In an editorial originally published in the July issue of the WSDA News, Dr. Todd Irwin asserts that addressing uncompetitive practices is key to dentistry’s future in Washington.
I met with some University of Washington School of Dentistry students at last month’s PNDC. While we were supposed to exchange ideas on how WSDA could help them through the challenging times at the dental school, I soon found myself delivering a “Danger, Will Robinson!” message. Each of them is investing up to $500,000 in themselves and expecting to receive a return on that investment when they enter the dental marketplace. But there are forces at work – and one very powerful force in particular – that has found a way to get at that investment.
That force, of course, is Delta Dental. It’s hard to believe from today’s vantage point, but there was a time when it felt like practicing dentists had a real partnership with Delta. We maintained a professional, arm’s-length relationship and worked together as “strategic partners” in promoting better oral health for all Washingtonians. We supported each other’s mutual success as a means of achieving that common goal.
This atmosphere of mutual support served Delta well. The company increased its market share significantly through the 1990s and 2000s. While I believe that Delta historically behaved in good faith, something changed significantly around 2007. Maybe Delta was feeling the same recessionary pressures we all were. Or maybe they just saw an opportunity.
Either way, recognizing their effective control of the market for dental benefits in Washington, they began making slow, systematic changes in benefits, governance and corporate structure. Looking back, it reminds me of the fable of the boiling frog, with the water temperature rising so gradually that the frog doesn’t realize it until it’s too late.
By 2011 Delta had the water at full boil. They reduced fee reimbursements 15 percent, and there was nothing any of us could do about it.
That’s when I decided to leave Delta. In one year I watched more than 1,000 patients leave my practice, and I had to lay off several employees despite knowing they had nowhere else to go. Delta contacted my patients, encouraging them to see another dentist to save money. They contacted employers to help redirect employees away from my practice. After a year I had to stop the bleeding.
In “The Godfather,” Michael Corleone famously describes his revenge plans as “not personal…it’s strictly business.” I believe that Delta operates like Corleone’s quote but most of us dentists cannot treat our patients and our practices like that. For many of us, it is very personal. We’ve worked incredibly hard to build relationships with our patients and employees. It hurts to watch it undermined by Delta.
As time passes, it still feels personal. More importantly, it just feels wrong.
Elsewhere, you can read about
WSDA’s request that the Attorney General investigate Delta’s monopsony power as the dominant buyer of dental services in Washington. Simply put, monopsony is the mirror image of monopoly, where instead of a dominant seller and many buyers you have a dominant buyer (Delta) and many sellers (dentists).
Monopsony is illegal if a dominant market position is maintained through predatory or anticompetitive behaviors.
If Delta is found guilty of engaging in uncompetitive behavior, it may be in violation of the same antitrust statutes that the company repeatedly cites as the reason why organized dentistry can’t be actively involved in working with them on various issues.
Why are dentists so vulnerable to monopsony? If you’re a carrot farmer facing a monopsonist, you have options. You can ship your product to another market or plant another crop. Dentistry is a very different animal. We’re “all in.” We invest hundreds of thousands of dollars on our education. Buildings and equipment can represent millions more. Our staff teams must be recruited and trained. We can’t ship dental services to another market.
Many dentists can’t continue to supply the same quality of dentistry they did before Delta’s changes to the fee structure. They can’t afford to invest in the latest technologies and continuing education to bring the latest innovations to their patients. When they leave the market or retire earlier than planned, the potential for inferior substitutes grows wider.
Today, most new dentists entering the market believe that owning their own practice is no longer attainable. This opens the door for exploitation of young people who may be carrying large student debt burdens and introduces more interference into the doctor patient relationship.
Economic theory holds that monopsony results in an inefficient market. Eventually an inferior product will enter the market as the supply of the original product dries up.
In dentistry, these inferior substitutes come in for the form of corporate dentistry and mid-level providers. Both are supported by Delta Dental and its captive Arcora Foundation.
What can we do about this? Most importantly, we can’t accept the status quo. Complacency is how we end up the frog in the pot.
Maybe new leadership at Delta will help us return to a more collaborative, “strategic partnership.” I sincerely hope so. But I don’t really expect Delta to relinquish their gains easily. So additional meetings will need to be held and additional legal battles like the one WSDA has just begun will need to be fought. So, stay informed. And stay involved to whatever level you can.
Returning to my conversation with the dental students, I recall one young man’s reaction to my cautionary tale. “You don’t have to convince us you have our best interests in mind,” he said. “We just need to know: What do you need from us?”
If we all have that attitude, we’ll be OK.
The views expressed in all WSDA publications are those of the individual authors and do not necessarily reflect the official positions or policies of the WSDA.