The New York Times Takes Aim at Dental Financing

On October 15th, The New York Times had a front-page article about how many senior citizens are getting roped into paying high interest for medical care financing.  Although the article was about medicine in general, the primary example was a case of a woman who financed her dentures, and how the interest had ballooned when she fell behind on payments.

Basically, the article stated that much of medical financing is done by companies that charge higher interest, with severe penalties for late or non-payment.  They mention that medical financing was about $45 billion in 2010, and going up.  This is primarily for non-insured medical treatment, not dental care.  But, strangely they didn’t mention any medical cases.  They did quote a chiropractor who had stopped using financing because “One missed payment can really ruin a patient’s life.”  (Unlike missing other kinds of payments, like your mortgage or your electric bill, which have no repercussions at all, right?)

They did point out that some of these plans charge no interest for 6-18 months (as if that’s somehow evil inducement, unlike buying a TV that way, or a bed, or anything else.)  And then there was my favorite line, “Doctors, dentists and others have a financial incentive to recommend the financing because it encourages people to opt for procedures and products they might otherwise forgo because they are not covered by insurance.”  The Times forgot to say “procedures that would be beneficial to these patients.”  Because, as we all know, senior citizens are flocking to dentists hoping to get as much unnecessary dentistry as possible, even if it impoverishes them.

Once again journalism takes the easy path, slamming dentists, and making them seem greedy.  I could get angry about it, but it’s just one more shot glass in an ocean of negativity. Sadly, the dentist that was mentioned refused to comment.  This is only makes us look worse.  I would have said, “the truth is, if someone needs dentistry, then there are very few investments they can make that can enhance the quality of their daily life as much as that dentistry will.  And unfortunately, dental coverage is minimal for most people, unlike health insurance. So we offer financing because the problem is only going to get worse and more expensive if they don’t take care of it at that time.”

When people don’t have the money for something in this country, and they need it or even just want it, they finance it.  And you know who pays higher interest? People with worse credit.  And they are financing all sorts of things that don’t add anywhere near as much value to their lives as the care dentists offer.

CareCredit is mentioned in the article, and everyone I’ve known there for 25 years has operated reputably, and helped literally millions of people get the treatment they need that they otherwise could not have afforded.  The article also mentioned that the dentist got his money up front.  The Times didn’t mention that he took a discount on that payment, because they didn’t know, or they didn’t know if it was non-recourse or full recourse financing.  And why bother to find that out?

The Times also forgot to mention that for most people dentistry is unexpected spending, often with an urgent need to get the patient out of pain or save their teeth. But why bring up that trivial detail?  And they never asked the woman in the article if she would return her dentures if she could get the money back.  I’m guessing she would have said, “Hell no!”

So what can we do in the face of this kind of negative publicity?

Well, I wouldn’t stop offering financing, that’s for sure. Patients need it.  As a practice policy, I would make sure that you explain the financing details to your patient, and make sure that they understand them.  Of course, many times people don’t listen the first couple of times you tell them something, but don’t just hand them a credit app and breeze through the explanation. It still has to be affordable for them to accept it, and they need to understand that if they don’t pay it’s just like not paying their mortgage or a credit card, there are going to be repercussions.

You might look into some very good self-financing systems, which allow you some flexibility with your patients in terms of interest and late payments, such as Comprehensive Finance, and it’s always good to have a few sources of financing for patients.  By no means should you self-finance without one of these services, or you will find out just how large your uncollected accounts receivable can get.  You need to be one step removed from the financing, and these services create that.

And also be vigilant about the finance companies that you do use. Some of them are a little tricky, or bury the risks or the triggers of higher interest in the fine print.  These patients are your long-term customers, and you need to protect them.

And in your treatment discussions, it’s essential that you are building value for that treatment in the patient’s mind, otherwise the natural tendency is to focus on the cost, especially as they make the monthly payment.

Lastly, and I say this often when I lecture, that I think there is great nobility in a profession that does so much for people’s well-being and is so under-appreciated for it.  Maybe the New York Times will call and interview me, so that I can tell them that people finance all sorts of stupid things that they don’t need and can’t afford, but dentistry isn’t one of them.

