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We may not know what orthodontists earn, but overall the income of dentists is up
SPECIAL ARTICLE
We may not know what orthodontists earn, but overall the income of dentists is up H. Barry Waldman, BA, DDS, MPH, PhD* Stony Brook, N.Y. The improving economics of dental practice is demonstrated with a variety of practitioner and federal agency sources. The potential for favorable orthodontic dental practice is considered. (AMJ ORTHOO DENTOFAC ORTHOP 1991 ;99:376-80.)
~¢ ¥¥e'~X[ still can't be certain about the income of orthodontists." That was the conclusion of two earlier reviews of available data by this author. 1"2The difficulty in developing reliable information evolved primarily about the limited number of responses to professional and proprietary surveys by members of the various specialties. The reports in the American Dental Association's (ADA's) Survey of Dental Practice have been forced to present data in a composite "specialist category." In particular, income studies conducted by the Journal of Clinic Orthodontics and Dental Economics have been compromised by extreme limitations in their rates of response (approximately 12% and 2%, respectively2). Nevertheless, monitoring the economic health of any of the health professions is essential if they are to continue to assure current members of the financial viability of the field and to attract young applicants for the future. It would be redundant to review the lay press and professional publications during the early 1980s that sensationalized the supposed early demise of the dental profession and no doubt contributed to the marked downturn in the number of applicants to schools of dentistry. Although adequate data are not available to describe the developments in the income of orthodontists during the 1980s, a large body of data from a variety of sources is available to emphasize the improving economic environment for the overall practice ofdentistry. The following presentation will review these data in an effort to (1) reassure both current and potential members of the profession that the profession is far from moribund and (2) consider the potential for orthodontic practice.
*Professor and Chairman, Department of Dental Health, School of Dental Medicine, State University of New York at Stony Brook. 8/1/19352
376
OVERALL PRACTITIONER INCOME: REPORTS BY DENTISTS
During the past 40 years, independent practitioner* current dollar median net income has continued to increase. Because of method changes by the ADA during the 1960s and 1970s, extreme care must be used when evaluating the income data for the period. With this precaution in mind, as compared to income data during this earlier period, there are indications that in the early 1980s, reported practitioner constant dollar income (i.e., removing the effects of inflation) did decrease. However, by the mid-1980s, constant dollar median net income once again increased and was one third higher than constant dollar income figures for 1960 (Table I). But how reliable are the income reports by intlividual practitioners? It is not unlikely that income survey results of lawyers, physicians, and dentists gathered for examination by the Internal Revenue Service will differ appreciably from those compiled for peer perusal. It is a well-known phenomenon, frequently encountered at organizational meetings, that the professional ego is polished by inflating fee and income figures. I Nevertheless, a series of reports from federal agencies does confirm the reported improving income of dentists during the second half of the 1980s (including to some extent reports by the Internal Revenue Service). INCOME BASED ON BUSINESS RECEIPT REPORTS
Total national business receipt data for the offices of dentists (not including nonemployer office receipts) are available on an annual basis from the U.S. Department of Commerce. ~ During the 1980s, total business receipts for dental practices (with employees) in*An independent practitioner is an owner (sole proprietor, partner, or shareholder in an incorporated practice) or partial owner of a private practice)
Volume 99 Number 4
S p e c i a l article
377
Table I, Current and constant dollar median net income for independent dentists, selected years 1948-19883.4--Based on practitioner income: Reports by dentists
Year
Current dollar
Consumer price index (1982-1984 = 100)
Constant dollar
1948 1960 1967" 1974' 1981"* 1983 1986 1987 1988
$5,888 $14,300 $21,455 $30,000 $50,000 $60,000 $70,000 $72,000 $75,000
21.7 29.6 33.9 50.8 90.9 99.6 109.6 113.6 118.3
$27,134 $48,310 $63,289 $59,055 $55,006 $60,240 $63,868 $63,380 $63,398
Norz: 1967 through 1988 current ~ollar data are from ADA sources. *Because of changes in methods by the ADA, comparisonswith these data should be used with caution? **Period of last economic recession.
