AT A GLANCE WSDA and ODA leaders are exploring how dentists in Washington and Oregon can create group dental practices.  A group practice is a practice with multiple dentist-owners operating under one legal entity (typically a professional corporation or professional limited liability company) with a single tax identification number.  Group practices can combine the preservation of the independent private practice model with the clout of a much larger organization.  The Virginia-based Atlantic Dental Care practice is a potential model for Washington and Oregon dentists.

Big ideas are often sparked by short conversations among peers.

On a dreary morning in Seattle last January, organized dentistry leaders from the states comprising the American Dental Association’s 11th District (Alaska, Idaho, Montana, Oregon, and Washington) converged on the WSDA office for their annual summit to discuss pressing issues. Oregon Dental Association (ODA) President Dr. Barry Taylor requested that “Group Practice Formation” be added to the agenda, and shared details about an exciting group practice he had heard about from a colleague in Virginia. 

“The Virginia practice, as it was described to me, seemed like the perfect balance between the clinical independence enjoyed by solo practitioners and the economies of scale in purchasing equipment, supplies, and supportive services afforded to large practices often owned by one person or a small group,” said Taylor.

This idea piqued attendees’ interest. Many expressed interest in learning more about group practice and believed dentists across the Pacific Northwest would consider joining groups.

“Dr. Taylor’s enthusiasm for group practice was contagious. Having WSDA and ODA join forces to learn more about how dental group practices can work in the Pacific Northwest was an opportunity that I did not want to miss,” said WSDA President Dr. Denny Bradshaw. “There is immense benefit to having two forward-thinking associations collaborate on an issue that is front-of-mind for all of our members. We are stronger when we work together.”

Discussions about group practice formation continued between ODA and WSDA, expanding to include those with experience forming and working within group dental and medical practices. The result of these discussions was a “Group Practice Summit” held in SeaTac this past October.

The Group Practice Summit, attended by leaders from WSDA, ODA and the Idaho State Dental Association (ISDA), featured two speakers familiar with group practice, Dr. Ralph Howell and Ms. Kara Dowdall. Howell, a practicing dentist in Suffolk, Virginia, is a founding member of Atlantic Dental Care. Dowdall is the vice president of operations for Proliance Surgeons, a group medical practice in Washington state.

GROUP PRACTICE DEFINED

Group practice is not a new idea. Medical and dental group practices have existed for decades across the country. 

The phrase “group practice,” however, is widely misunderstood or misused in the dental community. One overgeneralized definition is “any dental practice other than a ‘traditional’ solo practice.” This definition fails to appreciate the immense diversity of practice models outside of solo practice.

For example, many dentists are employed by government, academic, and public health institutions, which are not owned by dentists. These institutions are afforded public policy exceptions in state dental practice ownership laws due to their respective missions, such as training future workforce or providing health care to those enlisted in the military. Though large numbers of dentists often work for these institutions, they are not considered group practices. 

Many also use the terms “dental support organization” (DSO) and “group practice” interchangeably, but these concepts are distinct from one another. Conceptually, DSOs are not dental practices, but rather companies that provide non-clinical supportive services to dental practices. DSOs are typically owned by non-dentist corporations or private equity firms.

Some states permit non-dentists or DSOs to own and operate dental practices. In those states, DSOs may be permitted own dental practices outright and employ dentists to work for them. A DSO engaging in this type of activity is said to be engaged in the corporate practice of dentistry, which is allowed in some states but strictly prohibited in many others, including Washington. 

So, what is a group practice? A group practice is a practice with multiple dentist-owners operating under one legal entity (typically a professional corporation or professional limited liability company) with a single tax identification number. A dental group practice can operate in one office or across multiple offices. 

A group practice has distinctive characteristics, which may be viewed as benefits or drawbacks by different dentists. A group practice typically maintains some degree of centralization, resulting in economies of scale related to operational costs (e.g., administrative services, equipment, supplies) and the ability to better negotiate reimbursement contracts in certain circumstances.

Not all group practices are the same. A spectrum exists, with decentralized groups that afford individual owners more autonomy on one end and groups with highly centralized structures on the other. Atlantic Dental Care and Proliance Surgeons represent different positions on this spectrum.

ATLANTIC DENTAL CARE

At first glance, Dr. Ralph Howell seems to be what many would call a “typical” dentist. 

