No Images? Click here DENTAL NEWSLETTER April/May 2018 Big Changes are Occurring in DentistryHealth Funds troubles will have a knock on impact. Reports in the press suggest that thousands of health fund members require legal protection from unexpected tax debts arising from an extraordinary eleven year misinterpretation of insurance rules by health funds is the latest in a continuing string of bad publicity. This adds to mounting evidence that health funds have passed their zenith in Australia. Reports in The Australian and other press of 29 March 2018 indicated that there were around 25,000 policies issued with benefit restrictions up to 22 months longer than allowed by the regulations surrounding policy eligibility to avoid the Medicare surcharge have led to reports that overall premiums will rise by more than expected in 2019 following the premium increases for 2018 dating from 1 April 2018 (April Fools Day!) which are approximately double the rate of inflation. Bupa, NIB and GMHBA are among the funds significantly impacted. Health Minister Greg Hunt indicated that funds with illegal benefit limitation periods had until 1 July 2018 to become compliant – a costly exercise. Extras cover $1.6 billion RIP OFF! With Australians repeatedly facing annual increases in hospital cover in excess of the rate of increase of household income it is likely that increases in hospital cover will result in cancellation of some health insurance policies altogether and that many fund members will ditch their extras cover in an effort to maintain hospital cover. AHPRA figures indicate that in 2017 health insurers raised $6.47 billion in extras premiums but paid out only $4.87 billion creating a gap of $1.6 billion, or 24.73%. Dentists taking on health funds Dentists are reporting increased awareness of the shortcomings of extras cover amongst their patients and that dentists as a profession are becoming increasingly bold in advising their patients about the shortcomings of extras insurance. IDN report a steadily increasing interest by dentists enquiring into services to assist them insulate their practices from the predatory arms of health fund preferred provider arrangements. As a percentage of the population with extras cover diminishes we expect that the influence of the health funds on dentistry will diminish significantly. It has long been the case that the further practices are removed from third party entanglements the better off they are likely to be. Dental demography It’s long been known by nation builders that demography is destiny. Just as nations have to have the right balance of population in their workforce, so too is dentistry impacted. My memory of dealing with dentists of 30 years ago was that it was dominated by male dentists but, as with other health professions, change was underway. The male dentists of 30 years ago have either retired or are approaching retirement and a much greater proportion of contemporary dentists who are buying or establishing practices are female. The demographers tell us that couples form permanent relationships at a later age and that the age at which women have their first child is now about 31. Discussions with a multitude of dentists with multi chair practices indicate that it is common for a dentist with say three chairs to work one chair themselves and for the other two chairs to be shared between several part time dentists (or sometimes a part time hygienist) and that many of them are females only wishing to work part time in order that they can attend to family duties. The precise extent to which an increasing proportion of dentists are working part time intentionally is not known accurately but it is obvious that it is moderating the huge oversupply of dentists which occurred due to immigration and opening too many dental schools. A tipping point? Dentistry may be approaching a tipping point where * Health fund influence over dentistry is diminishing * The proportion of dentists working part time by choice moderates the supply and * The impact of corporate dentists is likely to diminish as the proportion of the population with extras cover falls. Dental Corporation is owned by Bupa while NIB and Pacific Smiles have a close relationship. The last great cottage industry? The weaknesses of dental corporates are that:- 1. No amount of corporate investment enables dentists to treat two patients simultaneously, and 2. Corporates are unable to stop new dental practices being established. While establishing a practice is a brave move, many will, over time, create a viable patient base. In 20, 30 or 40 years’ time, there will still be a huge proportion of privately owned and operated dental practices. What should young dentists do? Young dentists, whose training in dental school indicates that they are developing good clinical skills and who are gifted with interpersonal skills should seek employment in privately owned dental practices. They should not sign a long term employment contract with a dental corporate if a reasonable alternative is available. Dentists can be divided into those who are naturally practice builders and those who lack the necessary skills to be practice builders and become practice destroyers. A dentist with practice building characteristics joining a