Table II. Number of professionally active dentists, current and constant dollar business receipts per active dentist, and current and constant dollar net profit, 1980-1988s9--Based on business receipts, Department of Commerce
Year
1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988
Number of professionally active dentists
Total business receipts (mglions)
Current dollar business receipts per dentist
Consumer price index (1982-1984 = 100)
Constant dollar business receipts per dentist
Percent net blcome ofgross income**
Current dollar net income
Constant dollar net income
$40,241 $47,237 $48,977 $49,967 $52,205 $54,595 $55,741 $61,511 $64,453
$48 542 $51 ~66 $50 754 $50 168 $50 244 $50 738 $50 858 $54 146 $54 483
42.0 124 952*** 125 630 126 308 126 985*** 129151 131317 133 382 135 549 137 M7*** 138,749
$12 639 $14 879 $16 071 $17 255 $18 629 $20 187 $21420 $23418 $25 334
$100,604 $117,799 $126,558 $133,603 $141,862 $151,233 $157,907 $169,920 $182,588
82.9 90.9 96.5 99.6 103.9 107.6 109.6 113.6 I18.3
$121,356 $129,592 $131,148 $134,139 $136,533 $140,551 $144,075 $149,577 $154,343
41.0%* 40.1% 38.7%* 37.4% 36.8%* 36.1% 35.3% 36.2% 35.3%
No'rE: Total business receipts do not include nonemployerreceipts. Therefore the use of the total number of professionallyactive dentists in a particular year will result in an understatementof the business receipts per dental practice. *Estimate based on A D A reports. **Based on ADA solo practitionerreports. ***Number of dentists as reported by ADA. Numbers for all other years between 1979 and 1987 were prorated. The number of dentists for 1988 (and beyond) were projected by the AmericanAssociationof Dental Schools Manpower Committee)
creased from $12.6 to $25.3 billion. Despite the increases in the numbers of professionally active dentists (from 125,000 in 1979 to more than 138,000 in 1988), constant dollar business receipts per dentist increased by 27% between 1980 and 1988. However, during this same period, the ratio of net income to gross income decreased (from approximately 41% to 35%). Dental practitioners were expending a greater percent of their
business receipts on overhead costs to maintain their practice activities. Thus, although current dollar net income continued to increase annually (based on business receipt reports), constant dollar net income stagnated through the early and middle years of the 1980s. In actuality, constant dollar net income decreased during the period of the national recession during the first years of the decade.
378
Waldman
Am. J. Orthod. Dentofac. Orthop.
April 1991
Table III. Number of professionally active dentists, national dental expenditures, current and constant dollar expenditures per active dentist, and net profit, 1980-19896"4--Based on national expenditures, Health Care Financing Administration national dental expenditures (billions)
Current dollar expenditures per dent~t
Constant dollar expenditures per dentist
Percent net income of gross income
Cttrrent dollar net
Constant dollar net
Year
Number of professionally active dentists (millions)
income
income
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989"
125,630 126 308 126 985 129 151 131 317 133 482 135649 137 817 138 749 139 801
$15.4 $17.3 $19.5 $21.7 $25.1 $27.1 $29.6 $32.8 $37.0 $41.0
$122,582 $136,967 $153,561 $168,020 $191,140 $203,023 $218,210 $237,996 $266,668 $293,274
$147,867 $150,678 $159,130 $168,694 $183,965 $188,683 $199,097 $217,149 $225,416 $224,585
41.0% 40.1% 38.7% 37.4% 36.8% 36.1% 35.3% 36.2% 35.3% 35.0%
$50,258 $54,923 $59,428 $62,839 $70,339 $73,291 $77,028 $86,154 $94,133 $102,645
$60,626 $60,422 $61583 $63092 $67 999 $68114 $70 281 $78 608 $79571 $78 604
Total
*Estimated:
Table IV. Current dollar business receipts per sole owner, per partnership, per partner, and per dental corporation, selected years 1980-1987 ~5~9 based on Business receipts, Internal Revenue Service Year 1980 1982 1984 1986 1987
I
Sole owner
Per partnership
$85,768 $96,693 $100,796 $114,623 $120,830
$211,844 $244,312 $228,321 $242,098 NA
I
Per partner
Corporations
$87,657 $99,244 $91,874 $98,443 NA
$241,042 $287,469* $313,031" $332,609* NA
*Fiscal year.
