18 Aug 2016 Time to Lower the Cost of Back-to-School Dental Checkups
Innovation in Dental Practice Management Saves Money on Management Costs Such as Billing and Ordering Supplies
Lower Costs are Passed Along to Patients
But Old-Guard Dental Practices Are Lobbying Legislatures to Ban this Innovation
They Want to Keep Prices, and Profits, Higher
National Center’s Jeff Stier Asks Legislatures Not to Ban an Innovation that Makes Top-Quality Dental Care More Affordable
Washington, D.C. / New York, NY – National Center for Public Policy Research Risk Analysis Director Jeff Stier argues in a new Townhall.com op-ed, “Drilling Down on Rent-Seeking Dentists,” that one factor in out-of-control dental costs is a lack of innovation in how dentists run their offices.
Stier has for years observed dentistry trade groups trying to block commonsense cost control measures, such as credentialing dental hygiene practitioners to do some of the more basic clinical work done by dentists.
But now, as Stier points out in the op-ed, dentistry lobbying groups are even opposing non-clinical cost-saving innovations.
As Stier writes,
I’m a big fan of innovation, so I’m always eager to speak out against entrenched interests seeking to stifle progress with regulations designed to kill improvements in our health. Proponents of more regulation regularly use scare tactics, shoddy science and false allegations that people like me are against “all regulation.”
The piece explores Stier’s experience testifying in legislative hearings at city and state legislatures around the country.
I was huddled in a Connecticut legislative hearing room on a chilly spring morning three years ago, awaiting my chance to testify about a proposal to over-regulate e-cigarettes…
The Public Health Committee hearing room in Hartford was packed with people on both sides of the divide, waiting to address a number of different bills under consideration. As a teen, I watched C-SPAN over MTV, so I didn’t mind waiting. It was my equivalent of seeing a live concert.
Before e-cigarettes, the committee took testimony on Raised Bill No. 6484, “AN ACT REQUIRING PAPER TOWELS IN PUBLIC RESTROOMS.” I don’t know much about the issue, but I imagine that companies which supplied paper towels feared the popularity of products like the energy efficient, tree-saving Dyson Airblade Hand Dryer.
If so, this would be a classic example of “rent-seeking,” an economic term for the act of exploiting the political process to increase one’s profits at the expense of society.
The next act was a bill to certify advanced dental hygiene practitioners.
Given the high cost of dental care, I thought it made sense to create regulations which would allow trained and certified dental practitioners to do some of the simpler work only dentists are now permitted to provide. The model works well in the medical field, where nurse practitioners and physician assistants provide capable care, freeing up doctors to give higher level care.
Sure enough, earnest local dentists rose one by one in opposition to the bill, flouting evidence from successful trials in other states, claiming that anyone who didn’t go through dental school would wreak havoc inside the mouths of patients if they were allowed to do anything more than a cleaning. More rent-seeking.
There are a range of factors that keep medical and dental costs spiraling, and rent-seeking often plays a hidden role.
As Stier writes about his experience in Connecticut, “the dentists left an impression.”
Every six months or so, when I shell out too much money for a cleaning and sometimes minor dental work, I wonder why dentistry is so expensive. It had to be more than the dentists’ monopoly on lower level care.
It turns out, there’s an innovative way to provide dental care at a lower cost – through a model called Dental Service Organizations, or DSOs.
DSOs provide business management support to dental practices, permitting dental practices to focus on dentistry while allowing them to reduce their costs on management activities such as billing, ordering supplies and negotiating for office space. They save money by combining their management needs with those of other dental practices, thereby earning economies of scale that can be passed along to patients in the form of lower dental bills.
Unfortunately, however, the entrenched dentists see [DSOs] as a threat.
Consider the case of Kool Smiles, the largest dental provider for pediatric Medicaid patients with over 100 offices in 15 different states and the District of Columbia.
Medicaid reimbursement rates for dentists are so low that old-school dentists, with their often inefficiently run offices, just can’t afford to take on these patients, contributing to the dental health crisis among the poor.
But because Kool Smiles dentists’ offices are run externally through a firm called Benevis, a DSO, Kool Smiles dentists are able to focus exclusively on what they are proficient at and trained for, while Benevis takes advantage of the economy of scale, and does what they are proficient at doing: the non-clinical side of dentistry.
Dentists should, of course, be allowed to chose from a range of business models that allow dentists to compete for patients. Limited regulations are appropriate, says Stier, to promote quality care. But,
like with Hartford’s hand dryers and dental hygiene practitioners, rent seekers are trying to protect their turf with rules that keep out the competition…After all, when you effectively have a monopoly on what has become an outmoded way of doing business, you do everything you can to protect your high prices. Just ask AirBnB and Uber.
The bottom lines, according to Stier,
The DSO model is under attack by old guard dentists because it offers a more efficient way of doing business, which passes some of the savings on to patients and Medicaid. Dentists have a lot to offer to society and earn a good living without rent-seeking protectionism.
Jeff Stier is a Senior Fellow at the National Center for Public Policy Research in Washington, D.C., and heads its Risk Analysis Division. His National Center op-eds have been published in top outlets including The Wall Street Journal, USA Today, The Los Angeles Times, the New York Post, Forbes, the Washington Examiner and National Review Online. His more scholarly writing has been published in the Hoover Institution’s journal, Defining Ideas, The Cato Institute’s Regulation, and Springer’s Cancer Causes and Control. He has testified before many bodies at the city, state and international level and has appeared on the Fox News Channel, CNN, CNBC and other television networks and is a guest on talk radio programs approximately 100 times a year.
The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than four percent from foundations, and less than two percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors. Sign up for free issue alerts here or follow us on Twitter at @NationalCenter.