The Dental Nightmare of Private Equity

After years of getting quarterly dental cleanings, my periodontist said he wanted to pull several teeth and do three or four periodontal procedures. My pockets were too deep, I was told. And don't worry, the receptionist said in a cheerful voice, I didn't have to pay all at once. I was given about nine or ten months to get the $8000 together.

I declined the offer. He is now my ex-periodontist.

Several years later, I was on the verge of losing tooth #16, the left upper quadrant wisdom tooth. And tooth #15, the second molar, was not in good shape either. I was willing to sacrifice my wisdom tooth if it meant saving the tooth next to it, but then my dentist wanted to pull that one too! So I set up appointments with dentist after dentist after oral surgeon after endodontist until I found a dentist I could trust. My new dentist filled the tooth with no guarantees--this was about five years ago--and I've been fine ever since. No root canal. No tooth extraction.

So you can imagine my horror when I read the following (from May 17 on the Bloomberg website, an article by Sydney Freedberg: Dental Abuse Seen Driven By Private Equity Investments):

Dental care at an elementary school.

Isaac Gagnon stepped off the school bus sobbing last October and opened his mouth to show his mother where it hurt.

She saw steel crowns on two of the 4-year-old's back teeth. A dentist's statement in his backpack showed he had received two pulpotomies, or baby root canals, along with the crowns and 10 X-rays -- all while he was at school. Isaac, who suffers from seizures from a brain injury in infancy, didn't need the work, according to his mother, Stacey Gagnon.

"I was absolutely horrified," said Gagnon, of Camp Verde, Arizona. "I never gave them permission to drill into my son's mouth. They did it for profit."

Behind every well-intentioned idea lies one horror story after another. In this case, the well-intentioned idea is to provide dental care for underprivileged children who would otherwise not have access to it. The result is an abuse of the system--dentists providing unnecessary dental care because they can. As Mr. Freedberg explains:

Isaac's case and others like it are under scrutiny by federal lawmakers and state regulators trying to determine whether a popular business model fueled by Wall Street money is soaking taxpayers and having a malign influence on dentistry.

Isaac's dentist was dispatched to his school by ReachOut Healthcare America, a dental management services company that's in the portfolio of Morgan Stanley Private Equity, operates in 22 states and has dealt with 1.5 million patients. Management companies are at the center of a U.S. Senate inquiry, and audits, investigations and civil actions in six states over allegations of unnecessary procedures, low-quality treatment and the unlicensed practice of dentistry.

This is how The Wealthy Dentist blog described the situation on May 22:

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.

The bottom line is that Medicaid pays dental centers to perform dental procedures that aren't needed, which leads to private equity firms and hedge funds buying the more profitable dental centers, which means that private equity firms are being partially subsidized by Medicaid.

Comments (14)

May 24, 2012

It's a good idea to make sure you know the reputation of the dentist and oral surgeon before you go unless it's an emergency. Only pick the best. Some are almost like bad auto mechanics so beware.

Kids getting work done that their parents didn't know about beforehand sounds ridiculous. You can't blame the PE companies for making money, rather it's the government that allows it that's to blame in my opinion. Same goes for PE owned public utility companies and the extreme rate case increases.

May 24, 2012
TDSWIM:

It's a good idea to make sure you know the reputation of the dentist and oral surgeon before you go unless it's an emergency. Only pick the best. Some are almost like bad auto mechanics so beware.

Kids getting work done that their parents didn't know about beforehand sounds ridiculous. You can't blame the PE companies for making money, rather it's the government that allows it that's to blame in my opinion. Same goes for PE owned public utility companies and the extreme rate case increases.

No, if you do an unnecessary medical treatment on someone without informed consent, that's assault and battery. I know someone that this happened to.

The dentist should be in jail and the PE firm should be investigated. If they knew what was going on and permitted it while collecting profits, they should face a RICO action.

It's really that simple.

May 24, 2012

A dip a day keeps the dentist away

I eat success for breakfast...with skim milk

May 24, 2012
DeanPortman:

A dip a day keeps the dentist away

Haha, throwin' in a horseshoe?

May 24, 2012
APAE:
DeanPortman:

A dip a day keeps the dentist away

Haha, throwin' in a horseshoe?

i fuckin wish..hate europe

I eat success for breakfast...with skim milk

    • 1
May 24, 2012

I dont care who they are or where they are...all dentist are creepy and i am highly suspicious of them as pedaphiles

Eventus stultorum magister.