However, in 1987 and 1988 (based on business receipt data), practitioner constant dollar net income increased dramatically (Table II). INCOME BASED ON NATIONAL EXPENDITURE REPORTS National health expenditure data are reported annually by the Health Care Financing Administration. These data provide an overall picture of total expenditures for all forms of dental services, including funds spent in both the private and public sectors. Once again, using the total number of professionally active dentists, current and constant dollar net incomes were determined using ADA reports for the percent net income to gross ratios. Based on national dental expenditure data, throughout the 1980s, there were continuing increases in current dollar net income. However, in terms of constant dollar net income, between 1980 and 1983, there were minimal changes in practitioner net income. Since 1983, there have been marked in-
creases in constant dollar net income. For example, between 1986 and 1989, although there was a 3% increase in the number of professionally active dentists, based on national expenditure data, there was a 12% increase in constant dollar practitioner net income (Table III). INCOME BASED ON INCOME TAX RETURNS Business receipts It require~ minimal imagination to raise some questions regarding the accuracy of business receipt information made available to the Internal Revenue Service (IRS) on annual income tax returns. Therefore, in developing practitioner income on the basis of income tax data, the assumption was made that the annual IRS income tax reports included an "error" factor that remained constant during the past decade. During the 1980s, sole owner and corporation dental practices reported a current and constant dollar increase in business receipts on their tax returns. Partnership
Volume99 Number4
Special article 379
Table V. Constant dollar business receipts per sole owner, per partnership, per partner, and per dental
corporation, selected years 1980-19878. ~5-~9based on Business receipts, Internal Revenue Service
Year 1980 1982 1984 1986 1987
I
Sole owner
I
Per partnership
$103,459 $100,200 $106,637 $104,623 $106,364
$255,54 ! $253,173 $219,750 $211,768 NA
I
Per partner
Corporations
$105,738 $102,843 $88,425 $89,820 NA
$290,762 $297,895 * $301,281" $303,475 * NA
*Fiscal year.
Table VI. Sole owner current and constant
Table VII. Mean percent of time per week spent
dollar net income--Based on Internal Revenue Service business receipts data, selected years 1980_1987 s.tT.19
by solo dental practitioners by categories of services, 1981 and 19872,
Year
Current dollar
1980 1982 1984 1986 1987
$34,307 $37,420 $37,092 $40,461 $43,740
I
Constant dollar $41,383 $38,777 $39,242 $36.932 $38,503
practices and individual partners reported irregular increases in current dollar business receipts and a continuing decrease in constant dollar business receipts (Tables IV and V). Net income
Based on IRS business receipt information and ADA percent net to gross ratios, sole owners did report a continuing increase in current dollar net income between 1980 and 1987, reaching $43,740 in 1987. (The ADA reported net income of $67,320 for solo practitioners in 1987. 3) Comparable constant dollar net income for sole owners (based on IRS) was irregularly lower (Table VI). IN SUMMARY
Thus despite (l) a continuing increase in the number of practitioners and (2) an ongoing decline in the ratio of net income to gross receipt, and based on (1) practitioner reports, (2) a variety of federal agency reports on business receipts, and (3) national dental expenditure reports, dental practitioner current and constant dollar net incomes during the second half of the 1980s increased--except for some variations in constant dollar income (based on IRS business receipt reports) during some years.
Service Diagnostic Endodontics General service Operative Oral and maxillofacial surgery
l
1981
I
1987
9.6% 6.2% 3.4% 38.0% 6.5%
11.4% 8.0% 3.4% 30.7% 5.5%
Orthodontics
7.6%
9.4%
Periodontics Preventive Prosthodontics
5.0% 9.5% 14.4%
6.0% 11.9% 13.9%
POTENTIAL FOR ORTHODONTIC PRACTICE
The increase in practitioner income is a reflection of the increase in the use of dental services (both in terms of the percent of population with a dental visit in the previous year and the annual number of dental visits per person) by all age groups in the general population, by both men and women, by whites, blacks, and other minorities, and by residents of urban and rural areas of the country. 2° And most important, the increase in the use of services is associated with a changing emphasis in the types of services provided by dental practitioners. For example, as part of long-term changing trends, 2~ during the 1980s, (1) the time spent on diagnostic, endodontic, and preventive services increased, (2) the time spent on operative and denture services decreased, and (3) the time spent on orthodontic services increased (Table VII). An increasing awareness of the need for and value of, dental services,23 an increase in the number of young parents whose own favorable experiences with dental services are associated with high-speed dentistry, and other major technical and material advances and increasing third-party coverage all augur favorably for the future of dental practice. In particular, the future is
380
Am. J. Orthod. Dentofac. Orthop. April 1991
Waldman
m o s t f a v o r a b l e for t h o s e g e n e r a l a n d s p e c i a l t y p r a c t i c e s that o f f e r t h e p a t i e n t the o p p o r t u n i t y f o r p r e v e n t i v e a n d esthetic care--even orthodontic services.
