Friday, January 20, 2012

Fortune CNN Money article on a New Jersey Medicaid dental clinic

I was a bit offended by the attitude of these piece, but isn’t that the case when the press speaks of the less fortunate, poor or temporarily down on their luck.

It was titled Building a business with unwanted customers”, so I guess I had an attitude before I read it. 

My first thought was; of all the dental centers out there geared to treat child whose parents have fallen on hard times, why this one? 

All the right buzz words and phrases the dental mills use today - “Underserved” and ”Target Patients on Medicaid” for example – were used perfectly.  Even the added “nobility” factor was included – “believes that treating the underserved can make for good business.”

By the end of the article it sounded more like a story about a business in the ‘hometown” section of the local newspaper, not CNN Money.

This may be a fantastic dental center, I don’t know.  All I know is what I read and it had the sound of a local, one shop, assembly line style dental center.  That was until I saw the logo. Continue on and you’ll see what I mean.

Dental Kidz -A Newark, N.J. dental operation is turning a profit by focusing on the patients that most dentists shy away from: Medicaid recipients.

By Shelley DuBois, writer-reporter
January 20, 2012
FORTUNE -- Diego Cobo was trying hard not to cry when he returned to his family in the waiting area at the dentist's office. The three-year-old just had just had a cavity filled, and it hurt. "Maybe you shouldn't eat so many candies," his mom said to him. Diego thought for a minute, then pointed to the teeth on the side of his mouth that wasn't numb with Novocaine, and said, "Maybe I can eat candies with these teeth?"

If Diego is like the majority of patients at Newark, N.J.-based Dental Kidz, he will be back soon enough with more cavities. Dental Kidz targets patients on Medicaid and other subsidized health care. The practice is jointly owned by husband-and-wife team Chris and Lezli Harvell -- he handles everything outside of the clinic, and she's a dentist.

Most dentists don't want to touch kids on Medicaid with a 10-foot pole, much less a dental scraper. But Chris Harvell believes that treating the underserved can make for good business. And in New Jersey, which has one of the worst records for pediatric dental care in the U.S., kids have so few options that a good provider, even to those with little income, can make a profit.

"I used to be deathly afraid of the dentist. I used to have tons of cavities," says Harvell, a former Booz Allen consultant turned business student turned entrepreneur.


Harvell tries to keep Dental Kidz's office inviting.  It's brightly lit, with an open floor plan, Crayola-colored seats for small patients, high ceilings, and mock hardwood floors. Mariah Carey's power pop version of "All I want for Christmas" is playing. Kids in the back squirm into their examination chairs, some are crying.

Despite his early fear of dentists, Harvell married one, and recognized a serious shortage of quality care in the Newark area. In 2008, before launching Dental Kidz, he crunched numbers that he requested from the state dental board and department of human services and found that there were about 210,000 children within a five-mile radius of the city, 40% of which receive Medicaid benefits, and only 15 pediatric dentists.

Medicaid's ups and downs

Nationally, dentists shy away from treating Medicaid patients. Many complain that this patient population has a far higher no-show rate than patients with private insurance, according to a May 2011 report called "The State of Children's Dental Health" from the Pew Center on the States. Those empty chairs eat at profits.

[Those empty chairs eat at profits – Maybe there are too many chairs? ]

Medicaid compensation often falls woefully short of the cost of care: 33 states reimbursed under 60.5 cents for every dollar a dentist charged, according to the Pew study. The study also graded individual states' progress providing adequate pediatric dental care. New Jersey was one of five states to receive an F.

[ I wonder what is considered “adequate”.  I wonder if quality was important to the study or was it just counting the number of butts filling those empty assembly line chairs? Massachusetts is the nations leader according to the Pew report, it’s also a hot bed, like Texas, for dental mill operation and a lot of problems with the ineffectiveness of the dental board there, yet somehow it got an A  for “good management”

MassHealth Dental Program is managed by a third-party contractor-Dental Services of Masschusetts, Inc (DSM) which is really Delta Dental - who then hires DentaQuest-formerly Doral Dental.  Doesn’t this sound efficient? Masshealth provides for root canals on children but not on their adults, wonder why?

