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Executive pay soars as one of Washington state's largest non-profits makes cuts.
King 5 Investigative Report - May 10, 2012
Many dentists in Washington are still reeling from big cuts in payments to providers made last year by the state's largest dental insurer. To make up, dentists say they've had to increase the number of patients they see each day to make up for the losses.
"It's the patient that loses," said longtime north Seattle dentist Dr. Chris Pickel. "We basically have to see more patients. It's something we don't like to do. We want to spend time with people. We like to spend time educating them."
Last year, Washington Dental Service, part of the nationwide Delta Dental network, made across-the-board 15 percent cuts to the fees it pays to dentists for all procedures. WDS said the cuts allowed it to reduce the premiums it charges employers for dental insurance, a move that makes its service more competitive in the marketplace.
All Smiles for Top Executives
A KING 5 investigation shows that Washington Dental's top executives have been feeling no pain.
An examination of tax records shows that executive at WDS have enjoyed a 32 percent pay raise over the five-year period ending in 2010. Executive pay totaled $5.8 million in 2010.
The highest paid officer that year was WDS CEO James Dwyer, who earned $1.2 million.
"I'm happy with my compensation," Dwyer said in an interview with the KING 5 investigators. "There's no hubris in this. I am really very happy. I gave 10 percent of it back this year."
Washington Dental Service may sound like your typical corporation. But it's not. It's a non-profit organization that enjoys millions of dollars in tax breaks each year. IRS records show that WDS was exempted from paying taxes on $13.7 million in net income in 2010.
"If they spend so much money compensating executives and generating profit and returning less of that money to patient care then, obviously, we are very concerned about that," said Dr. Pickel.
CEO Dwyer emphasized that Washington Dental is not a charity; it's what the IRS calls a "social welfare" organization. Its mission is promoting oral health in Washington State.
"We fund our foundation to the tune of $5 million a year," said Dwyer.
WDS spent $5 million to help fund The Center for Pediatric Dentistry in Seattle. It's a ground-breaking clinic that targets the oral health of infants and children.
"These are initiatives that require a lot of money and we're quite proud that we don't have shareholders that we dividend the profits to," said Dwyer. "We put it into our tax exempt mission."
State Senator Cheryl Pflug (R-Maple Valley) applauds the big dollar commitment. Yet she said she still has concerns about non-profits like Washington Dental Service.
Pflug has been a vocal critic of health care organizations, primarily hospitals, that receive millions of dollars in tax breaks and pass the rewards onto executives instead of the community.
"I don't know a lot of people that got a 45 percent increase over the last 5 or 6 years. So that sounds suspicious," Pflug said of WDS executives' pay.
Dwyer said last year's cuts to providers followed a study that showed that WDS paid dentists among the highest fees in the nation, and that WDS needed to cut those rates to remain competitive.
Dentists may not appreciate Dwyer's million-dollar advice on how they can make up for the lost revenue – work harder.
"Number one: They could start working five days a week," said Dwyer.