REFERENCES 1. Waldman HB. A critique on orthodontic practice studies: some thoughts on the reports of orthodontist income. AM J ORT~ZOD DENTOFACORTHOP 1986;90:164-7. 2. Waldman HB. So, how much do orthodontists earn? AM J ORT/tOD DENTOFACORIHOP 1990;98:358-63. 3. Survey of dental practice (1968, 1975, 1982,1984, 1985, 1987, 1988, 1989). Chicago: American Dental Association. 4. Wright JW, The American almanac of jobs and salaries. New York: Avon Publishers, 1984:783. 5. US Department of Commerce, Bureau of the Census. Current business reports (1984). Service annual survey (1989). Publication no. BS-84-01, BS-88-01. Washington, DC: Government Printing Office, Aug 1985, Sep 1989. 6. Distribution of dentists in the United States by region and state (1982, 19~7). Chicago: American Dental Association. 7. Distribution of dentists in the United States by state, region, district, and county (1979). Chicago: American Dental Association. 8. Data tables. Social Security Bulletin. 1989;52(5):72. 9. AADS Manpower Committee. Manpower project. Report no. 2. Washington, DC: American Association of Dental Schools, Jan 1989. 10. Lazenby H, Levit KR, Waldo DR, et al. National health expenditures (1985). Health Care Financing Administration. Publication no, 03232. Washington, DC: Government Printing Office, Sep 1986. II. US Department of Health and Human Services. HHS News, Nov 1988. 12. Francis S. US Department of Commerce (Jan 1989). In: Medical care benefits, Feb 1989;6:1. 13. Gibson RM, Levit KR, Lazenby H, Waldo DR. National health expenditures, (1983). Health Care Finance Rev 1984;6(winter) :1-29.
14. Levit KR, Lazenby H, Waldo DR, DavidoffLM. National health expenditures (1984). Health Care Finance Rev 1985;7(faU): 1-35. 15. US Department of the Treasury, Internat Revenue Service. Corporation income tax returns (1981). Statistics of income. Publication no. 16. Washington, DC: Government Printing Office, 1984. 16. US Department of the Treasury, Internal Revenue Service. Source book (1983). Statistics of income (1985). Corporation income tax returns. Publication no. 1053. Washington, DC: Government Printing Office, 1986, 1988. 17. US Department of the Treasury, Internal Revenue Service. Statistics of income source book, sole proprietorship returns (19571884). Publication no. 1323. Washington, DC: Government Printing Office, 1986. 18. US Department of the Treasury, Internal Revenue Service. Statistics of income source book, partnership returns (1957-1983). Publication no. 1289. Washington, DC: Government Printing Office, 1985. 19. Statistics of income. SOl Bulletin 6;8:9, Summer 1986, 1988, 1989. 20. US Department of Health and tiuman Services, Public Health Service, Centers for Disease Control. Use of dental services and dental health: United States (1986). Data from the National health interview survey, series 10, no. 165. Publication no (PHS)881593. Washington, DC: Government Printing Office, 1988. 21. Recent trends in dental procedures rendered. Dent Pract Outlook 1989;2:I. 22. Bureau of Economic and Behavio/'al Research (1982, 1988). Survey of dental practice. Chicago: American Dental Association, 1982, 1989. 23. Waldman HB. More children are using dental services in the second half of the 1980s. J Dent Child 1988;55:216-9. Reprint requests to:
Dr. H. Barry Waldman School of Dental Medicine Health Sciences Center State University of New York at Stony Brook Stony Brook, NY 11794-8715
We may not know what orthodontists earn, but overall the income of dentists is up H. Barry Waldman, BA, DDS, MPH, PhD* Stony Brook, N.Y. The improving economics of dental practice is demonstrated with a variety of practitioner and federal agency sources. The potential for favorable orthodontic dental practice is considered. (AMJ ORTHOO DENTOFAC ORTHOP 1991 ;99:376-80.)
