Following the Money

by George Freedman, BSc, DDS, DiplABAD, FIADFE, FAACD

COVID-19 (the SARS-CoV-2 virus originating in Wuhan, China) has devastated the world. By July 2020, more than 11 million cases worldwide resulted in over 500,00 deaths. Untold misery, families shattered, businesses shuttered. Canadian dentists have faced practice- and career-threatening disruptions that will continue for many months.

Most Canadian dentists were totally shut down by government decree for up to three months. In the next 3-6 months, dental practices will operate at greatly reduced income levels (50% decrease or more), often with higher operating costs. In 2018, average practice annual revenue was $666,800 with expenses of $438,200 (Financial performance-Canadian Industry Statistics, Offices of Dentists – 62121). COVID-19 mandated closures and limited return-to-work will have cost the average dentist $210-280,000 in lost revenue in 2020 ($4.1-6.2 billion for Canada’s 22,000 dentists). Most office expenses (rent, utilities, some salaries, professional fees, bank charges) have continued, generating considerable losses.

Insurance companies charge premiums for dental coverage and provide payment for dental procedures. According to the Canadian Life & Health Insurance Facts, 2019 Edition, Canadian insurers paid out a total of $8.5 billion in dental benefits in 2018. Given that their stated administration margin is 15%, the insurance industry’s total dental business was $10 billion.

In the pandemic year of 2020, for 3 months from mid-March onwards, other than serious emergencies, there were few treatment payments to dental practices. For the remainder of the year, the increased chairside procedural times suggest that dentists will likely be only 50-60% as efficient as pre-COVID-19.

Meanwhile, much of the patients’ premiums are accumulating with the insurers. In 2020, due to COVID-19 closures and reduced productivity, $3.4-4.5 billion that would otherwise have been paid out to dentists will remain in the insurers’ coffers. The amount that insurers will have NOT paid to dentists in 2020 is $155-205,000 per practitioner.

It is understandable that insurers have remained silent on this issue. This is a major plus for the insurers’ bottom line. However, passive inaction is not proper. Insurers should refund 50% of 2020 dental premiums to their clients (a complex task, and not practical with groups).

Better yet, insurers should support the dental profession that generates more than $1.5 billion of their profits annually. By using the already collected premiums to help dental professionals get back on their business feet, the insurance industry not only provides a practice-saving shot in the arm for many dentists, but guarantees that the insurers’ ongoing multi-billion dental coverage profits can continue.

About the Editor

Dr. George Freedman is a founder and past president, American Academy of Cosmetic Dentistry; co-founder, Canadian Academy for Esthetic Dentistry; and Diplomate, American Board of Aesthetic Dentistry. Author or co-author of 12 textbooks, including "Contemporary Esthetic Dentistry" (Elsevier), and more than 700 articles, he is a REALITY Team Member. An internationally recognized lecturer on esthetics, technology, and dental materials, he was awarded NYU College of Dentistry's Irwin Smigel Prize in Aesthetic Dentistry. A McGill graduate, Dr. Freedman is a Regent and Fellow of the IADFE and maintains a private practice limited to Esthetic Dentistry in Toronto.

Dr. George Freedman, DDS, DiplABAD, FAACD, FIADFE is Adjunct Professor at Western University (California) and Professor and Program Director, BPP University, London, UK, MClinDent programme in Restorative and Cosmetic Dentistry. A founder and past president of AACD and co-founder of the Canadian Academy for Esthetic Dentistry, he is author of 14 textbooks, most recently “Contemporary Esthetic Dentistry” (Elsevier), and numerous articles and webinars. Dr Freedman received the Irwin Smigel Prize in Aesthetic Dentistry (NYU College of Dentistry). A McGill graduate, he lectures internationally on direct and indirect restorative materials and new technology. Dr. Freedman is a Regent and Fellow of the International Academy for Dental Facial Esthetics, and maintains a private practice limited to Esthetic Dentistry in Toronto, Canada.