Parallax View is an editorial series presented for educational and discussion purposes only.
The opinions expressed are those of the authors only, and by no means is any anti-trust action implied or to be inferred.
EIGHT PREMISES THAT ARE PARALYZING THE PROGRESS OF DENTISTRY IN THE MANAGED CARE ERA
Let’s dissect eight basic premises that are being touted in dentistry today that effect our perspective in looking at the dental marketplace. They serve as opiates to the masses of dentists and palliatives to individual dentists. Each of these thought processes is lacking in at least one basic consideration. We will arrive at and ask the pertinent questions that will provide the missing pieces necessary for an educated "save dentistry" discussion.
Premise 1) Managed care is going to go away because of a pending backlash from the public or the professions.
This premise is based on the assumptions that enough members of the public will be incensed by "managed care horror stories" that they will force deep and fundamental regulation, legislation, or a boycott that will see the end of managed care. This premise is often supported by the assumption that health care professionals will somehow be able to influence this revolt. In order to accept this premise, then, one must also assume that the managed care companies are static; that is, that they do not recognize their own organizational problems or liabilities and will fall like sitting ducks, fat and complacent from their previous oligopoly.
Premise 2) If dentists sit down and just look at the numbers, they will see that managed care just doesn’t pay; that to discount your dentistry to a twenty percent or more level will require such an increase in busyness that it just won’t make sense.
Hopefully we have all seen the infamous Kodak study, which showed, for example, that (assuming a 40% profit margin) if you discount your fees by 20%, you require a 100% increase in production to produce the same bottom line. Adherents to this premise state that, when faced with this overwhelming production requirement just to do "as good", dentists will of course reject a reduced fee contract and continue the good and righteous battle in fee-for-service.
Premise 3) Clinical excellence/specialized elective dental skills will put you in a place above the rank and file dentists that will allow you and your type of practice to survive.
Go take all the cosmetic courses you can. Take off a few days and go to an Institute of Highest Learning. Become the best bleacher in your area. Start a halitosis center. Get a laser, a sandblaster, an intraoral camera, a Caridex system (remember that?), an electronic anesthesia unit, and/or a porcelain milling machine and you will prosper. Other dentists will look at your margins and send their patients to you! You’ll be that good. The public will "find out" and you will prosper from their well deserved admiration and the deluge of new patients to follow.
Premise 4) Managerial excellence will put you in a place above the rank and file dentists that will allow you and your type of practice to survive.
If you are smart and pay attention to the numbers, then you will be profitable and able to afford the niceties that make an office successful- the physical plant, the new patient presentation, great staff, great customer service. Further, an astute dentist/manager can manipulate his or her practice in such a way that it compensates for any hit by "managed care migration". "Lean and Mean" will see you through, and then you can get back to it once this managed care thing has run its course.
Premise 5) Direct Reimbursement will save fee-for-service dentistry.
Direct reimbursement, when the public realizes it, will bring back the good old days of dentistry. Because the administrative expenses are so low, patients get more dentistry for their dollar and no intervention as far as treatment decisions. This is free market economics at its best. All we need to do is to talk to the business higher-ups that come to our offices and sell them on the idea. It’s going to take off any day now, and will save fee for service dentistry. If the ADA spends just a little more money on it, it will fly.
Premise 6) If you build it they will come.
This one goes like: "If you build the perfect office with the perfect decor with the perfect staff with the perfect training and the perfect customer service plan and the perfect management systems and the perfect CE, the patients will seek you out." It’s always worked that way, right? Don’t the seminar guru’s always talk about the top 10%?
Lotta Success, at the last seminar I went to said that if we had every system in our office perfect, we will define that top 10%!
Premise 7) Dental organizations cannot discuss global practice issues without incurring anti-trust liability.
Popular thought is that dentists may not gather and discuss anything except clinical issues. That if a group of dentists gets together and mentions the third-party payer industry, then the sword of anti-trust will befall them. (Look for a future article for a full discussion of the anti-trust issue.)
