A Bad Idea Whose Time Has Come

April 1, 1996
Casting about for topics, I find the slot for praising managed-care programs is wide open. At last, I can jump to the loyal opposition with authority and experience. I come to the aid of hapless colleagues flagellated by a bad press.

Dan Palmer, DDS

Casting about for topics, I find the slot for praising managed-care programs is wide open. At last, I can jump to the loyal opposition with authority and experience. I come to the aid of hapless colleagues flagellated by a bad press.

I talked to three former Emory University classmates at years` end and discovered that two had joined some capitation programs and were actually collecting more than they produced. To wit, all three grossed around 400K and the two in capitation plans had collected 115 percent and 121 percent, respectively, of their production. Astonishing on the surface and, as it happens, when probed. The third dentist, with few or no managed-care programs, grossed 424K and collected 82 percent. I know this is a low collection amount, pitifully low, when the national average is in the high `90s. However, find all the fault with managed-care programs you wish, but tell me another way to make your collections sing with the figures of the first two. There is a near 40 percent collection differential between the 121 percent and the 82 percent. Dramatic ends of the spectrum of course, but can you fantom another way to reap that kind of collection overage? I am impressed.

Work the math. Can you imagine collecting 64K over what you produced? I have done my best to find some fault with this, but failed. The first two dentists got into good programs at the recommended "safe-participation level" of no more than 15-25 percent of their total-patient load. They did all that initial cleaning up of the oral-health care of the group and in a little over a year were seeing the results. A meld of the useful with the agreeable.

Yes, I have heard all the denigration of these programs and how one will spend the rest of one`s life doing amalgams for $12 or gratis. There are vapid CE courses given somewhere every Friday at noon, telling you how to attract only fee-for-service patients. Good luck finding enough of them to fill any reception room by 2000. The managed-care dentists invested a year in getting the group up to par and now reap huge benefits. There appears to be an initial bell curve of utilization where it is unprofitable, but doing good foundational care seems to make the program(s) work.

So, you say the two in managed care actually did only 336K in production. True, but they collected two months` of production without working for it. You say they may have had more overhead as a percent of that gross figure, maybe, but certainly not another 64K or anywhere near that. A case can be made for saying that they only got what they would have had they charged their regular fees. However you look at it, they successfully have integrated the inevitable third-party into their practices. They both run crisp, efficient practices and if their overhead was 10 percent more they still fall into the average of a 60/40 ratio of overhead to net income. It passes that test. The most recent figures from the ADA are 61.4 percent overhead nationwide.

My new building (May 1993) sits between the home office of a large corporation and its union hall. David Justice could hit either with a good right-field throw to home. Their union was offering its members free dentistry (up to a yearly minimum of $1,250) to any member who wanted to go to their contract dentist. The union negotiated a fringe benefit for the members without costing anyone a cent (except me, you may say later). They also have the option to go to any other dentist of their choosing and submit the same insurance, but must pay the full co-payment. A clean offering with absolute freedom of choice. I already had many of the employees and felt a bit silly not joining the program. I didn`t expect much one way or the other.

So, 18 months ago, having never considered any type of managed care, I decided to take a flyer in this EPO (Exclusive Provider Organi-zation). I agree to a set fee schedule in return for the legal authority to forgive the patient co-payment. However, this plan pays 100 percent of all URC on preventive care and I forgive (legally and ethically) the co-payment on other services. I have a contract with the insurance company, not with the patient and his/her employer. The contract cost $5,000 from a dental marketer.

I never thought of it as anything more than a "filler," an interesting change of pace, and some common-sense insurance against losing some of the patients for purely financial reasons. I can see how a family of four could change dentists for four co-payments. I know what a charming guy I am, but still hundreds, even thousands of dollars in co-payments is stiff competition.

What happened? My "little filler" bloomed and the first full calendar year I saw this program do $112K. I did not hire any new employees and didn`t even know it was happening until I discovered that my clever business manager of 11 years had "tagged" the union patients in the computer. With a few keystrokes, the figures leaped from the screen. The hygienist, alone, did an extra $15K just picking union patients from the waiting list to fill in last-minute cancellations. I checked my lab bill and found out it had increased by about 17 percent, but that is all I can label as overage except a few disposable supplies. What also is surprising is that I could absorb any extra dentistry in an already full 20-year-old practice. I would have laughed at the very idea a year ago. However, on reflection, two extra crowns a day would just about do the numbers even at the reduced fee to the union members.

I read all the rhetoric about how we cannot possibly practice dentistry within managed-care systems, but having tested the waters, I see a positive side. As we download into the next century, perhaps it just may be a bad idea whose time has come.

The author practices general dentistry in Columbus, GA and has placed over 1,000 dental implants.

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