Public Health Business Model Considerations for DSOs

To “do more with less,” public health organizations have had to embrace an ownership mentality. Every stakeholder within public health programs realize that a dollar saved is a dollar that can go towards providing health care to a neighbor in need. Public health’s “why” is often succinctly honed and deeply embodied.

The public health community has adopted a clear sense of what their mission is. The Institute for Healthcare Improvement popularized the concept of The Triple Aim for Populations. The Triple Aim areas of impact focus on:

Improving (population) health outcomes – Preventing and treating illness.
Enhancing the patient experience – Valuing patient time, removing barriers to care and differentiating the health service experience.
Reducing (per capita) costs – Minimizing healthcare costs.

Let’s look at each of these public health guiding principles and identify a few considerations that could disrupt for-profit dentistry as we know it.

Improving Health Outcomes

Public health programs focus on patient health outcomes, not revenue. For public health programs the motives are simple, it is the right thing to do and it is less costly to provide preventative care than restorative care. Unfortunately, in for-profit dentistry, providers are compensated greatest when their patient’s health is most compromised (i.e. reimbursement for a sealant is $, though if a patient needs endodontic treatment the reimbursement opportunity is $$$$). Unless the reimbursement system is changed, private practice dentists and DSOs will continue to have the competing agendas of patient health optimization versus their own earning aspirations. The public health model does not have that moral conflict.

Healthcare providers, attorneys and financial advisors are a few of the professions whose billing rates are rarely challenged if they provide the desired outcome. In a for-profit business, if a consumer makes a purchase (a prescribed treatment) and the goods/services do not work and or do not resolve the issue, how likely are they to go back and purchase additional services from that business? Not likely at all. Public health programs are no different. Likewise, paying dental consumers increasingly expect that money spent on healthcare will keep, and ideally, enhance their health. Public health programs profit (increase the likelihood for future funding) when they enhance patient health.

The DSO community should give thought to the improving patient health outcomes model as there is foreshadowing for a potential disruption to the reimbursement model. We are seeing an increasing amount of vertically integrated (and influential) health service organizations, and insurer/provider service networks, such as, Kaiser Permanente, DentaQuest and Willamette Dental, that are prioritizing patient health outcomes. These are just a few of the organizations pioneering the patient health first/outcome-based reimbursement/profitability model.

Enhancing The Patient Experience

As consumers, we all recognize businesses that are easy to do business with. For example, REI is a bike, ski, hike, climb, camp and clothing store. Nordstrom sells formal and casual clothing for adults and children, cosmetics, gifts, many have cafes and more, all in the same store. They provide both an exceptional experience and high levels of service. Many public health programs emulate these principles, though in a health care setting.

Public health programs are not solely dental care facilities, they are increasingly integrated health homes. Under one roof they house dental, medical, mental health and often pharmacy services too. Medical and dental records “talk” and notes about health histories, allergies, medications, insurance coverage, etc. are shared. The result is a more holistic view of your health for the providers and also a more efficient experience for the patient. Public health does this as it is more efficient (reducing time and total costs) and provides a better patient experience.

Imagine if you had a “health home” where during your annual health screening you could get your vitals checked, blood work done, a dental hygiene cleaning, comprehensive oral exam and meet with your primary care physician for a physical.

Would a “health home” visit be a good use of your time?
Would your providers have a clearer view of your total health?
If you had systemic symptoms do you think providers would be more apt to collaborate on your treatment plan?
Do you think the possibility for better health outcomes would be enhanced?

Reducing Costs

Public health programs know their “why” and always have the patient at the forefront of their decision making. Public health’s patient-first mindset does not mean they purchase the cheapest products just to save a dollar. They purchase the minimally acceptable products to serve the needs of their patients. No more and never less.

Many DSOs struggle to match their clinical standard of care and procurement standards. On one hand, you have a procurement agent (who last week may have been an underperforming DA) trying to reduce costs by any means to justify his or her position. On the other hand, you can have clinicians struggling to embrace the employee-dentist mindset, wanting the latest and greatest equipment; having a bias towards working with branded products; and/or generally not having a systemized procurement process. DSOs that seek to purchase the lowest initial cost equipment often spend significant sums of money in maintenance and/or in lost productivity later. Procurement standards and good decision making also often go out the window when a DSO is considering a sale and they are trying to make a short-term enhancement to their finances picture. The guiding procurement principles of public health programs are steadfast.

Another reason public health programs do a good job with procurement is because of their funding source oversight. The Federal government stipulates procurement practices are to seek competitive bids, especially for capital equipment/expansion projects. Grant applications require justifications that define the measurements and impact that the proposed investments will have to better serve their existing and future patients. They are held to a high fiduciary standard.

Like most things in life “lowest cost” does not always equal “lowest price,” especially when you benchmark against time and outcomes. Many public health programs do an exceptionally good job of assessing a product’s total cost of ownership versus initial acquisition price. Public health programs are in it for the long game of preserving and protecting the health of their patient community.

Public health programs are in many ways on the leading edge of healthcare and reimbursement models that put patients’ health outcomes first. Public health programs maximize the time they have with patients to enhance their overall healthcare experience while making purposeful investments that minimize the total cost of care/ownership.

If the private sector voluntarily or involuntarily were required to follow these aspects of the public health model, ask yourself the following:

How might a single-payer, patient health outcome, reimbursement model disrupt the DSO industry?
How might your business practices change to enhance patient health if that determined your profitability?
Would the mission statement of your company change?
If you were solely responsible for perpetually operating your business, with no plans of selling, would it impact your procurement practices?
Do your answers differ when you remove your business operator hat and put on your hat of healthcare services consumer / taxpayer?

To learn more about public health programs and service models visit:

Written by Scott Graversen. Scott is a DSO / Dental Industry Strategic Advisor. For two decades Scott contributed to business development and leadership roles within Henry Schein Inc.’s Dental Special Markets business. Scott is a regular DSO and public health keynote speaker on the subjects of building dental equipment platforms and dental procurement best practices. Scott co-authored Henry Schein’s “Essential Guide for Planning a CHC Dental Expansion” and the “Guide to Portable & Teledentistry Essentials.” Connect with Scott on LinkedIn or email him at ScottGraversen@msn.com.

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