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Excess Capacity in Dentistry or A Shortage?
y
TRENDS
EXCESS CAPACITYINDENTISTRYOBASHORTAGE?
K E N T N ASH , PH. D.
© o s t forecasts of the growth in the number of active or practicing dentists are now indicating a slowdown, leveling off by the turn of the century and, if you are a brave forecaster, an actual turndown by 2005-10. These conditions have pushed some to predict the potential for a future shortage of dentists; some forecasters even believe it is imminent. It has also brought into question the adequacy of dentistry to provide enough dental services in the future. Much of the impetus for these concerns has emerged because: ■■ the number of applicants to the nation’s dental schools has been declining; first-year enrollments have been declining; ■■ there are fewer dental schools; ■■ the number of graduates has been declining. A short historical review is in order before considering the potential for a shortage. A period of capitation grants to dental schools in the early 1970s resulted in a relatively larger rate of growth than expected in the nation’s supply of dentists. The upper line in Figure 1 is the actual number of first-year enrollment in US dental schools from 1956 87. The graph shows the increase in actual enrollments during the early ’70s and the rather steep and continued decline since 1978. The lower line is a projection of enrollments if capitation grants had not occurred. The projection indicates that even without the capitation grants enrollments would have increased at least until the latter part of the ’70s and early ’80s. The area between the two lines is an estimate of the
added enrollments because of the capitation grants and is estimated to be some 10,000 -12,000 enrollees. By 1985, actual and projected enrollments were again the same at about 4,840 first-year enrollments. It is also interesting that first year enrollments by 1987 F I G .- I F I R S T Y E A R E N R O L L M E N T IN D E N T A L S C H O O L Actual and estimated 1956-1987 ENROLLMENT 7000
2000 J ESTIM ATED • ACTUAL
1000 2
56
60
64
68
72
76
80
87
YEAR
were actually lower than the expected number had capitation grants not occurred. Dentistry’s legacy from this period comes in the form of a larger than expected number of dentists who graduated during this period a n d . . . . they are still here. They are out there in private offices, 43
government, dental schools and other dental occupations, but most of them are in private offices treating patients. These dentists have not disappeared; they are going to be here for some time. When production and demand get out of sync as they have in dentistry, the likely adjustments attempting to stabilize the dental market include lower patient volumes per dentist, together with incumbent financial implications, and a cutback in the production of dentists by dental schools—both of which we have observed. The fact that the nation’s production of dentists has slowed significantly does not alone imply that we must face an impending shortage of dental services. This might not be the case if dentists were expected to end their practice of dentistry soon after graduation. But this simply is not the case. Once graduated from dental school (which usually takes four years), the work-life expectancy of a dentist is about 40 years. A dentist is expected to remain in practice about ten times as long as it took to complete dental school. The capacity to treat patients is expected to stay around for quite some time. We can get a better handle on the implications from dentists remaining in practice for a long period by examining Figure 2. There are two lines in this chart and each shows the age distribution of dentists for 1990 and 2010. The first line to the left in the figure shows the age distribution of dentists in 1990 and indicates that a high proportion of dentists are currently younger than 40. The line to the far right shows the projected age distribution of dentists in the year 2010. The graphs in Figure 2 indicate there is still a relatively large number of dentists who are in the formative, practice building stages of their professional dental careers. Many from this group of young dentists will not enter the beginning of the most productive period of their career for another five years (... productive in terms of treating more patients, providing more services and generating the highest earnings...). Between 1995 and 2010, a large number of dentists will be in the highest productivity period. A number of very productive dentists will be providing services to a growing population and this raises the issue of capacity to treat patients. The graduation of a dentist from one of our nation’s dental schools represents an expected capacity to treat patients for a relatively long period of time. The graduation of the large number of dentists during the 1970s has now left us with a larger than expected capacity to provide dental services. Currently, estimates indicate that capacity 44
utilization is averaging about 63 percent-meaning that only about 63 percent of what a dentist is capable of treating is actually being used by patients wanting dental care. ... And it hasn’t changed much in the last five years. Current estimates range from just below 60 percent for the youngest dentists, 67 percent for dentists in the 45- to 49-age group, and about 60 percent for dentists 65 years and older. If current capacity remained fixed for the next 10 years, and if patient visits to the dentist increased at the rate of about 2.5 percent per year (which is about the rate of growth in GNP and U.S. personal income), capacity utilization would climb to slightly less than 81 percent, certainly not an unbearable situation. F IG . 2 U.S. FORECAST OF ACTIVE DENTISTS BY AGE 1 9 9 0 ,2 0 1 0
27
32
37
47
52
57
62
67
72
DENTIST AGE (M ID P O IN T OF 5-YEA R AGE GROUPS)
The assumption that current capacity will remain fixed for the next 10 years is obviously inappropriate. But capacity is not only dependent on the number of dentists and the capacity to treat more patients in the future is not only dependent on graduating more dentists. Capacity to treat more patients in the future will likely increase as we consider the implications from: « the infusion of electronics and computers into the practice of dentistry... quicker, more accurate diagnosis; more accurate record information and transferring of greater amounts of information; ™ new bonding agents that will decrease time in cavity preparation; *■ use of special health charge cards providing quicker access to information about the patient coverage, eligibility, benefit limitations and avoiding delays; ■* new technology that will allow dentists to quickly fabricate crowns in the office, reducing the
number of appointments necessary for placement of crowns. So, looking from the supply side of things, I see little reason to anticipate a shortage of dental care or question the adequacy of dentistry to provide services in the future. True, the number of dentists is not growing as it used to, and the number is not growing as fast as demand. But counting only the number of dentists to assess dentistry’s ability to provide dental care in the future is also looking at only part of the story. There is already a relatively large number of younger dentists in place who are gaining more experience fast; there is significant excess capacity; and technology to provide more care is continuing to emerge in the marketplace.