To read the full article, click here, although you might not have access to it. Some of the comments below the article give you a flavor for how the public thinks, and there are even health care professionals calling it “predatory” to offer financing.  One jerk actually said that he accepts major credit cards, but offering his own financing would be “unethical”.  Pardon me for thinking clearly, but it’s the same thing, buddy!


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Love the Dentist? Depends Where You Live

We do a lot of consumer research at 1-800-DENTIST, and recently we did a nationwide survey on attitudes towards dentists and dentistry. This wasn’t done just with people who called our service, but was a random sampling across the country.  We learned some interesting things.

First, more than 65% of Californians have a regular dentist.  This is higher than the national average, and almost the reverse of certain southern states, namely Mississippi and Alabama, where nearly 70% of the population do not have a regular dentist, and only seek one in an emergency situation.Girl at dds shtrstck

On another note, more than half of dental patients in New York that we surveyed were unhappy with their dentist. Are people just crankier in New York?  Because over 65% were happy with their current dentists in California.  It’s not like they don’t have a choice to change dentists in New York.  They certainly don’t have to go all the way to California to find a dentist they like.

There are wide variations in dental behavior all across the country, and we have learned from answering millions of calls from people looking for a dentist that their expectations are also quite varied.  In some parts of the country the majority of people expect someone else to pay for their dental care, and in other cities and neighborhoods the primary concern is the level of care and expertise of the dentist and practice, regardless of cost.

How can there be so much variation around the country?  We all watch the same TV shows and movies, with actors with great smiles, why is it so acceptable in so many places to neglect yourself until it’s an emergency, and even then an extraction is the requested treatment?

My only conclusion is that it’s cultural, and that culture can be very localized. And I do see the consciousness shifting in the consumer mindset, but it’s gradual, and was certainly set back in 2008 when many people in the middle and lower classes lost a good portion of their discretionary income, and paying for their dental care became a financial impossibility.

It seems unlikely that the Affordable Care Act, which is already a Frankenstein of various conflicting solutions, as it mutates and is either gutted, revised or replaced, will ever encompass much in terms of dental care.  It does currently require that most children be covered by 2018 (after another presidential election).

And therein lies the solution, I believe. It starts with children, as most cultural shifts do.  We need as an industry, as a nation, to do our level best to help children to, first, not be afraid of seeing a dentist (that usually means keeping the parent out of the operatory) and to be much more concerned about neglecting and damaging their teeth.  We are making valiant stabs at this, by eliminating sugared drinks in schools, and in California, for example, a child cannot begin the first grade without having seen a dentist, but much more needs to be done.

Our goal should be a complete shift within a generation, so that 99% of American children brush, floss and see a dentist regularly, and like the dentist they go to.  And that they know what damages their teeth, and what protects them.  It’s probably going to be done practice by practice, since I don’t expect there will be a national awareness campaign anytime soon. (Maybe the next First Lady will take it on!)

Our company is going to keep promoting dentistry, and expanding our ad budget, but I think it will take an increased focus by individual practices all across the country to make this tectonic shift occur.  I hope you’re with me, and I welcome your thoughts and comments on this.


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Listen to the Question

I heard recently that the most common question asked at Disney amusement parks is, “What time is the 3:00 parade?” (The time isn’t always the same, of course).  On the surface, it sounds like a stupid question.  But when people are in a new or disorienting situation,

they tend to be unclear when they ask a question. Disney employees, sorry, I mean cast members, know that what the guest is really asking is, “What time does the 3:00 parade pass by here?”   Not so dumb.

