Trends in Dentistry: No End in Sight

Dentists, patients, and laboratories squeezed by patient reliance on fee-for-service dentistry

By Pam Johnson

Each December, IDT identifies major trends in dentistry poised to impact your clients and your businesses. For the coming year, there are three business environment changes on the horizon: digital dentures, sleep dentistry, and dental insurance.

Since laboratories serve dentists, they too are subject to the market forces that impact dental practices—including the fee-for-service model promoted by dental insurance companies. To learn more about the future of this model, IDT spoke with Tom Limoli Jr., president of Limoli and Associates/Atlanta Dental Consultants, Inc, which assists dental offices in streamlining the insurance reimbursement process.

IDT: What are the biggest trends you are seeing in the third-party dental benefits arena?

Tom Limoli: Unfortunately, the biggest trend today is the increasing influence of the Preferred Provider Organization (PPO) in the profession. Dentistry is still mired in its infatuation and reliance on the procedure-for-payment contract concept. What began in the 1950s and 1960s as a means to advance oral healthcare and increase access by reducing the cost of dental care has been wholly embraced by most of the patient base, but it has trapped private practice into providing discount dentistry. As a result, dentists equate the value of services rendered to the number of crowns that can be placed in a week or month. Today, 82% of dentists have signed on to one or more of the dental insurance PPO programs. Everyone is competing for the same patient in what today is a market-driven economy.

IDT: How is this negatively impacting the general private practice?

Limoli: In today's economic environment, employers continue to pressure insurance companies to shave the cost of their employees' dental care coverage, and insurance companies are obliging by cutting back individual treatment reimbursement rates. In the past, dentists were able to raise their rates each year to compensate for changing economic conditions and recoup lost revenue. However, with consumers now having to bear more of the cost for dental treatment, that fiscal response is untenable. So that leaves general dentistry chasing more dentistry in order to make more money. We are practicing “the more you do, the more money you make” dentistry.

IDT: How have these factors impacted consumer response to dentistry?

Limoli: When you look at what Americans are actually paying and then what they expect to pay for the value of services rendered, the competitive lure of multi-practitioner offices, group dental practices, and DSOs is perceived as a more cost-effective choice in many cases, especially for the nearly one-third of Americans who have no dental insurance. These larger entities can negotiate competitive reimbursement rates for various procedures and are attractive to insurance companies because managing a large group or DSO organization is more cost effective than coordinating myriad small, individual private practices.

This, in turn, has spurred dental insurance companies, capital investment firms, and even large suppliers to purchase practices and laboratories or partner with large groups to consolidate the industry for economy of scale advantages. Even some hospital groups are looking to integrate select dental services into their operations.

IDT: Does this mean the fee-for-service reimbursement model may be changing in the future?

Limoli: Dentistry is a fast-evolving market. However, the third-party insurance model will continue to dominate as long as there are economic striations in the patient base and as long as dentistry's primary focus remains less on prevention of dental disease and more on restoring the diseased mouth.

That said, there is some movement toward dentistry following the medical model. On the medical side, hospitals in certain regions of the country are purchasing and integrating every type of specialty group in their state or neighboring state and then offering an attractive package to a large employer for their exclusive services, effectively cutting out insurance companies for basic medical services.

The same type of model is occurring with large corporations; it's cheaper for them to partner with a large group practice or DSO to provide company employees with dental care than it is to contract with a dental insurance company. They understand that the more preventive services they offer employees, the less large-expenditure dental care that will be needed, and the more cost-effective that approach is.

Private practices also are finding new ways to compete and ensure a loyal patient base—as well as capture patients with no dental insurance—by offering a practice membership or buying club to their patient base. As an example, for a flat fee of $250 to $300, the patient receives an oral exam, two cleanings, and a set of X-rays per year, plus an across-the-board percentage discount for restorative services such as fillings and crowns.

IDT: None of these solutions appear to be a panacea for the reimbursement insurance model.

Limoli: I can't help but believe that if we could take the reimbursement model out of the equation, the dentists' approach to what is best for the patient would be entirely different than the fixation today on type of insurance.