Who Profits from Dental Non-Profits? Not you!
If you didn’t know the level of contempt that the dental insurance companies have for dentists, look no further than the actions and comments of Washington Dental Service and their CEO, James Dwyer.
Dwyer, in an interview with King5 TV station in Washington State this month, casually suggested that dentists “could start working five days a week” to make up for the 15% across-the-the board fee reimbursement cut WDS instituted in 2011. Easy for him to say, as he makes $1.2 million a year. He subsequently apologized, (which of course means nothing), saying also that his words were taken out of context. So the TV station ran more of the video, where Dwyer says this not once but twice and also says, quite smugly, that dentists only work three and a half days a week. “They certainly don’t work four days a week,” he adds, dripping with contempt. I think this man believes that in saying this he will garner public support, that people don’t like dentists, and think that dentists make too much money already, and now he’s letting people know that they have short work weeks. Excellent strategy, from an adversary.
And that’s my point. They are not in the dentists’ corner. Washington Dental Services, part of Delta Dental, operates as a non-profit organization. Of course, they are a non-profit in name only, and for one reason: to avoid paying taxes. WDS had a net income of $13.7 million in 2010, and paid no taxes on that. On top of that, their executive compensation that year was $5.8 million (including Mr. Dwyer’s $1.2 million.) Remarkably, the executive compensation of WDS has increased an average of 45% over the past five years, right through the recession. How many dental practices grew 50% in the past five years? Only a few? Well, maybe they should work harder. How many of your patients experienced that kind of salary growth? Maybe they should work harder too.
Why did they, and by “they” I mean Delta Dental, do an across-the-board cut? They said to stay competitive. Really? They have 90% of the dentists in the market already. They said they need to be able to lower their premiums to employers. Why exactly should premiums go down? Has the price of anything in dentistry gone down? I missed that. Dwyer’s advice was “work harder”. Work harder for less money is what he meant. Making lots of money is for people like him, not for dentists.
Here’s the other reason why I think Delta did it. They wanted to see how the dentists and the societies would react, so that they could do it in other states. To make more profit for their non-profit, and give bigger executive pay increases. I mean, what better way to fulfill their stated mission, which is to promote oral health?
Yes, Mr. Dwyer actually stated, with no sense of irony, that the mission of WDS was to promote oral health. How exactly are they doing that? The statement is ludicrous. Their clear purpose is to make money, crush the competition, pay no taxes, and pay themselves incredibly well. You can’t do that and promote dental health, because that would result in more claims. Which would hurt their profit. I mean, their non-profit.
As I said, they are your adversaries. Seldom are they so open about it, but Mr. Dwyer’s contempt is symbolic of an industry that is at crossed purposes to the health of Americans. 40 years ago in this country it was basically considered immoral and unethical to make a profit providing health insurance. Now the opposite is true. Now the job is not to provide coverage and promote health, it is to be competitive, limit care, and pay extremely high salaries so you can attract better executives. Recently, Blue Cross/Blue Shield of Massachusetts gave an $11 million severance package when they fired their CEO. That would turn most businesses into a de facto non-profit, but BC/BS absorbed it nicely. Because they don’t pay taxes. It was chump change.
So what do I think the dental society should have done? I think they should have recommended that their entire constituency drop WDS the next day–the old-fashioned American response to robber barons. They didn’t do that, of course. They sent a letter out recommending that dentists find cheaper dental suppliers. (Huh? How’s that going to offset 15% less in fees?) And when an individual dentist did drop WDS, the company sent a letter out to all the dentist’s patients, giving them a list of dentists who accepted their plan, and suggesting that their dentist simply wanted to make more money.
And there is that ridiculous statement: “They certainly don’t work four days a week.” Really? I personally know about 1,000 dentists, and virtually all of them work at least 4 days a week doing dentistry, and another day or more doing the business side of their practice or getting CE. But Dwyer knows that. He’s not an idiot. But he also knows how easy it is to turn public opinion against doctors and their incomes, which was exactly his intention. So that WDS could maintain their fee cut, lower premiums and everyone still gets a raise next year. Contemptible? Reprehensible? To be sure. Does Dwyer care? Not a bit.
So what is a dentist to do? In the end, this is big business against the small businessperson. So you work smarter, learn more procedures and techniques, and realize that some things are in your control, and some aren’t, and all your energy needs to go to those things that you can control, you can have an effect on. And you’ll still have a great business. And still change people’s lives for the better every day. The best revenge I think is doing good, and doing well. I’d rather be you than Jim Dwyer any day.
Posted on May 22, 2012, in dental insurance, Dental Marketing, Dentistry, Practice Management and tagged dental insurance, dental practice management, dentistry, health. Bookmark the permalink. 27 Comments.