~¢ ¥¥e'~X[ still can't be certain about the income of orthodontists." That was the conclusion of two earlier reviews of available data by this author. 1"2The difficulty in developing reliable information evolved primarily about the limited number of responses to professional and proprietary surveys by members of the various specialties. The reports in the American Dental Association's (ADA's) Survey of Dental Practice have been forced to present data in a composite "specialist category." In particular, income studies conducted by the Journal of Clinic Orthodontics and Dental Economics have been compromised by extreme limitations in their rates of response (approximately 12% and 2%, respectively2). Nevertheless, monitoring the economic health of any of the health professions is essential if they are to continue to assure current members of the financial viability of the field and to attract young applicants for the future. It would be redundant to review the lay press and professional publications during the early 1980s that sensationalized the supposed early demise of the dental profession and no doubt contributed to the marked downturn in the number of applicants to schools of dentistry. Although adequate data are not available to describe the developments in the income of orthodontists during the 1980s, a large body of data from a variety of sources is available to emphasize the improving economic environment for the overall practice ofdentistry. The following presentation will review these data in an effort to (1) reassure both current and potential members of the profession that the profession is far from moribund and (2) consider the potential for orthodontic practice.
*Professor and Chairman, Department of Dental Health, School of Dental Medicine, State University of New York at Stony Brook. 8/1/19352
376
OVERALL PRACTITIONER INCOME: REPORTS BY DENTISTS
During the past 40 years, independent practitioner* current dollar median net income has continued to increase. Because of method changes by the ADA during the 1960s and 1970s, extreme care must be used when evaluating the income data for the period. With this precaution in mind, as compared to income data during this earlier period, there are indications that in the early 1980s, reported practitioner constant dollar income (i.e., removing the effects of inflation) did decrease. However, by the mid-1980s, constant dollar median net income once again increased and was one third higher than constant dollar income figures for 1960 (Table I). But how reliable are the income reports by intlividual practitioners? It is not unlikely that income survey results of lawyers, physicians, and dentists gathered for examination by the Internal Revenue Service will differ appreciably from those compiled for peer perusal. It is a well-known phenomenon, frequently encountered at organizational meetings, that the professional ego is polished by inflating fee and income figures. I Nevertheless, a series of reports from federal agencies does confirm the reported improving income of dentists during the second half of the 1980s (including to some extent reports by the Internal Revenue Service). INCOME BASED ON BUSINESS RECEIPT REPORTS
Total national business receipt data for the offices of dentists (not including nonemployer office receipts) are available on an annual basis from the U.S. Department of Commerce. ~ During the 1980s, total business receipts for dental practices (with employees) in*An independent practitioner is an owner (sole proprietor, partner, or shareholder in an incorporated practice) or partial owner of a private practice)
Volume 99 Number 4
S p e c i a l article
377
Table I, Current and constant dollar median net income for independent dentists, selected years 1948-19883.4--Based on practitioner income: Reports by dentists
Year
Current dollar
Consumer price index (1982-1984 = 100)
Constant dollar
1948 1960 1967" 1974' 1981"* 1983 1986 1987 1988
$5,888 $14,300 $21,455 $30,000 $50,000 $60,000 $70,000 $72,000 $75,000
21.7 29.6 33.9 50.8 90.9 99.6 109.6 113.6 118.3
$27,134 $48,310 $63,289 $59,055 $55,006 $60,240 $63,868 $63,380 $63,398
Norz: 1967 through 1988 current ~ollar data are from ADA sources. *Because of changes in methods by the ADA, comparisonswith these data should be used with caution? **Period of last economic recession.
