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Research & Commentary: Dental Service Organizations Help Patients and Dentists

April 24, 2017

In this Research & Commentary, Matthew Glans examines dental service organizations and how they can improve the cost and availability of dental services.

The dental industry has taken dramatic steps toward improving its services using information technology. A new model available to dentists are dental service organizations (DSOs). DSOs are companies dental providers can choose to contract with to provide critical business management and support services, including non-clinical operations.

First launched in the late 1990s, DSOs help dental practices deal with the complexities of administration, accounting, and insurance, which can be especially daunting when dealing with state Medicaid programs. DSOs allow dentists to focus on patient care by taking the burden of office management off their shoulders. DSOs also allow dentists to expand and streamline their services, by providing their patients with new technologies, such as radiography, in-office CAD/CAM, intraoral cameras, implants, online record keeping, and scheduling. DSOs often provide training assistance for skills dentists do not traditionally have, such as business management and marketing.

In a 2012 paper by Laffer Associates, economist Arthur Laffer examined the effect of DSOs on the quality and cost of dental care. The study found DSOs allowed dentists in Texas to provide care at a lower cost, which was especially helpful for lower-income patients. “In turn, that lower operating cost has enabled DSOs to service Medicaid patients at a profit, something many traditional dental practices are unwilling or unable to do,” wrote Laffer.

Laffer points to the success of Kool Smiles, a major dental provider for pediatric Medicaid patients, as an example of what can be achieved thanks to DSOs. Operating in 15 states and the District of Columbia, Kool Smiles has used a DSO model to provide care to thousands of low-income patients while also saving taxpayer dollars.

In a study examining Medicaid dental utilization trends and expenditures in seven states –  conducted by Dobson, DaVanzo, & Associates – Kool Smiles patients had an overall average monthly Medicaid expenditure that was 33 percent lower than non-Kool Smiles patients. This trend was consistent across all states and years the study examined. The study also estimated if all Medicaid dental providers in these seven states were to adopt the Kool Smiles’ model, the total savings to state Medicaid programs would be more than $550 million annually.  

Unfortunately, DSOs have faced stiff opposition from dental lobby groups, which have sought to outlaw DSOs. Wayne Winegarden and Donna Arduin of the Pacific Research Institute argue new laws limiting DSOs hurt low-income families the most. Lower-income families, Winegarden and Arduin say, have seen the availability of dental services dramatically improve with DSOs.

“The DSO structure exemplifies the benefits that can be created when the policy environment welcomes private sector solutions to pressing societal problems,” wrote Winegarden and Arduin. “Actions that punish DSOs as an industry, such as frivolous lawsuits or legislation that unduly restricts DSOs, will reduce overall economic welfare.”

Elena Rios, president and CEO of the National Hispanic Medical Association, argues DSOs already help many low-income people, pointing to a Pew Research Center study that found DSOs cover at least 30 percent of Medicaid beneficiaries in Texas. Rios argues the DSO structure has provided those who would otherwise not have received dental care with affordable oral health care options.

Rios argues lawmakers should reconsider adding laws that block or restrict DSOs.

“As policymakers examine opportunities which may affect patient access to medical and oral health treatment options, including increasing reimbursement rates for Medicaid providers and implementing policies and regulations specifically impacting the DSO model, they should consider the significant challenges facing providers who utilize this system and work to expand, rather than inhibit, patient access for low-income and minority Americans,” wrote Rios.

DSOs have proven to be an effective tool for streamlining dental practices, bringing down costs, and leaving more time for dentists to provide care. State legislators should avoid implementing new laws that hinder DSOs – a successful model for maintaining an affordable and efficient dental practice.

The following documents examine dental service organizations in greater detail.
 

Dental Service Organizations: A Comparative Review
https://www.heartland.org/publications-resources/publications/dental-service-organizations-a-comparative-review?source=policybot
In this document by Laffer Associates, Arthur Laffer analyzed data for all Texas Medicaid dental patients in fiscal year 2011 and found dental service organizations “are providing dental care to some of the poorest, most underserved segments of our society. DSOs are not only providing much needed care, but they are providing that care expeditiously and relatively inexpensively when compared to non-DSO affiliated dentists.”