Howell works in private practice with his father, Dr. Leroy Howell, who, in his eighties, still practices dentistry a few days a week. Howell’s daughter, Dr. Dani Howell, joined the practice a few years ago. Howell has also been active in organized dentistry, serving as president of the Virginia Dental Association and as a longtime delegate to the ADA’s House of Delegates.

For many years, Howell operated one dental office in downtown Suffolk, in the Hampton Roads region of Southeast Virginia. Hampton Roads is home to several military bases including Naval Station Norfolk and Langley Air Force Base. Howell’s downtown Suffolk practice has a strong base of patients built over two generations, many of whom have come to him or his father for routine care for decades.

Howell had been aware of the significant trends impacting small group and solo dental practices but gained a deeper appreciation for these trends after opening a second location in a growing area of Suffolk. 

“Patient expectations were very different in our second office,” Howell explained. “In more instances, patient treatment decisions were driven by out-of-pocket costs and what a dental benefits provider chose to cover, which, as we all know, can run contrary to standard of care. In the new office, we didn’t have the same relationships built on time and trust.” 

Other trends, including rising student debt, growing numbers of dental school graduates, and increasing costs of providing care also caused Howell to reflect on the future of the type of practice he had built over many years.  He also saw a growing number of dental support organizations moving into the area and the advantages they realized in negotiating with supply companies and dental benefits carriers. 

“The idea that became Atlantic Dental Care started with three like-minded dentists in Hampton Roads who wanted to preserve patient relationships and remain competitive in the changing practice environment,” Howell said. 

The idea of forming a group quickly grew beyond those three founders. 

On Jan. 1, 2013, 32 independent dental practices became 32 divisions of a single company, Atlantic Dental Care (ADC). The company employed 52 dentists spread out across 38 locations in the Hampton Roads area.

“Organizing the group took a lot of leg work early on,” Howell said. “Each division had to handle several important administrative matters including changing official practice names, tax identification numbers, NPI numbers, business licenses, marketing materials, and contracts with benefits carriers. We also did a lot of communicating with our patients to explain what ADC was and how it would help us provide them with better care.”


Pictured: Dr. Dani Howell (left), Dr. Ralph Howell (center) and Dr. Leroy Howell (right).

HOW ADC WORKS

Atlantic Dental Care operates as a Professional Limited Liability Company (PLLC). Howell describes how his organization uses the legal entity as an “Operational Umbrella,” with ADC serving as a “unifying body” and each member retaining some operational independence in their own dental practice. 

Operating under a “unifying body” means that all employees across the 32 divisions are direct employees of ADC. The company has a common pension plan, medical benefits plan, and payroll system. Each dental office’s assets are controlled by the company, meaning that risk is similarly shared. Atlantic Dental Care is a single financial entity with a common tax identification number, and the general ledgers and balance sheets for each division roll up into one consolidated set of financial statements.

“Many issues are determined at the PLLC level either because it is required by law or because of economic benefit,” Howell explained. “All other decisions are left to each division. We want each division to remain somewhat autonomous so it can keep most day-to-day operations similar to what made that practice successful prior to joining Atlantic Dental Care.”

Examples of day-to-day operational decisions retained at the division level include delegation of duties, patient scheduling, billing, and determination of what supplies, materials, and equipment will be used at the practice.

Personnel decisions provide a good example of how business decisions are made at various levels within ADC. Direct management of staff, including associates, hygienists, assistants, and front office staff, remains at the division level, as are decisions regarding whom to hire and, if necessary, when to terminate an employee.

While these personnel decisions are made at the division level, they must comport with a common set of personnel policies and employment contracting requirements set at the PLLC level through its own governance process. Decisions about base employee benefits are also made at the PLLC level, though each division can offer additional or enhanced benefits at its discretion.

“There are many advantages to employing through an organization larger than a single dental practice,” Howell said. “We are able to provide better benefits at a lower cost per-capita, which is very helpful with both recruiting new employees and retaining existing ones. Also, since all divisions are under one tax identification number, we can talk amongst the owner-doctors to discuss compensation and benefit philosophies as well as other personnel matters.”

All work at the PLLC level is handled by the Board of Managers which is made up of a representative from each division.  The Board of Managers elects officers, executive committee members, and contracts with external consultants to handle day-to-day operations of the organization.  ADC does not have any paid staff at the PLLC level. 

ECONOMIES OF SCALE

Perhaps the most obvious benefit to forming a group practice is the ability to use the group’s size to negotiate better prices for practice expenses and more favorable reimbursement rates with benefit carriers.

