Types of "Managed Care"
There are two basic types of "managed care" devices: the CAPITATED plan and the PREFERRED (or NETWORK) plan.

Capitated Plans
These plans are sometimes called health maintenance organizations (HMO) or dental health maintenance organizations (DHMO). In this type of plan, the doctor is paid an agreed-upon monthly fee for each person enrolled in the plan regardless of whether any participants use the doctor's service. The doctor, in return, has agreed to give treatment that patients may require, provided that the plan covers the treatment. The patient may see only a participating doctor. The doctor may be financially penalized for referring the patient to a specialist.

Preferred or Network Plans
These plans are generally referred to as preferred provider organizations (PPO). The doctors participating in these plans are "preferred" by the company because they have agreed to discount their normal fees. In return for this discount, the company promotes these participating doctors to the patient subscribers by listing them as "Preferred" doctors in their plan. There usually is a substantial financial penalty for patients using non-participating doctors.

The "Managed Care" Principle
All "managed care" plans rely on the volume discount principle. In other words, it is believed that, by selling a larger volume of individual units of a product, then it is possible to charge less for each unit and still realize the same or even greater profit. While this principle may work well for discount stores, it tends to break down when applied to health care.

In dentistry, the actual costs of performing a procedure tend to be fixed. Any discount which is given comes from the profit segment of a fee. Therefore, no amount of volume would make up for the loss on each case. The participating doctor is then faced with a troubling ethical dilemma: being forced to cut corners in order to reduce overhead which may have the effect of reducing the quality of care or reducing the indicated care.

Dentistry Different Than Medicine
In constant dollars, dental care today is less expensive than it was 25 years ago. This is not true for medical care. Dentistry, therefore, has done an excellent job of containing costs by itself. Yet, because of its health alliance to the medical field, dentistry has been affected by the "managed care" movement.

A fee for a dental procedure is all-inclusive, whereas a fee for a medical procedure is segmentalized. A dentist typically does not charge separately for an anesthetic, laboratory procedures, testing, materials used in the procedure, etc. Usually a physician either refers these things to a separate facility which will have its own fee or the physician simply itemizes these charges on the patient's statement. A dentist's fee is affected more by outside influences and therefore becomes difficult to discount without causing dangerous consequences with regard to the entire practice.

A dentist, unlike a physician, would have difficulty adjusting for a discounted fee by creating a large volume practice. Because most dental care is provided by the dentist who has a limited amount of time and energy, an increase in patient volume doesn't necessarily translate into increased income. Simply put, in most cases, the "managed care" principle does not apply to dentistry.

"Managed Care" Dentistry
In spite of all this, many dentists have attempted to incorporate "managed care" plans into their practice. In doing this, they must accept the problems associated with a two-level practice. One level of patients receives the dentist's usual approach to treatment and pays the usual and customary fee. The second level of patients receives treatment as specified by the plan and is given a discounted fee.

Under these circumstances, it becomes apparent that if a dentist is unable to reduce overhead and is forced to allow the "managed care" portion of the practice to grow too much, the regular fee-for-service patients will be forced to subsidize the "managed care" patients. This poses an entirely different ethical problem.

A Word About Quality
Since quality is so difficult to measure, it may be more useful to discuss the incentives that affect the desire to produce quality.

In a traditional fee-for-service practice, the dentist has every incentive to perform the highest quality service possible. The foundation of a practice depends on satisfied patients with whom the dentist has developed a trusting relationship. This may be difficult to establish with other forms of health care delivery.

In a "managed care" environment, the company, rather than the dentist, has much influence over which procedures may be offered to a patient. Often a dentist may feel that a patient's condition requires a particular procedure but both the dentist and the patient must settle for a less expensive and/or less desirable alternative simply because the "managed care" operator dictates this course.

On the other hand, in a fee-for-service environment, the doctor and the patient decide together the best course of treatment for a particular condition. Cost may or may not be a factor, but the decision is theirs to make, nevertheless.

Quality of care, then, may be a consideration in these intangible ways. The doctor may often have to weigh these factors when treating patients.

The American Way
We live in a country that provides us with many freedoms. We are free to choose any religion and worship as we please. We enjoy freedom of the press and free speech. The founders of this country intended for us to have this freedom. Many have died to preserve this country and its freedoms.

Until recently, we have always enjoyed the freedom to choose the doctor who treats us and to participate in selecting the treatment of our choice. Are we now to lose this freedom so that a third party can control the financial aspects of dentistry as well as the care received?

A Better Alternative
Unlike medical costs, dental costs are highly predictable because the problems are identifiable. For that reason, a dental benefits plan can be the most predictable element in an employer's overhead.

A company need only decide what dollar amount it wishes to provide its employees and simply reimburse the employee who visits his dentist. There are no complicated forms to fill out, no restrictions or disallowances, and the employee may visit the dentist of his choice.

By eliminating the expensive and dictatorial middle man, a company can save as much as 25% to 40% when compared to traditional insurance. The savings compared to "managed care" is also significant.

This form of delivery is called direct reimbursement. Hundreds of companies across the country use this program. There is no better system for containing costs and providing quality care.  Further information is available from the American Dental Association's Web site: http://www.ada.org/prof/prac/insure/dr/index.asp?site=.

Your Choice
The information in this Web page is intended to assist you in your decision on which type of dental benefits program you choose. You still have the freedom to make that choice. If you are offered a plan that requires you to change your dentist, then consider changing the plan rather than your dentist.