A December 2011 Audit report of one Medicaid center -Smile Center by Massachusetts State Auditor revealed many problems within the MassHealth program itself and concluded Smile Center, DentaQuest and the MassHelath program needed some serious overhauling, so much for the highest ranking state in the Pew report ]

There is money in treating these patients, Harvell says, but getting it is a hassle. Dentists must wade through red tape for Medicaid reimbursement, says Richard Green, the managing director of public affairs for the American Dental Association.

Many dentists, including American Dental Association president William Calnon, will treat Medicaid patients pro bono to avoid the inconvenience. "It's just not worth the headache," Green says, and many dentists figure that"it's better to get 100% of nothing, rather than working really hard to get 15 to 80% of something."

[Let’s just say the massive amount of fraud was cut in half, or by a third, even, there would be funds galore to pay dentists a reasonable and customary fee for their services.]

But 75% of Dental Kidz clients receive some kind of state subsidized dental care. This is not charity work; it's the foundation of the company's business. "In terms of having a practice like that," Green says, "the more you do, the easier it is."

Volume is the answer. Harvell sees opportunity in the same facts that deter so many dentists. He sees a group of patients who need care but aren't getting it. What's more, these patients tend to have more and more expensive problems than what is typical. The average age of the kids is four," Harvell says, "and the average number of cavities is eight. They only have 20 teeth!"

[ I think Richard Green, the talking head of the ADA, came as close to anyone of saying the truth, “the more you do, the easier it is”.  Harvell at least said it, and used the word “volume”. I sure wish he had been pushed on that statement a bit more, like: How can dentist do more? How does volume of clients play into the business model? Is it volume of treatment or volume of butts in the chair or both? Can volume based dental treatment meet the generally accepted ADA standards of care? Are you dizzy? Those sort of things… lol ]

Dental Kidz patients have their first dentist visit much later than they should -- the American Dental Association recommends a child visit a dentist before the age of one. Because of this, along with poor education about proper nutrition and eating habits, patients often have advanced dental problems that require expensive procedures, which Medicaid does reimburse.

[The ADA recommends before age one, huh?  Just a few short years ago it was age 3, but that was before the corporate dental factory hit the main stream.  At that point the powers that be (the individual professionals who convene and conjure up these recommendations, had a real financial interest the dollars that were becoming available. Example here – Dr. P is on the advisory board of Small Smiles Dental Centers!]

The key to profiting with patients who receive Medicaid or other subsidized care is getting enough of them in the door, then making sure those patients come back.

[ What I hear here is: “quantity, quantity and more quantity and making sure you find things wrong, real or imaginary, to make them come back, creative dentistry so to speak. You can do a lot of treatment on 6,600 children, each with 20 teeth-132,000 teeth. But we must work quick! Chop Chop, everybody.“  Where did these folks get their ideas anyway?  Did one of them work for Kool Smiles, Small Smiles, and private equity firm?]

Since Dental Kidz opened its doors in 2009, its patient population has grown from zero to roughly 6,600.


The limitations of the 'volume business'

While volume might be the key to financial success, this model has sunk other dental practices. In 2010, company Forba Holdings LLC, which owned a nationwide dental practice called Small Smiles, agreed to pay $24 million over five years to settle charges that it had advocated unnecessary procedures. Families of patients filed lawsuits claiming that dentists in Small Smiles offices were pulling healthy teeth and performing unneeded root canals for the sake of Medicaid money.

[ The paragraph above sounds like Small Smiles Dental Center’s paid some families $24 million dollars. That’s not even close to what happened!  Employees of the corrupt dental centers turned them into the government for fraud and abusing children among a host of other things.  Small Smiles parent company paid $24 million (another $2 mil to NY) to stop the Department of Justice from filing further fraud charges. The Small Smiles dental centers company also had to sign a 66 page Corporate Integrity Agreement and agree to a host of stipulations, which they began to break in the first weeks after the agreement was signed. 