Dentists across the country are being quoted in clandestine small group discussions as saying, "If we could just tell people not to join managed care, but we will get sued for that", and, "If nobody joined, it would just go away". Anti-trust disclaimers are now read at dental meetings across the country prior to any official business. Dentistry feels that it is held to a different standard in its ability to communicate with its membership, a standard where one can’t fight back. So, it is extrapolated, if your hands are tied, you may as well give up on the ability of dental organizations to do anything to save dentistry as we knew it.
Premise 8) The practice of dentistry and dental pathology are fundamentally different from their counterparts in medicine.
Dentistry is a fundamentally preventive profession. We have already achieved the success in positively affecting the epidemiology of our most common diagnoses. Dental disease, by its nature, is seldom catastrophic, is generally preventable and easily palliated, and is orders of magnitude less expensive than medical care. Dentistry is already outpatient-based, and thus is an example of the cost-containment that medicine is trying to achieve. The ratio of generalists to specialists in dentistry is already what the medical profession is evolving to achieve. Therefore, dentistry does not need managed care, nor is it attractive to managed care companies, because the major cost containment is already done.
What, then, is the question that remains unanswered throughout all of these currently popular belief systems? Where is the patient, the customer, the market in all of these illusions? Once again, just as we have learned not to do in every practice management lecture, we have not listened to our patients; or, from the corporate perspective, we have lost sight of our market!
Let’s now re-examine these premises from a patient market based perspective, and call the questions- "Where is the patient in this theory?" and "What are the real motivations of all players?"
1) Managed care is going to go away because of a pending backlash from the public or the professions.
Well, guess what? Referenda this spring in two Western states, which were supposed to make capitation illegal, were overwhelmingly defeated. The public doesn’t have the bad taste in its mouth for managed care that many might think. The third parties and the media have been quite successful in keeping the public eye on doctors as culprits (How Honest Are Dentists?, She Woke Up Pregnant, two decades of UCR limitations, the AIDS fiasco.). Hospitals, the organizations that should have the most refined understanding of the pitfalls of managed care, are flocking to it for their own employees. Many offer no indemnity insurance, or price it so high as to be a non-choice. And, insurance companies in their ability to respond to the climate, have initiated "point of service" plans that look like and smell like indemnity insurance until you have a true medical emergency. Then they kick in at 30% or more co-payment, of their own company’s UCR! Managed care companies can and will evolve their plans into whatever it takes to survive professional and legislative scrutiny. So, yes, it may not be the way it is today in twelve months, but it will still exist, and there will still be reduced fees, and the potential for provider dilemmas. It will mutate and change, slick as a whistle. And the controversy will end, oh yes it will. The controversy will end when all of the "old docs" who remember fee-for-service have retired and/or been forced out, and when the next generation who has never been exposed to anything else takes over. It will be time more than anything else that works in the favor of the third parties.
The imperative for managed care is undeniably financial. The public has not been educated as to how to asses quality. We have failed there. The bottom line is: Employers and patients love managed care because they love the bottom line!
2) If dentists would just sit down and look at the numbers, they will see that managed care just doesn’t pay; that to discount your dentistry to a twenty percent or more level will require such an increase in busyness that it just won’t make sense.
First of all, this is not how managed care markets to existing dentists. They know very well our weaknesses. They fully understand fear-based marketing. They prey on the number one insecurity that all dentists have, "Where is the next new patient going to come from?".
Managed care marketeers appeal to open chair time. (Dr. Iatrogenicus, we can take that 15% of the time that your chairs are not full, put patients in them regularly, you won’t have to increase your overhead a penny because you are already paying your full overhead now, and yes, the fees are lower or capitated, but you weren’t making any money during that time before. We will give you a guaranteed income for that time.)
Managed care marketeers appeal to "join the bandwagon" emotions. (Dr. Iatrogenicus, all of your colleagues in this neighborhood have already joined. They will get all of the good patients if you don’t get involved soon.)
Managed care marketeers appeal to exclusion based fears. ( Dr. Iatrogenicus, this plan is going to close, and the five largest employers in our city have all signed with this plan. You had better sign now to survive.)
Managed care marketeers appeal to fear of practice entropy. (Dr. Iatrogenicus, every month more of your patients are signing up for our plan. Most of them will leave your practice if you don’t become a participant. Our national statistics show that only twenty percent of patients on our plan will go out of network. Statistics don’t lie, Doctor. We need each other.)