So, lookingfrom the supply side of things, I see little reason to anticipate a shortage of dental care or question the adequacy of dentistry to provide services in thefuture. True, the number of dentists is not growing as it used to, and the number is not growing asfast as demand. But counting only the number of dentists to assess dentistry’s ability to provide dental care in thefuture is also looking at only part of the story. The next 15 to 20 years rests heavily on the demand side of the dental market. Growth in demand is expected to continue but not by leaps and bounds. Its future path is likely to be in line with a more steady growth in things like: growth in population, growth in national income, expansion of dental benefits, and continued increases in the education level among our population. The problem: there is no simple conversion of these demand trends into an accurate counting of patients or patient visits or services to use as a continuing test against the current capacity to meet the demand for services.
OBSTACLE COURSE Unfortunately many employers just don't realize how vital the National Guard and Reserve is to our armed forces. The fact is, they make up over 44% of our national defense. So the next time someone who works for you needs time off for Guard and Reserve duty please give your full support. And let the obstacle course begin at annual training.
Dr. Nash, an economist, is director of the ADA Bureau o f Economic and Behavioral Research.
45
TRENDS
EXCESS CAPACITYINDENTISTRYOBASHORTAGE?
K E N T N ASH , PH. D.
© o s t forecasts of the growth in the number of active or practicing dentists are now indicating a slowdown, leveling off by the turn of the century and, if you are a brave forecaster, an actual turndown by 2005-10. These conditions have pushed some to predict the potential for a future shortage of dentists; some forecasters even believe it is imminent. It has also brought into question the adequacy of dentistry to provide enough dental services in the future. Much of the impetus for these concerns has emerged because: ■■ the number of applicants to the nation’s dental schools has been declining; first-year enrollments have been declining; ■■ there are fewer dental schools; ■■ the number of graduates has been declining. A short historical review is in order before considering the potential for a shortage. A period of capitation grants to dental schools in the early 1970s resulted in a relatively larger rate of growth than expected in the nation’s supply of dentists. The upper line in Figure 1 is the actual number of first-year enrollment in US dental schools from 1956 87. The graph shows the increase in actual enrollments during the early ’70s and the rather steep and continued decline since 1978. The lower line is a projection of enrollments if capitation grants had not occurred. The projection indicates that even without the capitation grants enrollments would have increased at least until the latter part of the ’70s and early ’80s. The area between the two lines is an estimate of the
added enrollments because of the capitation grants and is estimated to be some 10,000 -12,000 enrollees. By 1985, actual and projected enrollments were again the same at about 4,840 first-year enrollments. It is also interesting that first year enrollments by 1987 F I G .- I F I R S T Y E A R E N R O L L M E N T IN D E N T A L S C H O O L Actual and estimated 1956-1987 ENROLLMENT 7000
2000 J ESTIM ATED • ACTUAL
1000 2
56
60
64
68
72
76
80
87
YEAR
were actually lower than the expected number had capitation grants not occurred. Dentistry’s legacy from this period comes in the form of a larger than expected number of dentists who graduated during this period a n d . . . . they are still here. They are out there in private offices, 43
government, dental schools and other dental occupations, but most of them are in private offices treating patients. These dentists have not disappeared; they are going to be here for some time. When production and demand get out of sync as they have in dentistry, the likely adjustments attempting to stabilize the dental market include lower patient volumes per dentist, together with incumbent financial implications, and a cutback in the production of dentists by dental schools—both of which we have observed. The fact that the nation’s production of dentists has slowed significantly does not alone imply that we must face an impending shortage of dental services. This might not be the case if dentists were expected to end their practice of dentistry soon after graduation. But this simply is not the case. Once graduated from dental school (which usually takes four years), the work-life expectancy of a dentist is about 40 years. A dentist is expected to remain in practice about ten times as long as it took to complete dental school. The capacity to treat patients is expected to stay around for quite some time. We can get a better handle on the implications from dentists remaining in practice for a long period by examining Figure 2. There are two lines in this chart and each shows the age distribution of dentists for 1990 and 2010. The first line to the left in the figure shows the