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What is Direct Pay Dental Care?
August, 13, 2017

Literally means dental services paid directly to the provider from patient.  However, this common question requires further elaboration.  In relation to our practice, it is a concept.  The concept is derived from economic and insurance literature.  Economists believe insurance is best applied to products if lost result in catastrophic loss and thereby great financial loss. Hence, having insurance on these products, such as houses, cars, and your life, creates an allocative efficiency where the value of the gain in payouts by insurance may equal the value loss of the product.

In the tooth industry, the value of the insurance payout never equals the value of the loss.  Thereby, an allocative inefficiency is present resulting in a limited amount of dental care per high-risk patients and extremely high prices.

Direct Pay Dental Care counters this effect by pricing dental services as if there was no such thing as dental insurance (By the way, one can argue that “dental insurance” is not an insurance at all.  It is more of a contrived marketing tactic produced by the collusion of dental professionals and insurance companies).  Our prices come from subject-matter knowledge, willingness-to-pay insurance co-payments, and competitive price strategies.

Under these conditions, the results have been what we intended:

1. Prices lower than our competitors have been maintained over the past five years.  Most of our revenue is attributed to two-party transactions.   Approximately 85% of our revenue comes from one party, either a patient or the state. We take the state insurance as a means of marketing our services.  Third-party insurance transactions contribute to the smallest portion of our revenue.

2.  Quality of customer service is high.  Generally, self-paying patients get better customer service independent of the setting.

3. Product quality.   Quality is generally difficult to track and relate to price.  Especially in dentistry and oral surgery.   However, there are two factors pertaining to quality we deal with in direct payment using a market pricing strategy.  That is we have set the price based on a supply meets demand model.    Reasonably, a lower quality product will call for a lower price and higher quality products call for higher prices.  Since we charge a lower competitive price,  the quality of our work should be questioned as a person would expect lower quality. However, with a good supportive process including the facility, staff, equipment, and supplies, and systems to guide decisions, quality quickly becomes quite predictable and effective.

Our process supports our quality level and our quality is reflected in our price.  Unfortunately in most dental settings, their product quality is not reflected in their insurance-generated fee schedules and herein lies the problem or challenge in buying dental services.  A market price gradient would be a solution to this problem.  However, there is no price gradient.  Therefore you have low-income people in high-income settings resulting in high prices and limited care.