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Discounting Dentistry
JADA
Discounting dentistry I f you w a n t to h o ld your ow n in he alth care circles these days, you had better be able to ta lk about such matters as em p lo y e e h e a lth in c e n tiv e s , pro sp e ctive pay m e nt p lan s, business coalitions, an d fee discounts. H ealth care conversations h a v e b e c o m e d e c id e d ly s tr u c tu r e d a ro u n d cost-containm ent concepts and, for reasons spelled out in last m o n th ’s ed ito rial, the loudest voices are those of the m ajor purchasers of he alth care benefits. O n e o f the m arketplace ap p licatio n s of these concepts being discussed m ost fre q u e n tly is the preferred provider org an i za tio n (PPO). Y o u m ay not yet be fa m ilia r w ith the PPO and, frankly, it defies precise d e fin i tio n . In essence, how ever, a PP O is a gro up of providers that contracts w ith a c o m p an y or com pan ies to offer services in a m ore econ om ical m an ne r— a sort of d is co unte d fee-for-service health care, if you w ill. The C o u n c il on D ental Care Pro grams has prepared an e n lig h te n in g re port on h o w PPOs currently relate to d e n tistry (see page 76). W e can look for their increased in v o lv e m e n t because, as this report indicates, gro up purchasers have spotted an “ eroding patien t base for prac tition ers,” an d have learned that “ pro viders appear to be w illin g to m ake cer ta in trade-offs for a larger patient base and a larger share of the lim ite d benefit d o l lar.” To date, o n ly a h a n d fu l of PPOs have a c tu a lly gotten off the g ro und . One reason is t h a t b u s in e s s c o a lit io n s are s t ill feverishly gathering data on the “ cost pro file s” of practitioners an d institutio ns. Those id e n tifie d as h a v in g reasonable fees a n d p ro v id in g a conservative n u m b e r of services are still being sorted out. The in ten t, of course, is to then determ ine h o w best to fu n n e l as m an y patients as po ssi ble to these preferred providers. If these p r o v id e rs w i ll lo w e r th e ir fees eve n further th ro u g h discounts, so m u c h the better for the group purchasers. Patients w ill be p o in te d in the preferred direction a n d then n u d g e d along w ith such incen130 ■ JA D A , Vol. 107, Ju ly 1983
In the scurry to be more “businesslike,” none of us should forget where our primary allegiance lies. tives as copaym ent reim bursem ent in a d d itio n to the discounts. As you m ig h t suspect an d as the C o u n c il report in d i cates, antitrust lawyers are eyeing PPO agreements very carefully. To get an idea of just one of the ways a de n ta l PPO can fu n c tio n , there is already an e x a m p le agreem ent. It is be tw ee n C o nn ecticut General Life Insurance Co a n d U n ite d D e ntal N e tw o rk (U D N ), a Colorado-headquartered franchise co m p a n y that offers m anagem ent a n d m arket in g services to contracting dental prac tices. U n de r terms of the agreement, U D N m em ber dentists, an d on ly U D N dentists, can elect to have their services m arketed to C o nn ecticu t General po licyho lders in Colorado. In return, these dentists m ust adhere to a discount-type fee schedule developed by C o nnecticut General, b ill for co p a y m e n ts a n d d e d u c tib le s , an d s u b m it to aud its an d to u tiliz a tio n re view s. T he p o s s ib ilitie s for d e v is in g n e w he alth care delivery systems based on the PP O concept are v irtu a lly lim itless, and som e are certain to becom e favorites of dollar-conscious gro up purchasers. D o n ’t assum e, however, that such established systems as he alth m ainten an ce org an iza tio ns (HM Os) w ill back aw ay from the co m p e titio n . M an y H M O s have shed their closed-panel approach for far m ore flex i ble a n d varied arrangem ents and are gar n e rin g more attention th an ev^r before. In 1982, 90% o f the 269 existing H M O plans were operating successfully. Several have
converted from non-profit to for-profit i status a n d have begun s e llin g stock to p u b lic investors. R em em b er, approxi- ' m ately a quarter of the H M O s offer pre p a id dental care options. H ealth care is n o w be in g researched a n d developed just as any other c o m m o d ity in the m arketplace and, as such, its fate t rests m ore an d more in the h a n d s o f tw o groups: b usine ssm e n an d w o m e n w h o th in k in terms of stock reports an d profit an d loss statements, an d go vernm e nt of fic ia ls w h o are s tr u g g lin g to c o n ta in gro w in g budget deficits. These buyers, h av in g cau ght the sellers w ith their u n balanced su p p ly a n d d e m a n d s h o w in g , are taking unprecedented liberties in the he alth care decision process. T heir m oo d is u n m istak ab ly one of cost-containm ent, a n d this is reflected in their greater in te r est in the fin a n c ia l aspects of he alth care delivery than in health care itself. A lth o u g h the PPO m ay be the latest w ave in the tide of delivery systems buffeting the health professions, it certainly w o n ’t be the last. There w ill be ne w alter natives w ith broader patient app eal, some w ith im pro v ed incentives for p rac titio ners, an d others w ith in g e n io u sly devised benefits for purchasers of health care. Y o u also can be certain that too m a n y w ill re quire participa tin g dentists to re lin q u ish more an d m ore of their previous preroga tives in patient m anagem ent. A s increas in g num bers of dentists an d other health practitioners fin d it necessary or a d v a n tageous, for whatever reasons, to enter in to new practice arrangem ents in the de livery of health care, none s h o u ld forget that the prim ary allegiance o f the doctor is to patients an d their needs. The b u s i ness of A m erica m ay w e ll be business, b u t the business of A m e rican dentists is d e n tistry.