“After a few months of operations, we were able to begin negotiations with dental supply companies,” Howell said. “Prior to joining ADC, each of us had no idea what other members of the group were paying for supplies. All of us thought we were getting a great deal but, when we were able to compare costs with each other, we were quite surprised to learn the variance in prices we were each being charged for the same supplies from the same companies and, at times, even by the same sales representatives.”

“Purchasing at a larger volume allows us to obtain supply prices unavailable to us prior to forming ADC,” Howell said.

ADC has been able to negotiate more favorable reimbursement rates with some dental benefits carriers. Contact negotiations occur at the PLLC level. Divisions cannot enroll with plans outside of ADC. In some instances, ADC has chosen not to join the networks of some plans after engaging in negotiations.

SEVEN YEARS LATER

Seven years into the venture, ADC has continued to grow and is learning how to best support its divisions in providing optimal oral health care.

“Since 2013, ADC has more than doubled to include 132 dentists across 77 divisions,” Howell stated. “We are now the largest dental practice in Virginia with over 500 employees. About a quarter of all dental practices in Hampton Roads are a part of Atlantic Dental Care.”

Howell believes the endeavor has been successful because of ADC’s core values and strong, inclusive governance.

“We don’t just let any interested dental office in our group,” Howell explained. “ADC has a committee of member dentists thoughtfully review those who are interested in joining. From the outset, we have strived to make the organization easier to leave than it is to join.”

“The greatest benefit we provide to our members is the preservation of the independent private practice model with the clout of a much larger organization,” Howell continued. “Though it is pretty easy to leave ADC, few have, because the practice philosophies of our member dentists are in strong alignment with the group practice. It also helps that we provide a greater level of flexibility in a rapidly changing practice environment.”

ADC is currently focused on internal growth of its existing divisions and improving organizational efficiencies. The company has several member committees looking into developing best practices and streamlining operations. 

One area where increased efficiencies can be achieved is in practice management software. Before ADC formed, several practice management software programs were used across the different practices. When ADC formed, the group decided to allow each division to keep the practice management software it had previously used, and several different programs are used across the divisions to this day.

“We currently have inefficiencies due to multiple systems doing the same thing. This matter is being discussed within our governance but, like in any democratic organization, decisions of significance take time,” Howell said. 

The Atlantic Dental Care model is being replicated elsewhere in the Commonwealth of Virginia. A group of dentists in the Richmond area have formed Central Virginia Dental Care. That group currently has 101 dentists across 69 offices.

Currently, both Atlantic Dental Care and Central Virginia Dental Care do some joint marketing and recruitment activities. In the future, these entities may join together with other similar groups to have even greater economies of scale. 

NEXT STEPS FOR WSDA, ODA

Attendees of the October 2019 Group Practice Summit left the meeting with increased interest in group practice formation. They agreed that WSDA and ODA should articulate a role to help members learn how to form groups and, potentially, provide recommendations for consultants to aid members in group practice formation.

“Driving innovation to reduce our members’ costs in providing optimal oral health care has emerged as a priority in WSDA’s next three-year strategic plan,” said WSDA executive director Bracken Killpack. “Members should expect more from us on how to form a group practice and efforts to reduce barriers to forming dentist-owned groups in the years ahead.”

“The ODA is also very interested in supporting the development of group dental practices in the Pacific Northwest,” explained ODA executive director Conor McNulty. “We routinely get inquiries from our members about how ODA can support them in finding or starting a group practice. ODA is committed to helping our members succeed in the practice modality that is right for them.”

Since the summit, leaders from the two associations have continued to move this dialogue forward. A joint task force is being formed to create in-depth educational materials on forming groups as well as develop recommendations on additional support WSDA and ODA can offer their members. Look for more information from WSDA on these efforts in the months ahead. 

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Proliance Surgeons: A Group Medical Practice Case Study in Washington

Trends in medicine can serve as a predictive lens through which one can see a potential future for dentistry. 

The number of physicians in private practice has been in a steady decline for decades. As of 2018, the American Medical Association reported that less than half of all physicians have an ownership stake in their practice. The decline in practices with 10 or fewer physicians has been particularly pronounced.

“Medical groups of all sizes are dealing with many of the same challenges,” explained Kara Dowdall, vice president of operations for Proliance Surgeons in Washington state. 