Table II. Number of professionally active dentists, current and constant dollar business receipts per active dentist, and current and constant dollar net profit, 1980-1988s9--Based on business receipts, Department of Commerce
Year
1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988
Number of professionally active dentists
Total business receipts (mglions)
Current dollar business receipts per dentist
Consumer price index (1982-1984 = 100)
Constant dollar business receipts per dentist
Percent net blcome ofgross income**
Current dollar net income
Constant dollar net income
$40,241 $47,237 $48,977 $49,967 $52,205 $54,595 $55,741 $61,511 $64,453
$48 542 $51 ~66 $50 754 $50 168 $50 244 $50 738 $50 858 $54 146 $54 483
42.0 124 952*** 125 630 126 308 126 985*** 129151 131317 133 382 135 549 137 M7*** 138,749
$12 639 $14 879 $16 071 $17 255 $18 629 $20 187 $21420 $23418 $25 334
$100,604 $117,799 $126,558 $133,603 $141,862 $151,233 $157,907 $169,920 $182,588
82.9 90.9 96.5 99.6 103.9 107.6 109.6 113.6 I18.3
$121,356 $129,592 $131,148 $134,139 $136,533 $140,551 $144,075 $149,577 $154,343
41.0%* 40.1% 38.7%* 37.4% 36.8%* 36.1% 35.3% 36.2% 35.3%
No'rE: Total business receipts do not include nonemployerreceipts. Therefore the use of the total number of professionallyactive dentists in a particular year will result in an understatementof the business receipts per dental practice. *Estimate based on A D A reports. **Based on ADA solo practitionerreports. ***Number of dentists as reported by ADA. Numbers for all other years between 1979 and 1987 were prorated. The number of dentists for 1988 (and beyond) were projected by the AmericanAssociationof Dental Schools Manpower Committee)
creased from $12.6 to $25.3 billion. Despite the increases in the numbers of professionally active dentists (from 125,000 in 1979 to more than 138,000 in 1988), constant dollar business receipts per dentist increased by 27% between 1980 and 1988. However, during this same period, the ratio of net income to gross income decreased (from approximately 41% to 35%). Dental practitioners were expending a greater percent of their
business receipts on overhead costs to maintain their practice activities. Thus, although current dollar net income continued to increase annually (based on business receipt reports), constant dollar net income stagnated through the early and middle years of the 1980s. In actuality, constant dollar net income decreased during the period of the national recession during the first years of the decade.
378
Waldman
Am. J. Orthod. Dentofac. Orthop.
April 1991
Table III. Number of professionally active dentists, national dental expenditures, current and constant dollar expenditures per active dentist, and net profit, 1980-19896"4--Based on national expenditures, Health Care Financing Administration national dental expenditures (billions)
Current dollar expenditures per dent~t
Constant dollar expenditures per dentist
Percent net income of gross income
Cttrrent dollar net
Constant dollar net
Year
Number of professionally active dentists (millions)
income
income
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989"
125,630 126 308 126 985 129 151 131 317 133 482 135649 137 817 138 749 139 801
$15.4 $17.3 $19.5 $21.7 $25.1 $27.1 $29.6 $32.8 $37.0 $41.0
$122,582 $136,967 $153,561 $168,020 $191,140 $203,023 $218,210 $237,996 $266,668 $293,274
$147,867 $150,678 $159,130 $168,694 $183,965 $188,683 $199,097 $217,149 $225,416 $224,585
41.0% 40.1% 38.7% 37.4% 36.8% 36.1% 35.3% 36.2% 35.3% 35.0%
$50,258 $54,923 $59,428 $62,839 $70,339 $73,291 $77,028 $86,154 $94,133 $102,645
$60,626 $60,422 $61583 $63092 $67 999 $68114 $70 281 $78 608 $79571 $78 604
Total
*Estimated:
Table IV. Current dollar business receipts per sole owner, per partnership, per partner, and per dental corporation, selected years 1980-1987 ~5~9 based on Business receipts, Internal Revenue Service Year 1980 1982 1984 1986 1987
I
Sole owner
Per partnership
$85,768 $96,693 $100,796 $114,623 $120,830
$211,844 $244,312 $228,321 $242,098 NA
I
Per partner
Corporations
$87,657 $99,244 $91,874 $98,443 NA
$241,042 $287,469* $313,031" $332,609* NA
*Fiscal year.