FORBA is now Church Street Health Management. It’s now closing centers left and right.  Why? Because their volume treatment business model and the fraud involved has been exposed!   Including the fact that the lie of their dental centers being “dentist owned” has been revealed.

It also has hundreds of malpractice and person injury lawsuits against it because of the gross negligence and malpractice by its dentist.  The dentist are pushed to make “production” goals and keep volume high.  That same volume Harvell spoke about.  The dentists are actually paid a percentage of what they are able to bill Medicaid – “eat what they kill” is how it’s termed.]

Many Medicaid patients have received sub-par treatment at clinics, Harvell says. Diego Cobo's grandmother, who was in the waiting room with Diego's mother and two siblings, told a couple of horror stories about other family members who had traumatic dental experiences. "This place is better," she says.

[She says this place is better, but I see that it also says Diego is back there alone, even though his grandmother, mother and two siblings are there. Red flag!]

The office has a room to educate parents on oral care and nutrition. But does that kind of educational effort actually work? "After about the fourth or fifth visit, they get it," Harvell says. This gives enough lead-time to pull a substantial profit, while the information absorbs and before the patients' permanent teeth come in.

[ I love it!! “enough lead-time to bill for enough services on their baby teeth to receive a substantial amount of taxpayer dollars before we leave the child alone after they get their permanent teeth.  We don’t do much to the permanent teeth because they are “permanent” and leave evidence of any misdeeds. That’s how I read that statement. It doesn’t appear New Jersey Medicaid reimburses for Oral Hygiene Instruction, code D1330, but I have seen dental mills in some states bill for this code, even for children as young as age one, and the dentist or hygienist never spoke to the parents.  Well, I know the 1 year old didn’t understand all those brushing instructions!  Yet, they clinic was reimbursed the set amount from the Medicaid system. ]

Harvell's business model is not for the faint of heart. "The first year, I called it 'Obama's ground game,'" Harvell says. "I Googled every competing office in the region. I visited 60% of them."

The pace is more manageable now, but business is booming. The clinic sees between 180 and 200 new patients per month. The company made $1.6 million in revenue for 2011, up from $500,000 at the end of 2009. Profit margins have also increased, up from 24% in 2009 to 47% this past year.

[ Really!  Double profit margin in two years??!!!  That is simply amazing!  I’m sure others would like to know the secret of such success!!]

The most expensive part of the business is actually its staff, which accounts for 40% of Dental Kidz's overall expenditure, Harvell says.

To attract talent to work so hard in a demanding environment, Harvell has set up a student loan forgiveness plan for his staff, the only one in the state for a private practice, he says.

[Which means he’s hiring “new graduates” to treat children.  Children are a handful in the highchair, let alone in the dentist chair".  Where are those papoose boards, I know they are in that clinic somewhere!]

The state will pay $120,000 towards staff members' dental school loans over four years. Hiring can be a challenge, Harvell says. You can't be a tough guy with a heart of gold. You have to be outgoing, to love kids – you have to be able to handle noise.

[He means blood curdling screams I bet.  The Primary Care Loan Redemption program he mentions is tricky, and the professionals who sign up, better be ready to suck it up, cause its gonna have you by the kahunas for a very long time, unless you want to give the money back.]

For Dental Kidz to be eligible for the PCLR program they:

Must be located in an underserved area as defined by the NJ Commissioner of Health and Senior Service or in a Federally designated Health Professional Shortage Area.

Must hire Loan Redemption Participants full time for a minimum of two years, maximum of 4 years, the LRP will be on probation for 6 months, early termination financial penalties apply for those who want out before the first two years are complete.

You won’t get the money applied toward to your loan until the end of each full year of service according to the schedule below:

18% up to $21,600 max. - first full year of service

26% up to $31,200 max. - second full year of service

28% up to $33,600 max. - third full year of service

28% up to $33,600 max. - fourth full year of service

DentalkidzHere is the really scary part!  Notice how similar the logos are between all the Church Street Dental Centers and Dental Kidz!!!!




Small Smiles Dental Center Logos: