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Private Equity Dental Management Companies Come Under Fire
The Wealthy Dentist | Jim Du Molin | Jan. 10, 2019
Private Equity dental management companies are at the center of a U.S. Senate inquiry, audits, investigations and civil actions in six states over allegations of unnecessary procedures, low-quality treatment and the unlicensed practice of dentistry, according to a report released by Bloomberg News.
Federal lawmakers and state regulators are trying to determine whether a popular dental practice model funded by Wall Street is having a destructive influence on dentistry in the U.S.
The private equity dental companies only account for about 12,000, or 8%, of U.S. dental practices, according to Thomas A. Climo, a Las Vegas dental consultant.
In 2010, The Wealthy Dentist reported that All Smiles Dental Center Inc., a management company owned by Chicago-based Valor Equity Partners, filed for bankruptcy protection after a Texas Medicaid action cut off reimbursement payments because of their exorbitant amounts of orthodontic care at the expense of Texas taxpayers.
All Smiles was part of a state audit that discovered 90% of the Medicaid claims for orthodontic braces weren’t medically needed.
After years of criticism that the poor were being deprived of dental care under Medicaid, class-action lawsuits and public pressure forced Medicaid to change their health care reimbursements. As reported by The Wealthy Dentist in our story, Taxpayers Footing the Bill for Braces in Texas, some Texas’ dental practices went on to bill Medicaid $184 million for Medicaid orthodontics — more than the rest of the United States combined.
M. Alec Parker, executive director of the North Carolina Dental Society told Bloomberg News that the private equity industry stepped up its investments in dental management over the last 5 years partly because health care was one of the few areas that grew through the recession.
According to the Bloomberg report, Christine Ellis, a Dallas orthodontist, who testified before Congress in April of this year reported that the “flagrancy of the fraud” she found in audits she performed for Texas Medicaid “is truly unbelievable,” with only 10% of the paid claims she reviewed actually qualifying for Medicaid coverage.
Read more here.
Dental Alliance Leadership
Kristine Grazioso, DMD
Frustrated by the increasing pressure to sell out to private equity firms, 15 independent dentists rallied to form AID’s first alliance. Unlike an AID chapter, which requires a minimum of 15 doctor members in a state or region, alliances are united by their specialties’ unique interests and have members nationwide.
AID has given this group a voice on the national stage by launching a national media campaign "Is Dental Insurance Worth It?" and by writing "Why dentists need to fight back against corporate giants," which appeared in Modern Dental.