Discounting dentistry I f you w a n t to h o ld your ow n in he alth care circles these days, you had better be able to ta lk about such matters as em p lo y e e h e a lth in c e n tiv e s , pro sp e ctive pay m e nt p lan s, business coalitions, an d fee discounts. H ealth care conversations h a v e b e c o m e d e c id e d ly s tr u c tu r e d a ro u n d cost-containm ent concepts and, for reasons spelled out in last m o n th ’s ed ito rial, the loudest voices are those of the m ajor purchasers of he alth care benefits. O n e o f the m arketplace ap p licatio n s of these concepts being discussed m ost fre q u e n tly is the preferred provider org an i za tio n (PPO). Y o u m ay not yet be fa m ilia r w ith the PPO and, frankly, it defies precise d e fin i tio n . In essence, how ever, a PP O is a gro up of providers that contracts w ith a c o m p an y or com pan ies to offer services in a m ore econ om ical m an ne r— a sort of d is co unte d fee-for-service health care, if you w ill. The C o u n c il on D ental Care Pro grams has prepared an e n lig h te n in g re port on h o w PPOs currently relate to d e n tistry (see page 76). W e can look for their increased in v o lv e m e n t because, as this report indicates, gro up purchasers have spotted an “ eroding patien t base for prac tition ers,” an d have learned that “ pro viders appear to be w illin g to m ake cer ta in trade-offs for a larger patient base and a larger share of the lim ite d benefit d o l lar.” To date, o n ly a h a n d fu l of PPOs have a c tu a lly gotten off the g ro und . One reason is t h a t b u s in e s s c o a lit io n s are s t ill feverishly gathering data on the “ cost pro file s” of practitioners an d institutio ns. Those id e n tifie d as h a v in g reasonable fees a n d p ro v id in g a conservative n u m b e r of services are still being sorted out. The in ten t, of course, is to then determ ine h o w best to fu n n e l as m an y patients as po ssi ble to these preferred providers. If these p r o v id e rs w i ll lo w e r th e ir fees eve n further th ro u g h discounts, so m u c h the better for the group purchasers. Patients w ill be p o in te d in the preferred direction a n d then n u d g e d along w ith such incen130 ■ JA D A , Vol. 107, Ju ly 1983
In the scurry to be more “businesslike,” none of us should forget where our primary allegiance lies. tives as copaym ent reim bursem ent in a d d itio n to the discounts. As you m ig h t suspect an d as the C o u n c il report in d i cates, antitrust lawyers are eyeing PPO agreements very carefully. To get an idea of just one of the ways a de n ta l PPO can fu n c tio n , there is already an e x a m p le agreem ent. It is be tw ee n C o nn ecticut General Life Insurance Co a n d U n ite d D e ntal N e tw o rk (U D N ), a Colorado-headquartered franchise co m p a n y that offers m anagem ent a n d m arket in g services to contracting dental prac tices. U n de r terms of the agreement, U D N m em ber dentists, an d on ly U D N dentists, can elect to have their services m arketed to C o nn ecticu t General po licyho lders in Colorado. In return, these dentists m ust adhere to a discount-type fee schedule developed by C o nnecticut General, b ill for co p a y m e n ts a n d d e d u c tib le s , an d s u b m it to aud its an d to u tiliz a tio n re view s. T he p o s s ib ilitie s for d e v is in g n e w he alth care delivery systems based on the PP O concept are v irtu a lly lim itless, and som e are certain to becom e favorites of dollar-conscious gro up purchasers. D o n ’t assum e, however, that such established systems as he alth m ainten an ce org an iza tio ns (HM Os) w ill back aw ay from the co m p e titio n . M an y H M O s have shed their closed-panel approach for far m ore flex i ble a n d varied arrangem ents and are gar n e rin g more attention th an ev^r before. In 1982, 90% o f the 269 existing H M O plans were operating successfully. Several have
converted from non-profit to for-profit i status a n d have begun s e llin g stock to p u b lic investors. R em em b er, approxi- ' m ately a quarter of the H M O s offer pre p a id dental care options. H ealth care is n o w be in g researched a n d developed just as any other c o m m o d ity in the m arketplace and, as such, its fate t rests m ore an d more in the h a n d s o f tw o groups: b usine ssm e n an d w o m e n w h o th in k in terms of stock reports an d profit an d loss statements, an d go vernm e nt of fic ia ls w h o are s tr u g g lin g to c o n ta in gro w in g budget deficits. These buyers, h av in g cau ght the sellers w ith their u n balanced su p p ly a n d d e m a n d s h o w in g , are taking unprecedented liberties in the he alth care decision process. T heir m oo d is u n m istak ab ly one of cost-containm ent, a n d this is reflected in their greater in te r est in the fin a n c ia l aspects of he alth care delivery than in health care itself. A lth o u g h the PPO m ay be the latest w ave in the tide of delivery systems buffeting the health professions, it certainly w o n ’t be the last. There w ill be ne w alter natives w ith broader patient app eal, some w ith im pro v ed incentives for p rac titio ners, an d others w ith in g e n io u sly devised benefits for purchasers of health care. Y o u also can be certain that too m a n y w ill re quire participa tin g dentists to re lin q u ish more an d m ore of their previous preroga tives in patient m anagem ent. A s increas in g num bers of dentists an d other health practitioners fin d it necessary or a d v a n tageous, for whatever reasons, to enter in to new practice arrangem ents in the de livery of health care, none s h o u ld forget that the prim ary allegiance o f the doctor is to patients an d their needs. The b u s i ness of A m erica m ay w e ll be business, b u t the business of A m e rican dentists is d e n tistry.