“These challenges include increased overhead and practice expense and declining reimbursement. At the same time, medical groups, especially those with ancillary revenue, are receiving interest from private equity firms seeking influence or outright control of practices. Medical groups may be interested in these arrangements to gain access to capital for expansion. Another significant trend is in medical insurers purchasing medical practices. Case in point, OptumCare: a subsidiary of UnitedHealth group, which now employs over 45,000 physicians across 15 states.”

“These pressures can interfere with a physician’s ability to provide the best care to patients — and stay in private practice,” Dowdall said.

In 1993, several groups of orthopedic surgeons formed the Orthopedic Consultants of Washington (OCW). Eight years later, OCW added a general surgery group, and, in 2002, renamed the organization Proliance Surgeons (Proliance).

Since then, Proliance has added additional medical specialty groups including plastic surgery, obstetrics and gynecology, neurosurgery, ophthalmology, otolaryngology, physiatry, pain management, podiatry and urology.

Currently, Proliance employs over 2,200 people including more than 250 physicians. Proliance has more than 100 medical clinics, ambulatory surgery centers, physical and occupational therapy clinics, and imaging centers. The vast majority of these clinics are located in the Puget Sound region with additional locations in eastern Washington.

Dowdall, who has been with Proliance since 2010, explained why so many independent medical groups have joined Proliance. 

“Our physicians believe Proliance is a better alternative to being an employed physician for a hospital or other medical groups because physicians completely own and control the organization; they have autonomy in their practices while obtaining the benefits of being in a larger group,” she said. “Proliance provides services not easily performed in a solo or small group practice including information technology, regulatory compliance, and human resources support.”

HOW PROLIANCE WORKS

Proliance has a two-tiered structure. The Central Services Office (CSO) handles finance and accounting, human resources, vendor and supply contracting, information technology, and all legal, regulatory, and compliance issues. The CSO has a staff of about 50 employees, predominately IT and accounting staff.

Working in conjunction with the CSO are separate care centers. Each care center handles its own day-to-day operations and retains autonomy in patient care decisions.

Marketing, branding, and real estate-related activities vary across care centers. Some care centers assume more responsibilities, while the CSO assumes more responsibilities in other instances.

Proliance relies upon active member governance to sustain its business operations. In addition to having a nine-person board of directors, all of whom are physicians, Proliance committees oversee different aspects of its business operations.

For example, Proliance has a contracting committee, chaired by a physician, to oversee negotiations with all payors and establish a single fee schedule.  Each employed physician must participate with all Proliance-contracted payors. 

Other Proliance governance committees include quality assurance, credentialing, strategic planning, marketing, revenue cycle, and information technology. Most medical specialties within Proliance also have service line committees that handle matters specific to that specialty, such as general surgery, orthopedic, ENT, urology, and women’s health.

At this time, Proliance’s standardized requirements for joining and leaving ownership in the group practice do not include non-competition agreements with new owners. The organization recruits heavily among the fellowship programs from which its existing physicians graduated. Dowdall explains that, “Proliance has had strong success recruiting new physician owners from strong fellowship programs. Our physicians have strong ties with their fellowship programs and we are able to attract the top physician candidates from these programs.”

PLANNING FOR THE FUTURE

Proliance continues to evolve to meet the needs and demands of its physician members. At their request, Proliance is in the process of increasing its centralization of many services, such as revenue cycle management, to avoid redundancy and reduce overall operational costs. Care center administrative staff will be increasingly consolidated under regional leadership. 

The company is also preparing for major changes in the ever-evolving insurance market. “As payors increasingly shift to value and risk-based/bundled payments, Proliance has invested more in analytics and measuring patient-reported outcomes,” Dowdall said.

Proliance has taken particular interest in participating in Medicare’s Shared Savings Program Accountable Care Organization (ACO). The program’s objective is to provide incentives for health providers across specialties and practice settings to work more closely together to provide better individual patient care. By participating, providers are eligible for enhanced reimbursement rates tied to quality-of-care measures. 

Establishing joint ventures with hospitals is also an emerging priority for Proliance. The organization currently has three separate ambulatory surgery center joint ventures with Puget Sound-area hospitals.

Overall, Dowdall believes Proliance is well positioned for future changes in health care.

“There is strength in economies of scale,” she explains. “New reimbursement models, focused on increased quality of care and measured patient and clinical outcomes, will require health care providers to have more efficient operations and more market awareness. Larger groups can spread increasing delivery costs over a wider patient base and exercise greater leverage in payor negotiations.”