age distribution of dentists in 1990 and indicates that a high proportion of dentists are currently younger than 40. The line to the far right shows the projected age distribution of dentists in the year 2010. The graphs in Figure 2 indicate there is still a relatively large number of dentists who are in the formative, practice building stages of their professional dental careers. Many from this group of young dentists will not enter the beginning of the most productive period of their career for another five years (... productive in terms of treating more patients, providing more services and generating the highest earnings...). Between 1995 and 2010, a large number of dentists will be in the highest productivity period. A number of very productive dentists will be providing services to a growing population and this raises the issue of capacity to treat patients. The graduation of a dentist from one of our nation’s dental schools represents an expected capacity to treat patients for a relatively long period of time. The graduation of the large number of dentists during the 1970s has now left us with a larger than expected capacity to provide dental services. Currently, estimates indicate that capacity 44
utilization is averaging about 63 percent-meaning that only about 63 percent of what a dentist is capable of treating is actually being used by patients wanting dental care. ... And it hasn’t changed much in the last five years. Current estimates range from just below 60 percent for the youngest dentists, 67 percent for dentists in the 45- to 49-age group, and about 60 percent for dentists 65 years and older. If current capacity remained fixed for the next 10 years, and if patient visits to the dentist increased at the rate of about 2.5 percent per year (which is about the rate of growth in GNP and U.S. personal income), capacity utilization would climb to slightly less than 81 percent, certainly not an unbearable situation. F IG . 2 U.S. FORECAST OF ACTIVE DENTISTS BY AGE 1 9 9 0 ,2 0 1 0
27
32
37
47
52
57
62
67
72
DENTIST AGE (M ID P O IN T OF 5-YEA R AGE GROUPS)
The assumption that current capacity will remain fixed for the next 10 years is obviously inappropriate. But capacity is not only dependent on the number of dentists and the capacity to treat more patients in the future is not only dependent on graduating more dentists. Capacity to treat more patients in the future will likely increase as we consider the implications from: « the infusion of electronics and computers into the practice of dentistry... quicker, more accurate diagnosis; more accurate record information and transferring of greater amounts of information; ™ new bonding agents that will decrease time in cavity preparation; *■ use of special health charge cards providing quicker access to information about the patient coverage, eligibility, benefit limitations and avoiding delays; ■* new technology that will allow dentists to quickly fabricate crowns in the office, reducing the
number of appointments necessary for placement of crowns. So, looking from the supply side of things, I see little reason to anticipate a shortage of dental care or question the adequacy of dentistry to provide services in the future. True, the number of dentists is not growing as it used to, and the number is not growing as fast as demand. But counting only the number of dentists to assess dentistry’s ability to provide dental care in the future is also looking at only part of the story. There is already a relatively large number of younger dentists in place who are gaining more experience fast; there is significant excess capacity; and technology to provide more care is continuing to emerge in the marketplace.
So, lookingfrom the supply side of things, I see little reason to anticipate a shortage of dental care or question the adequacy of dentistry to provide services in thefuture. True, the number of dentists is not growing as it used to, and the number is not growing asfast as demand. But counting only the number of dentists to assess dentistry’s ability to provide dental care in thefuture is also looking at only part of the story. The next 15 to 20 years rests heavily on the demand side of the dental market. Growth in demand is expected to continue but not by leaps and bounds. Its future path is likely to be in line with a more steady growth in things like: growth in population, growth in national income, expansion of dental benefits, and continued increases in the education level among our population. The problem: there is no simple conversion of these demand trends into an accurate counting of patients or patient visits or services to use as a continuing test against the current capacity to meet the demand for services.
OBSTACLE COURSE Unfortunately many employers just don't realize how vital the National Guard and Reserve is to our armed forces. The fact is, they make up over 44% of our national defense. So the next time someone who works for you needs time off for Guard and Reserve duty please give your full support. And let the obstacle course begin at annual training.
Dr. Nash, an economist, is director of the ADA Bureau o f Economic and Behavioral Research.
45