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FTC Opposes NC Dental Management Bill

Posted on June 1, 2012

RALEIGH, N.C.--()--The Federal Trade Commission (FTC) issued a letter to the North Carolina General Assembly, care of Representative Stephen LaRoque, that states its opposition to the Dental Management Bill, pending legislation in the House of Representatives known as House Bill 698 (H.B. 698) and in the Senate, Senate Bill 655 (S.B. 655). The FTC, through its Office of Policy Planning, Bureau of Competition, and Bureau of Economics, made a forceful statement citing the “anticompetitive effects” of the bill, and made a strong recommendation to reject both H.B. 698 and S.B. 655.

“We applaud the Federal Trade Commission for bringing transparency to the motives driving this bill. A small group of people in dentistry leadership positions in North Carolina continues a decades-long history of restraining competition to the detriment of the dental consumer,” said Dr. Edward Meckler, executive director of the Dental Group Practice Association. “This bill is about preserving a privileged existence that maintains N.C. dentists’ status as one of the most highly paid in the nation. While North Carolinians collectively pay $280 million more for dental services than in other states, the state ranks 47th in the nation in dentists per capita. The N.C. Board of Dental Examiners has manipulated licensing practices, and now wants to eliminate dental service organizations, to ensure that competition for patients stays low. We hope that members of the N.C. General Assembly realize how bad both H.B. 698 and S.B. 655 will be for patients across North Carolina.”

At risk is the existence in North Carolina of the dental service organization (DSO), a dental practice model in which the dentist selects a business support partner to make capital investments and run the business side of the practice, while the dentist is free to focus on the clinical practice of dentistry. This DSO business model is expanding throughout the country, but its progress in North Carolina would be halted by the proposed state legislation.

Some FTC comments on H.B. 698 that stood out:

  • “… we are unaware of any safety or quality issues arising from the use of DSOs.”

  • “… the Bill may deny consumers of dental services the benefits of competition spurred by the efficiencies that DSOs can offer, including the potential for lower prices, improved access to care, and greater choice.”

  • “Given that the state’s existing licensure framework already enables the N.C. Board of Dental Examiners to oversee health and safety issues, and in the absence of evidence regarding safety concerns specific to the use of DSOs, the Bill appears likely to do more harm than good.”

  • “The U.S. Surgeon General has found that “‘a silent epidemic’ of oral diseases” affects our nation’s most vulnerable citizens, including children.”

  • “Another recent report noted that “preventable dental conditions were the primary diagnosis in 830,590 visits to [emergency rooms] nationwide in 2009” and for “many low-income children, emergency rooms are the first and last resort because their families struggle to find a dentist who either practices in their area or accepts Medicaid patients.” “In 2009, there were more than 69,000 ER visits to North Carolina hospitals due primarily to disorders of the teeth or jaws.”

  • “All or portions of 78 out of 100 counties in North Carolina are listed as Dental Health Professional Shortage Areas, and four counties have no actively practicing dentists.”

  • “Moreover, “[d]ental practices affiliated with DSOs accept commercial insurance at a significantly higher rate than practices unaffiliated with DSOs, resulting in discounted services and lower out-of-pocket expenses for commercially insured patients.”

  • “The Board’s recent action against an established dentist when he entered a management contract with a DSO, and the Board’s consent agreement preventing that DSO from entering North Carolina for five years, provide strong evidence of the Board’s hostility toward dentists’ use of DSOs to help manage the non-clinical aspects of their practices.”

Most telling is the concluding statement from the FTC, “For these reasons, and in the absence of DSO-specific safety concerns, we urge the North Carolina legislature to consider the potential anticompetitive effects of H.B. 698 – including higher prices, reduced access, and decreased choices for consumers – and to reject H.B. 698 (as well as S.B. 655, the companion bill in the North Carolina Senate).”

This is the second opinion letter the FTC has issued in response to anticompetitive actions taken by the N.C. Board of Dental Examiners. In 2010, the FTC initiated an action against the Board alleging that its restriction against non-dentists for providing teeth-whitening services was overreaching and made it harder to obtain these services and more expensive for North Carolinians. The FTC stated that, “Without active supervision by a disinterested state authority, a regulatory board whose members have a financial interest in the industry it is charged with regulating cannot exclude its competitors from the marketplace.”

About the Dental Group Practice Association

The DGPA is a nonprofit organization representing DSOs that service more than 3,500 dental practices in 46 states, plus Canada, Australia and New Zealand, with more than 6,500 affiliated/owner dentists. The collective experience of our members proves that enhancing the work-life balance for the dentists enables delivery of a better dental experience for the patient. That is why we joined together as an association, with an honest and progressive agenda of industry improvement initiatives. For more information, please visit http://dgpaonline.org/.