May 24, 2012

Healthcare is one of the most fraudulent sectors of the economy. I just looked at the publicly traded spine companies, and estimates from some the insurance payers say that 15-20% of the procedure volume in certain types of operations don't have any medical basis. Imagine having your fucking spine fused together so some doctor could earn a little bit more.

The awesome thing about spine is that doctors banded together to create something called Phyisician Owned Distributors, which means they control what some hospitals do or do not purchase (extracting fees and kick backs from the manufacturers who have to pay to play), and they get a cut of that as a distributor -- it's an unecessary middle man relationship. And that relationship incentivizes them to perform more procedures (they get paid twice, once as the surgeon and once as the distributor). And this is legal as of now. Medicine is a racket. No wonder the country is going bankrupt.

May 24, 2012
Ravenous:

Healthcare is one of the most fraudulent sectors of the economy.

Agreed. See:

http://bitterqueen.typepad.com/friends_of_ours/201...

May 24, 2012

My dentist is a milf.

May 24, 2012

How do you prove it was unnecessary? Different dentists have different philosophies regarding the best way to deal with and prevent problems. I'm not sure procedure is as clearly laid out as it is for say, removing an organ or what have you. I don't disagree with you, but I doubt any of the PE firms are openly saying "treat people for something need it or not." It's probably more aligning incentives and the dentists can figure out how to boost profits.

Most of the dentists and dental students I have known don't have the same level of scruples you usually see in most MDs. There is a different mindset in those that gravitate towards dental school.

It would just be difficult to connect the dots. I'd love to see them get burnt though.

May 24, 2012

If some kid comes home crying because he got a dental procedure that meets all of the following criteria:

1.) He did not want.
2.) His parents did not approve.
3.) Any reasonable dentist would have seen as medically unnecessary.

It's pretty darned cut and dry here. If all three criteria were met, the dentist should be in jail, and the PE managers should also be in jail if they were aware that this was being done. This is no different than assault and battery. We can blame government incentives afterwards if we would like, but let's blame the folks that assaulted this poor kid's teeth for profit before we do anything else.

If you don't believe we should prosecute folks who perform medically unnecessary procedures on unwilling patients, or conspire to aid or abet them, I really don't know what to tell you. If you get mugged on your way home, maybe your mugger will try to defend the three punches he threw at you as a "medical procedure" and your emptying the contents of your wallet as "payment for services."

May 24, 2012

I'm curious as to whether or not there are past cases where a dentist has ever been prosecuted for this. It seems to me like something that would fall under torts, not criminal law. I will ask one of my know it all law friends about it. I'd be willing to bet a small amount of money that there has been a tort against a dentist for something like that, but I highly doubt there have been any criminal cases in this area. I might be wrong though.

RICO cases seem to get dismissed too easily. Best case of action would probably be do the criminal side first and regardless of success get them with the tort too. If a RICO case actually got through it would be a hell of a wake up call for everyone to stop screwing around. It would be harsh but it would send the right message to all parties involved.

May 24, 2012

Actually, it happened to a family friend who was having open heart surgery done, and a doctor, unbeknownst to her, did an experimental procedure that she was not informed of. She is a bigwig at an F500 company, so she had the money and the clout to get the attention of the prosecutor. The doctor is now considering a plea deal that gives him five years in jail.

Same deal here. It's called ASSAULT, and assault applies when a doctor does a medically unnecessary procedure that you did not ask for and were not informed of.

Regardless of whether RICO cases get dismissed, the mere suit generally ruins a company with any kind of leverage, because they have to post a performance bond. CC: the fears about a RICO suit against Goldman Sachs two years ago and Drexel Burnham in the early '90s.

Regardless of whether or not the managers actually go to jail, their careers in private equity will effectively be over and they and their investors will lose pretty much everything. I think that's a fair and a reasonable punishment if there's a lot of evidence to suggest they knew about this. Their motivation was money, they traded ethics for that money, now they are left without money or ethics; just a bunch of grade school kids with their mouths filled with dental mercury, and the embarassment and ostracization that comes with having been "those assholes" and having to live on social security after the investors finish their lawsuits.

Conviction and jail would be a better deterrent, but I think a mere RICO filing will be effective enough to prevent repeats.

Of course, this is all assuming the evidence shows the prosecution team that management knew what was going on. If they didn't know what was going on and this was just a rogue dentist or two, that's a completely different story.

Jul 3, 2012
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