 for $29.75, costing about $1 per use. Finally, PVS bite registration is used to capture the bite and will cost about $4 per use.

Financial impact (hard costs) = $30 (on average for impressions/models) + $4.25 for bite registration = $34.25 per appliance

Appliances

Appliance costs vary greatly. I have seen fees range from $189 to $650 for FDA-approved oral appliances for sleep apnea. Developing your knowledge of the appliances available will enable you to select the most appropriate appliance for each patient.

Financial impact = $350 (on average)

Time per appliance

When done efficiently, team members can handle most of the data gathering and patient education. Office visits per patient generally consist of a consultation, a comprehensive exam and records appointment, a panoramic radiograph (at minimum), a one- or two-week follow-up appointment, a three-month follow-up appointment, a six-month follow-up appointment, and annual appointments thereafter. Some patients, however, require more visits to deal with side effects, to arrange communication with their other health-care providers, or to make appliance adjustments, depending on their capability and the appliance selected. Also, additional imaging may be necessary, but since it is often billed as a separate line item, it will be ignored for now. Ultimately, the average patient in my office usually takes about three hours of chair time, plus an average of a half hour of nonclinical time.

Financial impact (for example) = Two hours of dentist time and one and a half hours of team member time, per appliance

Warranties and repairs

Warranties on appliances vary from six months to five years. While the repair is free, your chair time and the shipping costs are nonbillable expenses.

Financial impact (for example) =

• The chair time will equate to about 20 minutes of dentist time plus one hour of assistant time for an assessment and delivery appointment, multiplied by 5% of the number of appliances.

• A warranty/repair utilization rate of 5% over the warranty period has a hard financial impact of the cost of shipping (about $15) multiplied by the 5% of the number of appliances.

Recordkeeping and physician communication

While proper records can be kept in dental charting software, some software systems specifically for sleep apnea are needed. Dental Writer and MicroMD are just two examples. Dental Writer, for example, allows online forms and a customizable examination template. After a setup fee, which currently starts at $4,995, maintenance and support cost $99 per month.

Financial impact (for example) = $4,995 + $99 per month
Billing and insurance

Billing medical insurance is significantly different from billing dental insurance. I recommend starting out with one of the many companies that will provide billing services. The first decision you'll need to make is whether to bill Medicare. The cost for the 39-page application is $542, including a site visit. Alternatively, there are third parties who will help with this. Dental Writer, for example, charges $1,585 for the Medicare Durable Medical Equipment (DME) application. If you decide to bill Medicare DME, you must then choose whether to participate or not to participate. Participation provides a slightly higher reimbursement rate, but it means that you cannot balance bill the patient. Nonparticipation means that you can bill Medicare, and you can also balance bill the patient. You should have a full understanding of the Medicare rules and participation versus nonparticipation, even if your office does not sign up as a Medicare DME.

Dental Writer also provides third-party billing services. They currently charge $750 for setup, $249 for private insurance claims, and $99 for Medicare or in-network claims, and they offer many other services for various prices. Other companies might charge on a per-claim basis or for a percentage of billed charges.

Financial impact (for example) = $1,585 + $750 in fixed charges + $249 per claim

Marketing

A large portion of the marketing for a sleep practice is educating the physician community about what you do. Hard costs can include educational brochures and demonstration appliances, in addition to website promotion and other external marketing ventures. The total dollar amount for marketing comes down to the value of your time and your team's time, as well as the amount of external marketing you want to do.

Financial impact (variable) = $2,000 per year for brochures, demonstration appliances, and website updates + two hours dentist time (out of the office) + two hours staff time

Summary

Before jumping into oral appliance therapy, consider the fixed and variable expenses. Here is an example of a cost breakdown for a hypothetical office:

One-time costs: $8,915 total or $103.50 per month, financed at 7% for ten years

• Records and physician communication software = $4,995

• Billing and insurance setup = $2,335

• Medicare DME setup = $1,585


Ongoing hard costs: $5,688 per year

• Software maintenance = $99 per month

• Education = $2,500 per year

• Marketing = $2,000 per year


Costs per appliance: $717.25 to $867.25

• Impression and bite registration = $34.25

• Appliance = $350

• Chair time = $225

• Warranty = $9

• Claims billing = $99 to $249


Staff time commitment

• Education = 32 hours per year

• Time per appliance = One and a half hours

• Warranty and repair = 5% (repair rate) x (number of appliances) x one hour (staff time)


Dentist time commitment

• Education = 16 hours per year

• Time per appliance = Two hours

• Warranty and repair = 5% (repair rate) x (number of appliances) x 20 minutes (dentist time)

• Marketing = Two hours per month


Now, for an actual number, the cost of staff time is based on the time needed to break even and estimated at $150 per hour. The exact number can be determined by subtracting the practice profit from the gross revenue and dividing that number by the hours worked.

• Hard cost at 50 patients per year = ($103.50 x 12) + $5688 + ($867.25 x 50) = $44,604.50

• Staff time = (16 hours x $150 per hour) + (1.5 x 50 x $150 per hour) + (0.05 x 50 x 1 hour x $150 per hour) = $14,025

The total cost in this example is $58,629.50 for 50 appliances. The profit is the number of appliances times the collected fee. Over a year, the dentist time = 16 hours + (50 x 2 hours) + (0.05 x 50 appliances x 0.33 hours) + 24 hours = 140.8 hours. Now divide the profit by the hours worked to find the hourly rate. This rate can be used to determine how mandibular advancement therapy treatment compares to the hourly rate for the rest of the practice. This is also one factor that can be used to set the appliance fee and decide whether participating in PPO plans makes financial sense. Again, the numbers change for each practice, but the exercise is invaluable for decision-making with regard to treatment offerings, and it enables the financial analysis needed to make informed business decisions.

References are available upon request.


Dan Bruce, DDS, is a diplomate of the American Board of Dental Sleep Medicine who practices in Boise, Idaho. His credentials include: general dentist, educator, volunteer, husband, and father. He can be reached at dbruce@boisedentalsleeptherapy.com

More in Money