Rising Health Care Costs and Provider Level Predictions

Last year, the U.S. Health Resources and Services Administration (HRSA) made headlines with a report projecting that, by 2025, all states will experience a shortage in dentists.¹ The American Dental Association (ADA) disputes the finding, claiming that a population-to-provider ratio analysis may be too simplistic. In addition, its surveys signal excess capacity in the market, as the ADA notes as many as a third of dentists report they are not busy enough.² But could both groups be right?

A factor in the disconnect between HRSA’s findings and the ADA’s analysis could be cost of care. Utilization of dental services by adults has gone down as most of their health care dollars go toward medical services perceived as more necessary than dental care. Between 1990 and 2010, the U.S. population grew by 23.9%.^3,4 An increase in total health care costs should approximate this growth, but, in fact, health care costs rose by an even greater percentage. Although dental costs rose moderately compared to hospital care, physician and other professional services (Figure 1),⁵ government and private insurance payers have tried to slow the increases by putting pressure on all providers (including dentists) to do more for less. As a result, inflation-adjusted general dentist income has declined steadily over the past decade.⁶

Anecdotally, news reports suggest that patients with Medicaid plans are now struggling to find dentists who will treat them.⁷ Seems there could be a shortage of dentists, as the HRSA predicts, if everyone who needed dental services could access them.

Against this backdrop, it is illuminating to compare an ADA analysis of changes in private payer reimbursement rates by state.⁸ It found a correlation between the rate of dentists participating in PPOs (which seek to hold down costs) and the percentage change in rates. High PPO participation correlated with low rates and vice versa (Figure 2).

There is another interesting correlation with federal predictions for dentist shortages, however. The states that will experience the greatest shortage of dentists by 2025 — New York, California and Florida — are also first, 10th and 11th, respectively, on the list of states with the greatest negative change in private payer payment rates. Meanwhile, the only four states with a greater than 1% positive increase in payment rates are all Western states, where the shortage in dentists is predicted to be smaller.

Will a greater shortage of dentists in states where payment rates are declining most lead to more negotiating power for those dentists, and a reversal in the trend of decreasing payment rates? Time will tell.

REFERENCES

1. U.S. Department of Health and Human Services. National Center for Health Workforce Analysis. National and State-Level Projections of Dentists and Dental Hygienists in the U.S., 2012–2025. Available at: bhpr.hrsa.gov/healthworkforce/supplydemand/dentistry/nationalstatelevelprojectionsdentists.pdf. Accessed October 13, 2016.
2. Vujicic M. Interpreting HRSA’s Latest Dentist Workforce Projections. American Dental Association Health Policy Institute. Available at: ada.org/~/media/ADA/Science%20and%20Research/HPI/Files/HPI_HRSA_shortages_commentary.ashx. Accessed October 13, 2016.
3. U.S. Census Bureau. Population Distribution and Change: 2000 to 2010. 2010 Census Briefs. Available at: census.gov/prod/cen2010/briefs/c2010br-01.pdf. Accessed October 13, 2016.
4. U.S. Census Bureau. Population Distribution and Change: 1990 to 2000. Census 2000 Brief. Available at: census.gov/prod/2001pubs/c2kbr01-2.pdf. Accessed October 13, 2016.
5. Kaiser Family Foundation. Distribution of Health Care Expenditures by Service by State of Residence (in millions), Timeframe: 1991–2009. Available at: kff.org/other/state-indicator/distribution-of-health-care-expenditures-by-service-by-state-of-residence-in-millions. Accessed October 13, 2016.
6. Munson B, Vujicic M. General Practitioner Dentist Earnings Down Slightly in 2014. American Dental Association Health Policy Institute. Available at: ada.org/~/media/ADA/Science%20and%20Research/HPI/Files/HPIBrief_1215_1.pdf?la=en. Accessed October 13, 2016.
7. Galewitz P. Medicaid patients struggle to get dental care. Kaiser Health News and USA Today. Feb. 15, 2015. Available at: usatoday.com/story/news/2015/02/15/medicaid-patients-struggle-to-get-dental-care/23315811. Accessed October 13, 2016.
8. Vujicic M. Why are payment rates to dentists declining in most states? J Am Dent Assoc. 2016:147:755–757.

From Decisions in Dentistry. November 2016;2(11):54.