Often we have the same experience in dental practices.  People call asking how much a crown or a root canal costs.  They are asking that because they don’t know what else to ask!  What they’re really trying to find out is if the pricing is fair, and how much they’ll have to come out-of-pocket, and more significantly, is this an office they can trust to treat them fairly.  If they understood anything about dentistry they would ask if the dentist will fully explain the need for and the extent of any treatment he recommends, or what type of technology the office uses.
A more sophisticated patient would ask what the dentist’s failure rate is with crowns (most average 6%), or how long her composites last historically.  But they won’t because they really don’t understand much about dentistry, except that it is uncomfortable and expensive (in their mind).So when talking to patients, don’t allow yourself to get irritated by the dumb-sounding questions.  No one is doing a good job educating people about even the basics of dentistry, (except you with your patients,hopefully,) so they ask uninformed and misguided, or miss-phrased, questions.
Think about what they are really asking, and answer that question.  If someone says, “How much is a crown?” you can easily respond with, “It would depend on what you needed, and we can only know that after we examine you.  But our fees are very reasonable for the area, and we won’t do any treatment without you first understanding the costs involved.  Would you like to come in this afternoon at 3 or tomorrow at 10? I have those times available, and there would be no charge for the initial exam.”  It’s a little bit longer than, “The parade comes by here at 3:15,” but you get the point.
Or when they say, “Why do I need x-rays again? I had them last year,” they’re really saying, “I don’t want cancer.”  So explain that it is less radiation than an average plane flight, (or even living in a brick house.)  They don’t get it because no one on an airplane is pointing an x-ray machine at their face.If they ask, “It doesn’t hurt, why do I need to take care of that now?”  don’t get exasperated.  They are telling you that they have the average dental consumer’s perception about dentistry: pain is the indicator that it’s time to see a dentist.  This is the perfect opportunity to explain that pain means they waited too long.  And that they are not saving money or discomfort by putting it off, but rather the opposite.
Or, “Why isn’t this covered by my insurance?” They think their dental insurance is health insurance.  Not unreasonable to assume, by the way, just completely wrong.  So take the time to explain that dental insurance is really just a discount plan on some basic procedures. Also, in many ways it is the opposite of health insurance coverage, because the more catastrophic your need in health care, the better your coverage.  Not true at all with dental plans.  “Your plan was chosen and designed by your employer to save you some money on your dental care, but it doesn’t relate at all to your personal dental needs.  It’s our job to tell you what you need to keep all your teeth, and keep them healthy, and sometimes there will be a cost to you. But it’s probably one of the best investments you can make in your health and the quality of your life.”

We all ask dumb questions when we’re talking to an expert.  We just hope that expert understands we’re not dumb, just out of our element, and shows a little empathy.

Further Thoughts on James Dwyer and Dental Insurance

Let’s start with what we know when it comes to dental insurance and patients.

First, the dental patient doesn’t really care if the dentist gets paid fairly or makes a different living. That’s the dentist’s problem, not theirs.

Second, dental insurance companies are out to make a profit.  And thus they benefit from under-utilization. Paying more for a treatment code, or for more patients being treated, doesn’t work. Neither does encouraging people to take care of their teeth.  All this either lowers profits or requires increased premiums. So what would seem to be the point of dental coverage––to get people to see a dentist and get treated––contradicts the business model it is managed through. But even when there is less utilization, these companies generally don’t lower premiums, but rather increase them every year.  That is, unless they do what Washington Dental Service did, which was cut payments to dentists so they could lower their premiums to businesses. These institutions are tax-exempt, but make no mistake, they are motivated by profit.  So dentists get to absorb the shock.

Third, for as long as I’ve worked in dentistry (since 1986), up until five years ago, the general trend, indeed the goal, was for dentists to gradually move their practices to full-fee-for-service, and not be a provider for any dental plan.  This came to a screeching halt in 2007, and has reversed itself continuously.  More and more practices are adding plans, for the simple reason that people are not spending money on their dental care like they used to.  The days when every month one or two patients would borrow against their home to do a full set of veneers or extensive implants are over.  Practices have had to adapt, accepting more plans, and in so doing have handed more power to the dental insurance companies.  And with this you get the arrogance exemplified in CEO James Dwyer’s remarks (see my previous blog on those, as well as Gary Takac’s call for Dwyer’s resignation.)

So the simple question is, do we want to go the way of general medicine, which is to say, let insurance companies call the tune?  For physicians, it is the insurance companies who determine the treatment, the fees and even the allowed medications.  If the doctor or the patient disagrees with that determination, then the patient has to pay out of his own pocket. And because 95% of physicians’ income comes from insurance, the average income for general physicians is now lower than that of general dentists. What’s more,  it is virtually impossible for a general physician to double or triple his income from the average level, while it is quite possible for most dentists to do so.  And everyone expects physicians’ income to continue to decline.  How’s that going to play out?