Managed care marketeers utilize subterranean approaches. (You can imagine a patient saying, "Dr. Iatrogenicus, a lot of us at work were talking about how much we like you and want to stay with your practice. But you aren’t our new plan. I called the insurance company to make sure that they hadn’t just forgotten to put you on the list, but they said you hadn’t joined. Doctor, we all would be so grateful if you could join just for our group; we’ve all been so dedicated and would hate to leave.")
Now, the point of the pedantics here is that in the short run, the marketers may be correct. Now, it’s hard for those of us who love fee-for-service/free choice dentistry to admit this, but despite the Kodak study, sometimes the numbers do make sense, and the fears of dentists are real. Much of this depends on the previous history of the practice, but history is past, and today’s needs are compelling- ultimately compelling.
Secondly, this argument is based on the assumption that a dentist will turn his or her entire practice over to managed care. The marketeers are not selling this (mostly entrepreneurial dentists are). They are instead selling an insidious new culture into a practice, and therein lies the real danger, not in the numbers. The facts are that the dentist’s fixed overhead probably will not go up, at least not at first. More patients will enroll, the capitation check will get bigger, and the dentist will think it’s a great idea-he’s a genius! But then, utilization will eventually rise. The dentist must decide whether to treat these patients like any other, despite the fact that he gets only $3 per month to take care of them. He likes the money, he filled in his 15% open chairtime, he now perceives that "just saying no to managed care" will drop his income accordingly. So faced with increasing utilization and financial punishment, the dentist can:
1) personally work harder,
2) hire an inexpensive associate to treat plan patients,
3) sign up more patients in the hope that that will dilute the utilization and so increase the profit margins,
4) look for more billable procedures to do on those patients, or
5) ration care to plan patients by limiting their ability to make appointments.
But, Dr. Iatrogenicus is hooked, unless he is prescient enough to know that a short term hit in the wallet may be a long term benefit. The appropriate question here is, "Where are the quality patients in this equation?". What he did, which most dentists don’t understand, was to take away his growth capacity. If he had that empty chairtime left, he could be using it for emergency patients and to spend more time with his patients enhancing their experience and dental knowledge, thus making his practice grow with new, private patients. Instead, his quick fix has become a career breaker. Unfortunately, most dentists don’t see this coming. They just look at the bottom line, and hand over the keys.
3) Clinical excellence/specialized elective dental skills will put you in a place above the rank and file dentists that will allow you and your type of practice to survive.
There is one very basic mistake to this premise. That is, this premise is based on the assumption that the patient will not be able to get what he or she perceives to be identical services in a managed care practice. Think again, my friends. Cosmetics and other value-added types of services will be the lifeblood of the entrepreneurial managed care practice. It is their shot at fee -for-service and, in their paradigms, windfall profits. You can bet that dentists who participate in managed care will be right beside you at many of these seminars. There is no rule that states that the practice of managed care dentistry must be restricted to budget prophies and pin amalgams. That is a view that only fee-for-service dentists hold. Fee-for-service dentists see the words, "not in the contract" as offensive and interfering in the doctor/patient relationship. Managed care dentists see those words as an opportunity to sell full fee dentistry or high co-payment services to the patients. Just think how you would feel if you had to practice managed care. Wouldn’t a veneer case have special meaning? Might you not try harder to push these cases?
Finally, remember that within a few years the managed care dentist will have something that you might not: Patients.
Recent statistics suggest that by 1999, over 60% of the patients who have dental insurance will be covered by a managed care plan. Higher in metropolitan areas. Don’t underestimate the market pull of the bottom line. Patients at all levels of dental perception will go there, "Just for my cleanings", or "I wanted to meet my plan dentist just in case I ever needed to use the coverage", or "A lot of folks from my office went and said it was great! The cleanings were done much faster, and that rubber cup doesn’t hurt as much as those scrapers". Then, at that visit, the patients will get a harder sell than you ever imagined putting on. Don’t underestimate the sophistication of managed care dentists. Just because you disagree doesn’t mean that they are dolts, or incompetent. As competition inevitably increases among managed care dentists, you will see their services and value-added features looking more and more similar to yours.