However, in 1987 and 1988 (based on business receipt data), practitioner constant dollar net income increased dramatically (Table II). INCOME BASED ON NATIONAL EXPENDITURE REPORTS National health expenditure data are reported annually by the Health Care Financing Administration. These data provide an overall picture of total expenditures for all forms of dental services, including funds spent in both the private and public sectors. Once again, using the total number of professionally active dentists, current and constant dollar net incomes were determined using ADA reports for the percent net income to gross ratios. Based on national dental expenditure data, throughout the 1980s, there were continuing increases in current dollar net income. However, in terms of constant dollar net income, between 1980 and 1983, there were minimal changes in practitioner net income. Since 1983, there have been marked in-
creases in constant dollar net income. For example, between 1986 and 1989, although there was a 3% increase in the number of professionally active dentists, based on national expenditure data, there was a 12% increase in constant dollar practitioner net income (Table III). INCOME BASED ON INCOME TAX RETURNS Business receipts It require~ minimal imagination to raise some questions regarding the accuracy of business receipt information made available to the Internal Revenue Service (IRS) on annual income tax returns. Therefore, in developing practitioner income on the basis of income tax data, the assumption was made that the annual IRS income tax reports included an "error" factor that remained constant during the past decade. During the 1980s, sole owner and corporation dental practices reported a current and constant dollar increase in business receipts on their tax returns. Partnership
Volume99 Number4
Special article 379
Table V. Constant dollar business receipts per sole owner, per partnership, per partner, and per dental
corporation, selected years 1980-19878. ~5-~9based on Business receipts, Internal Revenue Service
Year 1980 1982 1984 1986 1987
I
Sole owner
I
Per partnership
$103,459 $100,200 $106,637 $104,623 $106,364
$255,54 ! $253,173 $219,750 $211,768 NA
I
Per partner
Corporations
$105,738 $102,843 $88,425 $89,820 NA
$290,762 $297,895 * $301,281" $303,475 * NA
*Fiscal year.
Table VI. Sole owner current and constant
Table VII. Mean percent of time per week spent
dollar net income--Based on Internal Revenue Service business receipts data, selected years 1980_1987 s.tT.19
by solo dental practitioners by categories of services, 1981 and 19872,
Year
Current dollar
1980 1982 1984 1986 1987
$34,307 $37,420 $37,092 $40,461 $43,740
I
Constant dollar $41,383 $38,777 $39,242 $36.932 $38,503
practices and individual partners reported irregular increases in current dollar business receipts and a continuing decrease in constant dollar business receipts (Tables IV and V). Net income
Based on IRS business receipt information and ADA percent net to gross ratios, sole owners did report a continuing increase in current dollar net income between 1980 and 1987, reaching $43,740 in 1987. (The ADA reported net income of $67,320 for solo practitioners in 1987. 3) Comparable constant dollar net income for sole owners (based on IRS) was irregularly lower (Table VI). IN SUMMARY
Thus despite (l) a continuing increase in the number of practitioners and (2) an ongoing decline in the ratio of net income to gross receipt, and based on (1) practitioner reports, (2) a variety of federal agency reports on business receipts, and (3) national dental expenditure reports, dental practitioner current and constant dollar net incomes during the second half of the 1980s increased--except for some variations in constant dollar income (based on IRS business receipt reports) during some years.
Service Diagnostic Endodontics General service Operative Oral and maxillofacial surgery
l
1981
I
1987
9.6% 6.2% 3.4% 38.0% 6.5%
11.4% 8.0% 3.4% 30.7% 5.5%
Orthodontics
7.6%
9.4%
Periodontics Preventive Prosthodontics
5.0% 9.5% 14.4%
6.0% 11.9% 13.9%
POTENTIAL FOR ORTHODONTIC PRACTICE
The increase in practitioner income is a reflection of the increase in the use of dental services (both in terms of the percent of population with a dental visit in the previous year and the annual number of dental visits per person) by all age groups in the general population, by both men and women, by whites, blacks, and other minorities, and by residents of urban and rural areas of the country. 2° And most important, the increase in the use of services is associated with a changing emphasis in the types of services provided by dental practitioners. For example, as part of long-term changing trends, 2~ during the 1980s, (1) the time spent on diagnostic, endodontic, and preventive services increased, (2) the time spent on operative and denture services decreased, and (3) the time spent on orthodontic services increased (Table VII). An increasing awareness of the need for and value of, dental services,23 an increase in the number of young parents whose own favorable experiences with dental services are associated with high-speed dentistry, and other major technical and material advances and increasing third-party coverage all augur favorably for the future of dental practice. In particular, the future is
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m o s t f a v o r a b l e for t h o s e g e n e r a l a n d s p e c i a l t y p r a c t i c e s that o f f e r t h e p a t i e n t the o p p o r t u n i t y f o r p r e v e n t i v e a n d esthetic care--even orthodontic services.