private practice should spend as much time working on their interpersonal skills as they do with their clinical skills. It is important that patients want to come back to the dentist who has no difficulty in generating follow up appointments and after a relatively short time in practice, will find that they are receiving a steady stream of personal referrals from existing patients. A practice builder places themself in a position to one day buy out their employers practice, or buy an associateship and henceforth operate as associated practice owners. Exclusion conditions Talented young dentists should avoid wherever possible signing employment contracts with unrealistic exclusion conditions. However at the same time they need to recognise that they have a duty to their employer. If they leave their employment, they are not permitted to take lists of patient addresses with them as that information belongs to their employer. Employers who try and enforce an unrealistic exclusive zone contract on a dentist are at risk of an unsympathetic judge throwing out their claim on the grounds that dentists, like everyone else, have a right to earn an income from their calling. Synstrat services to dentists buying practices. The most critical time to get expert advice on dentistry is at the precise point at which you are considering buying a practice, whether you are buying it from your employer or from another dentist, or are engaging with a practice broker. Don’t risk being taken in by incomplete or inaccurate financials or paying a completely unrealistic price. You must be in a position to make an informed decision and if necessary, seek assistance with negotiation. Synstrat has long offered this service to dentists – contact Graham Middleton or David Collins (03) 9843 7777. Australian Dental Association Yes/No survey Recently the ADA surveyed dentists asking whether or not they approved a broadening of the scope of practice of dental therapists and hygienists. If the scope of practice of dental therapists is broadened it calls into question their training, vis a vis, the training and accreditation of dentists. ADC Exams There is a huge continuing failure of immigrant dentists to qualify at Australian Dental Council examinations with a multitude of examinees failing on multiple occasions. There is wide disparity in the training standards of dental immigrants dependent upon where they received their training. Our understanding is that the current pass rate at ADC exams is 17%. Independent Dental Network (IDN) Keeping control of your practice IDN provides dentists who wish to retain their freedom from the encroachment of large health funds the tools to market their practice and offer patients an ethical and more beneficial choice of dental insurance, including an ability to switch to a mutual fund which doesn’t interfere with patient choice of dentists by discriminatory rebate setting, and which offers patients superior value for their insurance dollar. Alternatively, patients can opt out of extras insurance and contribute to a savings plan (with accounts run in a major bank) to pay for planned dental treatment. The health insurance industry heavily advertises extras (ancillary) cover because that’s where it makes the big profit. The industry pays out 75 cents per dollar of extras premium, which in turn covers only 52% of treatment costs. Dentist are aware, that’s a rip-off. Every member practice retains its own identity while belonging to IDN, which gives it the marketing tools to promote itself under its own name. Contact merv@independentdentist.com.au Disclosure Neither Synstrat Group nor Synstrat’s directors have any financial interest in Independent Dental Network other than the interests of our dental clients. A dumb letter to the newspaper A dentist spotted a letter from Dr Rachel David, CEO of Private Healthcare Australia (Sunday Age - 15th April) blathering on about health funds subsidising 40 million dental services a year and criticising the cottage industry dental model of private practice. She goes on to brag about the ability of health funds to contract dentists to provide effective services to consumers but there is no mention of the health funds ripping almost 25 cents in the dollar off extras cover! When it comes to gilding the lily, this lady is almost in the class of “Comical Ali” who as Iraqi propaganda minister was talking up the Iraqi victories in Gulf War II as the British and American tanks were rolling through the streets of Baghdad. Incidentally the Australian SAS were already in Baghdad taking over a vacated embassy building to use as their base even ahead of the tanks rolling in! Best wishes to all dentists, Graham Middleton and the Synstrat Team The Synstrat Group are Australia's most experienced Dental practice business advisers, accountants, practice valuers and licensed financial advisers. The information contained herein is of a general nature and no specific action should be taken without individual advice. Synstrat Management Pty Ltd P. 03 9843 7777 ABN 57 006 295 325 If you are not the intended recipient of this communication please delete and destroy all copies of this message and telephone Synstrat on +61 3 9843 7777 immediately. 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