If dentistry as an organization doesn’t educate its customers away from such decisions, who do you think you are going to present your specialized and cosmetic treatment plans to?
4) Managerial excellence will put you in a place above the rank and file dentists that will allow you and your type of practice to survive.
Lean and mean, downsized practices will have better survivability throughout this evolution, without a doubt. But prepare for downsized profits as well. Again, the question has less to do with what you are doing and more to do with what your patients and potential patients are thinking. Who is first in the patient’s mind? This is a bottom-line driven era. Can you compete with the price of managed care? Can you compete with their marketing? Can you compete with "I’ll go there for my cleanings because they’re free, but if I need anything big I’ll come back to you"? Do you really think that, even if you have a Top 10% practice that all of those patients will elect to forego their benefits? How much of a drop in production can you compensate for and still be able to provide your services the way you think that they are best provided?
You can bet at $3 per month capitation that any rational managed care dentist will be running lean and mean, too. Too lean, and you reduce your growth potential, similar to what was discussed above. Too lean, and you’ll be making your confirmation calls yourself. Too lean, and you will lose those "service stars" that made your practice in the first place.
Again this premise has lost focus on where are the patients going to come from, and what they have been trained to think.
5) Direct Reimbursement will save fee-for-service dentistry.
DR has been around for well over a decade, and has been promoted by organized dentistry. After this time, DR now represents about 0.1% of the dental insurance policies written.
There are several intrinsic problems with DR that will prevent it from ever succeeding:
1) No one makes money from selling it. Therefore, a significant and dedicated professional sales force will never be recruited. The food chain is not recognized.
2) Dentists are not insurance salesmen. There is no correlation between skill with gold foil and the ability to sell insurance. It is ludicrous that a profession that has sold its own health services to less than half of its prospects should be expected to sell insurance in an effective manner.
3) CEO’s and Benefits Managers are unaccustomed to making corporate policy decisions with a saliva ejector hanging from their mouths. The dental office is not an appropriate venue for such activity nor does it provide an atmosphere conducive to effective discourse and parlay for a corporate decision.
4) It is being marketed mostly to dentists. Until each and every Mrs. Magillicuty has heard of DR, you can bet that it won’t come up in the boardroom.
Direct Assignment, which originated in Florida, is a much more inspired concept. It allows for a reasonable co-payment that reverts to the insurance salesman and the marketing company. The profit factor is recognized while providing the same benefit for the patient. DA needs to be marketed quickly and heavily, but to the insurance sales industry, not the dentists. Organized Dentistry needs to back away from DR. Its a losing proposition and a waste of organizational energy and resources.
6) If you build it they will come.
This is a warm, fuzzy kind of a premise that just feels so right. Yet, once again, the people principle is forgotten. In this case, People Express. Remember the airline. It excelled as a no-frills airline. Passengers considered that, at least for shorter flights, most of the value-added airline features were just fluff. They went for the bottom line. Remember what killed People Express? It was a program of putting back the added features and line extension that killed it. In other words, this is an era of "multiple profile consumers". A multiple profile consumer will make significant purchases on the basis of emotional desire, and will shop for and expect discount for basic needs. This is the profile of a person who "invests" in a Porsche but buys wiper blades on sale at K Mart.
Big business gave up on "if you build it they will come" long before the Kevin Costner movie ever came out. It didn’t work. Popular usage of this premise fails to mention its caveat: "they will come if you are first in the customer’s mind and give them a heartfelt, compelling reason to do so". Well, friends, the number one heartfelt, compelling reason of this era is bottom line, and the third parties have huge marketing budgets to make sure that when a person thinks of dentistry and bottom line, the first thing that comes to mind is a managed care company, not Dr. Iatrogenicus with his Wonder Office. Dentistry hasn’t educated its patient pool to revere imperceptible margins, textbook primary closure, or the wonders of osseointegration. The dental corollary to the caveat is "they won’t come if they don’t have alignment between their emotions, their values and their needs. Values + Needs + Emotion = Purchase Desire". This alignment is not facilitated by a Wonder Office or a perfect management system. The emotional component of Purchase Desire is effected as much or more from outside sources (such as the media) as it is from rational understanding of needs. This is a problem of education, and only some of it can be achieved at chairside. Yet we individually and organizationally should be obligated to educate the public to have purchase desire for Optimal Dentistry.
7) Dental organizations cannot discuss global practice issues without incurring anti-trust liability.
This is certainly not true, although one must be careful as to how one conducts oneself. Each individual dentist is considered by law to be an individual business entity, considered to be the same as IBM. Each dentist is a competitor to all others. Therefore, organized movements that include boycott of another competitor, group price fixing to compete better or to force reimbursement levels, movement to block the growth or competition ability of another competitor, or creating libelous statements in any forum, are anti-trust actions that are truly illegal and you will be investigated at the very least if a complaint is made. Anti-trust accusations are very expensive to defend, and the US government is the deep pocket paying the prosecution. No dental organization wants this.
However, the first amendment does grant us the right of assembly and the right of free speech. Here is a list of what dental organizations may do, and must do without fear:
-Educate one another with factual information.
-Disseminate truthful information, even if it is negative.
-Solicit and listen to opinions from individuals, stated as such.
-Advise their membership based on factual information.
-Educate their membership on how to be better individual competitors.
-Educate the public with factual information. (Look for a future article on "The New Tool of External Patient Education™")
Premise 8) The practice of dentistry and dental pathology are fundamentally different from their counterparts in medicine.
There is one basic counter-argument to this premise. No one ever said that the managed care organizations are altruistically evolving health care for the good of the masses. They are doing what any reasonable corporation does: making profit. Profit for the corporation, profit for the stockholders, and (in case you haven’t read a financial magazine in the last five years) incredible annual bonuses, often in the tens of millions of dollars, to their top management and officers. This profit is the reason for existence of any major corporation. It’s what they are supposed to do. They do not have fundamental fiduciary responsibility to the patient. The patient is a part of the "product", grist for the mill.
Dentistry is a thirty seven billion dollar a year industry that third parties used to accept risk on. Dentistry is, in its essence, a cottage industry of competitive individuals with no idea of corporate mindset, no big picture, and no sense of modern organizational theory. It has never marketed its basic product. The public has a love/hate relationship with the profession that is almost genetic. More than fifty percent of its "prospects" don’t avail themselves to dentistry’s product. More than twenty five percent of active dentists don’t belong to its national organization. History has shown that, like medicine, you can find a dentist in any community who will sign any contract, no matter how bad or under what potential liability, and accepting of any amount of potential ethical dilemmas toward patient care. Imagine this narrative presented at a managed care organization board meeting:
"Let’s look carefully at this situation. Here is an industry in which the competitive nature of the providers can be turned against themselves. Plant some seeds, give a few doctors in each community special deals to get our panel started, give significant savings on annual dental premiums to industries which are strapped, like education, airlines, municipal workers, and hospitals. Start discussions about panels closing. Create a need to belong. As we already know from our medical experience, we can truly create a self-fulfilling prophecy in such an industry. The numbers are great. Wouldn’t our stockholders love to get 20-25% of 37 billion flowing through our hands? We can easily swing the public by marketing. We know how to do that well; our return on investment will be high. The dentists will never respond. Maybe someone will give dentistry some bad press that we can take advantage of. Here is an industry, ladies and gentlemen, here is an industry that is ripe for the picking."
Our foremost premise in dealing with today’s health care climate must be to focus on what we are doing, not the third party payers. We need to understand the real world like the big boys do. We need to understand consumerism, mass psychology, marketing, and modern organizational theory. Effective change can be accomplished in dentistry, to the benefit of dentists and patients, without mentioning the words "managed care". Let’s learn about and focus on today’s patient, from a sociological and behavioral basis. Let’s see how good dentists and Optimal Care™ can effect the marketplace. Once we understand, then we can build a new world for dentistry in which we are still included and wanted—by the patients!
K. Randall Groh, DDS
Acting Chair
The American Independent Dentist’s Association
336 Alhambra Circle
Coral Gables, FL 33134
E-Mail feeforserv@aol.com
June 14, 1997© K. Randall Groh, 1997
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