I think this problem needs attention right now, before control is fully surrendered to insurance companies, or before the government steps in to make sure that everyone in America has some sort of dental care, regardless of whether it provides a living income for a dentist who has a facility, leases, loans and employees to reckon with on a monthly basis.

And, as other people in this blog have mentioned, it’s not financially bearable for a dentist to drop the insurance provider when that company tries to cut their payments.  But in my mind that’s what your state dental society is for.  When Delta or any other company decides it’s time to do an across-the-board fee cut, then there ought to be an immediate call by the society for their entire constituency to drop that carrier the next month.  They don’t need everyone to comply; if 40% do, then the insurance company gets hit right where they care most–the profit end of their revenue.  It should be a swift, resounding and unequivocal response.  And my guess is after one or two states do it, and the results are proven, then an even greater number of dentists will join in the protest.  And the insurance companies will fall back into line.

Along with this response by the societies, there should also be a unified message sent out to each dentist’s patients as to why this is happening.  They should let all their patients know that the insurance company, in an effort to increase their profits, is paying less for the same services, and thus limiting care to the patients.  (In Washington, it was the insurance company who seized the opportunity, and communicated with the patients when a dentist stopped being a provider because of the fee cut, and recommended the patient move to a different dentist who accepted the plan, and even provided a list.  Outrageous behavior, unless of course you’re in business to make money, not provide dental care.)

This response by the society is only step one.  The next step is to take a hard look at how dental insurance is provided.  We live in a world where data can move instantaneously and simply between entities. Why do we even need a middle man to provide discounts on some dental services for a business’s employees?  In three months I could get five 20-year-olds to write a program that lets any business choose from a menu of services, calculate the premium, allow the employees to choose a dentist and get care, and subsequently the dental practice can file the claim and have the money in their account the next day.

Certainly there are regulations to follow, but does an enormous profit for an intermediary organization benefit anyone but that organization?  I don’t think so.  I say let them all work somewhere else where they don’t have a negative impact on the overall health of Americans.

One last point.  Dentistry in many ways is different from general medicine. There are millions of people in this country who will never be able to get high-end dentistry.  For example, we all know that implants are the ideal solution to missing teeth.  But this quite simply will never be insured, because eventually everyone will need them.  A quadruple bypass surgery is incredibly expensive, but not everyone is going to need one, so the cost gets spread over a thousand other people.  But as the population continues to live longer, most people are likely to lose some or most of their teeth. Either they can afford implants or they can wear dentures.  But it is not reasonable to imagine an insurance plan that provides virtually everyone with implants.  We need a wiser, more balanced solution that does not emulate health insurance.

Sometimes you can’t just modify business models.  They become antiquated, or fail to serve their original purpose, diverging from their mission to one that is more self-serving, (like Congress!) and we need to abandon them and start over.  Why not create a brilliant, modern solution that helps the greatest number of people, and is the envy of the entire world?

I’m open to your thoughts, and I will do my damnedest to get them in front of the right people.


Post Script: I have been told that the FTC views any such action by dental societies to be illegal boycotting, and precedent has been set.  Sounds like the wrong lobbyists got to the right ears (and pockets) to me, but if that really is the case, then dental societies are virtually powerless in this situation, until that precedent is challenged.  The Washington State Dental Association spent many hours and legal dollars trying to deal with this within the parameters of the FTC ruling, so other avenues may be more appropriate.  I’m not sure that the FTC could have much say about dentists using Twitter to say that they are personally dropping the insurance plan.  I’m not fond of laws or precedents that protect corporations to the detriment of individual citizens, and I can’t accept that boycotting of a company by anyone or any group can be considered illegal.  But I’m no lawyer, so the pathway through this is not clear to me.

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Who Profits from Dental Non-Profits? Not you!

If you didn’t know the level of contempt that the dental insurance companies have for dentists, look no further than the actions and comments of Washington Dental Service and their CEO, James Dwyer.