Overregulation Threatens Market-Driven Solutions in Dentistry
https://www.heartland.org/publications-resources/publications/overregulation-threatens-market-driven-solutions-in-dentistry-1
This document by Mia Heck of the American Legislative Exchange Council looks at the current state of the dental care market and what states can do to help create a more open and free market for dental care. “In dentistry, the balance between managing the cost of care while improving quality has led to the development of a cost-saving business model reliant on services provided by Dental Support Organizations (DSOs).”

The Benefits Created by Dental Service Organizations
https://www.heartland.org/publications-resources/publications/the-benefits-created-by-dental-service-organizations
This analysis by the Pacific Research Institute examines dental service organizations, finding they create a “win-win solution for consumers and taxpayers by providing important, efficient and effective health services to people who have historically lacked access to care, ultimately at a lower cost to the taxpayer.”

Dental Service Organizations: A Private-Sector Solution to a Public Health Problem
https://www.heartland.org/news-opinion/news/dental-service-organizations-a-private-sector-solution-to-a-public-health-problem?source=policybot
In this Health Care News article, Wayne Winegarden, a senior fellow with the Pacific Research Institute, examines the growing problem of dental care access and how dental service organizations can help improve access to dental care. “The benefits created by DSOs are no small feat. And these benefits are created without any new government fiats or regulations. Instead, DSOs exemplify the right way to reform healthcare—through private sector innovations that create greater efficiencies, lower costs, and better service,” wrote Winegarden.

An Examination of Minority Populations and the Dental Service Organization Model in the United States
https://www.heartland.org/publications-resources/publications/an-examination-of-minority-populations-and-the-dental-service-organization-model-in-the-united-states
This paper by Elena Rios, President and CEO of the National Hispanic Medical Association, examines the current state of health care for minorities and the important relationship between Medicaid, minority communities, and the dental service organization (DSO) model. Rios’ study helps readers better understand how lawmakers can empower providers seeking to expand coverage to low-income populations.

Medicaid Dental Programs in Seven States Could Save $550 Million Annually or Provide Care for 1.9 Million More Children Through Adoption of Kool Smiles Practice Model
https://www.heartland.org/publications-resources/publications/comparison-of-kool-smiles-utilization-and-medicaid-expenditures-across-states-using-government-provided-data
This multi-state, multi-year analysis from Dobson, DaVanzo, & Associates uses publicly available Medicaid data to examine how Kool Smiles, a company utilizing DSO, performed. The study found providers performed fewer dental services at a lower cost than other Medicaid providers in their geographic areas. “The study findings support existing literature indicating that the dental service organization (DSO) model is a cost-effective means of increasing access to dental care among pediatric Medicaid patient populations,” wrote the study’s authors.

Dental Care Health Professional Shortage Areas (HPSAs)
http://kff.org/other/state-indicator/dental-care-health-professional-shortage-areas-hpsas/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D  
The Kaiser Family Foundation analyzes the dental care health professional shortage areas in each state in order to show which states have the largest discrepancies in dental-care access.

Older Americans Need Better Access to Dental Care
http://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2016/07/older-americans-need-better-access-to-dental-care   
Almost 40 percent of seniors did not visit a dentist in 2014. As the number of older Americans increases in the coming decades, the demand for care for this age group will intensify. In this fact sheet, Pew Charitable Trusts examines the health risks seniors currently face, from poor access to mental health services to dental-care barriers. “The use of dental services declines as people age due to a variety of factors. Perhaps the single greatest barrier is the inability to afford care. Seniors with dental insurance are 2.5 times more likely than those without coverage to visit a dentist, and about half of seniors lacked insurance in 2015.”

Healthcare Openness and Access Project: Mapping the Frontier for the Next Generation of American Health Care
https://www.heartland.org/publications-resources/publications/healthcare-openness-and-access-project-mapping-the-frontier-for-the-next-generation-of-american-health-care
The Healthcare Openness and Access Project (HOAP) is a collection of state-by-state comparative data on the flexibility and discretion US patients and providers have in managing health care. HOAP combines these data to produce 38 indicators of openness and accessibility. The project provides state-by-state rankings over a number of variables, including occupational licensing.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database. 

If you have any questions about this issue or The Heartland Institute’s website, contact John Nothdurft, The Heartland Institute’s government relations director, at john@heartland.org or 312/377-4000.

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Author
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance. In 2012, Glans was named senior policy analyst.
mglans@heartland.org @HeartlandGR