REFERENCES 1. Waldman HB. A critique on orthodontic practice studies: some thoughts on the reports of orthodontist income. AM J ORT~ZOD DENTOFACORTHOP 1986;90:164-7. 2. Waldman HB. So, how much do orthodontists earn? AM J ORT/tOD DENTOFACORIHOP 1990;98:358-63. 3. Survey of dental practice (1968, 1975, 1982,1984, 1985, 1987, 1988, 1989). Chicago: American Dental Association. 4. Wright JW, The American almanac of jobs and salaries. New York: Avon Publishers, 1984:783. 5. US Department of Commerce, Bureau of the Census. Current business reports (1984). Service annual survey (1989). Publication no. BS-84-01, BS-88-01. Washington, DC: Government Printing Office, Aug 1985, Sep 1989. 6. Distribution of dentists in the United States by region and state (1982, 19~7). Chicago: American Dental Association. 7. Distribution of dentists in the United States by state, region, district, and county (1979). Chicago: American Dental Association. 8. Data tables. Social Security Bulletin. 1989;52(5):72. 9. AADS Manpower Committee. Manpower project. Report no. 2. Washington, DC: American Association of Dental Schools, Jan 1989. 10. Lazenby H, Levit KR, Waldo DR, et al. National health expenditures (1985). Health Care Financing Administration. Publication no, 03232. Washington, DC: Government Printing Office, Sep 1986. II. US Department of Health and Human Services. HHS News, Nov 1988. 12. Francis S. US Department of Commerce (Jan 1989). In: Medical care benefits, Feb 1989;6:1. 13. Gibson RM, Levit KR, Lazenby H, Waldo DR. National health expenditures, (1983). Health Care Finance Rev 1984;6(winter) :1-29.
14. Levit KR, Lazenby H, Waldo DR, DavidoffLM. National health expenditures (1984). Health Care Finance Rev 1985;7(faU): 1-35. 15. US Department of the Treasury, Internat Revenue Service. Corporation income tax returns (1981). Statistics of income. Publication no. 16. Washington, DC: Government Printing Office, 1984. 16. US Department of the Treasury, Internal Revenue Service. Source book (1983). Statistics of income (1985). Corporation income tax returns. Publication no. 1053. Washington, DC: Government Printing Office, 1986, 1988. 17. US Department of the Treasury, Internal Revenue Service. Statistics of income source book, sole proprietorship returns (19571884). Publication no. 1323. Washington, DC: Government Printing Office, 1986. 18. US Department of the Treasury, Internal Revenue Service. Statistics of income source book, partnership returns (1957-1983). Publication no. 1289. Washington, DC: Government Printing Office, 1985. 19. Statistics of income. SOl Bulletin 6;8:9, Summer 1986, 1988, 1989. 20. US Department of Health and tiuman Services, Public Health Service, Centers for Disease Control. Use of dental services and dental health: United States (1986). Data from the National health interview survey, series 10, no. 165. Publication no (PHS)881593. Washington, DC: Government Printing Office, 1988. 21. Recent trends in dental procedures rendered. Dent Pract Outlook 1989;2:I. 22. Bureau of Economic and Behavio/'al Research (1982, 1988). Survey of dental practice. Chicago: American Dental Association, 1982, 1989. 23. Waldman HB. More children are using dental services in the second half of the 1980s. J Dent Child 1988;55:216-9. Reprint requests to:
Dr. H. Barry Waldman School of Dental Medicine Health Sciences Center State University of New York at Stony Brook Stony Brook, NY 11794-8715