Dwyer, in an interview with King5 TV station in Washington State this month, casually suggested that dentists “could start working five days a week” to make up for the 15% across-the-the board fee reimbursement cut WDS instituted in 2011.  Easy for him to say, as he makes $1.2 million a year.  He subsequently apologized, (which of course means nothing), saying also that his words were taken out of context.  So the TV station ran more of the video, where Dwyer says this not once but twice and also says, quite smugly, that dentists only work three and a half days a week.  “They certainly don’t work four days a week,” he adds, dripping with contempt.  I think this man believes that in saying this he will garner public support, that people don’t like dentists, and think that dentists make too much money already, and now he’s letting people know that they have short work weeks.  Excellent strategy, from an adversary.

And that’s my point. They are not in the dentists’ corner.  Washington Dental Services, part of Delta Dental, operates as a non-profit organization.   Of course, they are a non-profit in name only, and for one reason: to avoid paying taxes. WDS had a net income of $13.7 million in 2010, and paid no taxes on that.  On top of that, their executive compensation that year was $5.8 million (including Mr. Dwyer’s $1.2 million.)  Remarkably, the executive compensation of WDS has increased an average of 45% over the past five years, right through the recession.  How many dental practices grew 50% in the past five years? Only a few? Well, maybe they should work harder.  How many of your patients experienced that kind of salary growth? Maybe they should work harder too.

Why did they, and by “they” I mean Delta Dental, do an across-the-board cut?  They said to stay competitive.  Really?  They have 90% of the dentists in the market already.  They said they need to be able to lower their premiums to employers.  Why exactly should premiums go down?  Has the price of anything in dentistry gone down? I missed that.  Dwyer’s advice was “work harder”.  Work harder for less money is what he meant.  Making lots of money is for people like him, not for dentists.

Here’s the other reason why I think Delta did it.  They wanted to see  how the dentists and the societies would react, so that they could do it in other states.  To make more profit for their non-profit, and give bigger executive pay increases.  I mean, what better way to fulfill their stated mission, which is to promote oral health?

Yes, Mr. Dwyer actually stated, with no sense of irony, that the mission of WDS was to promote oral health.   How exactly are they doing that? The statement is ludicrous. Their clear purpose is to make money, crush the competition, pay no taxes, and pay themselves incredibly well.  You can’t do that and promote dental health, because that would result in more claims.  Which would hurt their profit.  I mean, their non-profit.

As I said, they are your adversaries.  Seldom are they so open about it, but Mr. Dwyer’s contempt is symbolic of an industry that is at crossed purposes to the health of Americans.  40 years ago in this country it was basically considered immoral and unethical to make a profit providing health insurance.  Now the opposite is true.  Now the  job is not to provide coverage and promote health, it is to be competitive, limit care, and pay extremely high salaries so you can attract better executives.  Recently, Blue Cross/Blue Shield of Massachusetts gave an $11 million severance package when they fired their CEO.  That would turn most businesses into a de facto non-profit, but BC/BS absorbed it nicely.  Because they don’t pay taxes.  It was chump change.

So what do I think the dental society should have done?  I think they should have recommended that their entire constituency drop WDS the next day–the old-fashioned American response to robber barons.  They didn’t do that, of course.  They sent a letter out recommending that dentists find cheaper dental suppliers. (Huh? How’s that going to offset 15% less in fees?)  And when an individual dentist did drop WDS, the company sent a letter out to all the dentist’s patients,  giving them a list of dentists who accepted their plan, and suggesting that their dentist simply wanted to make more money.

And there is that ridiculous statement: “They certainly don’t work four days a week.”  Really?  I personally know about 1,000 dentists, and virtually all of them work at least 4 days a week doing dentistry, and another day or more doing the business side of their practice or getting CE.  But Dwyer knows that.  He’s not an idiot. But he also knows how easy it is to turn public opinion against doctors and their incomes, which was exactly his intention.  So that WDS could maintain their fee cut, lower premiums and everyone still gets a raise next year.  Contemptible?  Reprehensible?  To be sure.  Does Dwyer care?  Not a bit.

So what is a dentist to do?  In the end, this is big business against the small businessperson.  So you work smarter, learn more procedures and techniques, and realize that some things are in your control, and some aren’t, and all your energy needs to go to those things that you can control, you can have an effect on.  And you’ll still have a great business.  And still change people’s lives for the better every day. The best revenge I think is doing good, and doing well.  I’d rather be you than Jim Dwyer any day.

P.S. For further thoughts on this whole matter, read my subsequent blog here.