Research & Commentary: Missouri Should Avoid Overregulating Dental Service Organizations

Published June 21, 2017

To improve efficiency and lower costs, many dental practices delegate business tasks to dental service organizations (DSOs), allowing dentists to focus on patients. DSOs are companies with whom dental providers can contract to provide critical business management and support, including non-clinical operations. Despite the tremendous advantages offered by DSOs, this free-market solution has been endangered by proposed regulations in Missouri that would place DSOs under scrutiny by the state’s Dental Board.

DSOs’ freedom of operation can be an important element in reducing health care costs and increasing availability. According to a study by Mia Heck of the American Legislative Exchange Council, “Access to efficient, affordable healthcare remains a significant challenge in the United States. Americans continue to experience an increase in the cost of care,” but DSOs can help states address some of those problems without burdensome government intervention.

First launched in the late 1990s, DSOs help dental practices focus on patient care by taking the burdens of office management, such as accounting and insurance, off their shoulders. DSOs also allow dentists to expand and streamline their services – including providing patients with new technologies such as radiography, in-office CAD/CAM, intraoral cameras, implants, online record keeping, and scheduling.

According to the Association of Dental Support Organizations (ADSO), the number of DSO-supported practices in Missouri has grown steadily. As of April 2017, 90 such practices operated in the state, providing care for around 434,000 patient visits. These patients and dentists are threatened by the new proposal, which would undermine the growth of DSOs by extending the authority of the state’s Dental Board to regulate them.

Language amending the bill to shield non-clinical support services provided by DSOs from the Dental Board’s regulations has been introduced, but it has not yet been included in the bill. This approach has drawn support from several organizations, including Americans for Tax Reform, the American Legislative Exchange Council, and the National Black Caucus of State Legislators.

Wayne Winegarden and Donna Arduin of the Pacific Research Institute argue new laws limiting DSOs hurt low-income families, who have seen much greater availability of dental services in recent years as a result of DSOs. “The DSO structure exemplifies the benefits that can be created when the policy environment welcomes private sector solutions to pressing societal problems. Actions that punish DSOs as an industry, such as frivolous lawsuits or legislation that unduly restricts DSOs, will reduce overall economic welfare,” wrote Winegarden and Arduin in a Pacific Research Institute study.

In 2012, economist Arthur Laffer examined the effect of DSOs on the quality and cost of dental care. The study found DSOs have allowed dentists in Texas to provide care at a lower cost, including for lower-income patients most in need of care. “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.

In his study, Laffer highlighted the success of Kool Smiles, the largest dental provider for pediatric Medicaid patients in the United States. Kool Smiles operates in 15 states and the District of Columbia, and it has used the DSO model to provide necessary care to thousands of low-income patients while also saving money for taxpayers.

Elena Rios, president and CEO of the National Hispanic Medical Association, wrote recently about a Pew Research Center study that found DSOs cover at least 30 percent of Medicaid beneficiaries in Texas, home to 9.8 million Hispanics, and more than 22 percent of all Medicaid dental patients in Maryland. Rios argues the DSO structure has provided those who would otherwise not receive dental care with affordable oral health care options.

DSOs have proven to be an effective tool for streamlining dental practices, bringing down costs, and allowing dentists to have more time to provide patients with dental services. Missouri should allow dentists to decide what business model works best for their practice by allowing DSOs to operate freely.

The following documents examine DSOs in greater detail.

Dental Service Organizations: A Comparative Review
In this study 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
This study by Mia Heck of the American Legislative Exchange Council examines the current state of the dental care marketplace and what states can do to help create a more open and freer 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,” Heck wrote.

The Benefits Created by Dental Service Organizations
This analysis by the Pacific Research Institute (PRI) examines Dental Service Organizations, which PRI says 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
In this Health Care News article, Wayne Winegarden, a senior fellow with the Pacific Research Institute, examines dental care access issues, problems Winegarden says DSOs can help to solve. “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
This study by Elena Rios, president and CEO of the National Hispanic Medical Association, examines the current status of minority community health and the important relationship between Medicaid, minority communities, and dental service organizations.

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
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 in 2016. “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 authors.

Dental Care Health Professional Shortage Areas (HPSAs),%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   
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
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. 

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