For Immediate Release
Date: Aug 21st, 2012
Contact: By Jeffrey Parker
Sarrell Dental: Beyond the Operatory
Why does this work?
This was the question I asked myself following the PBS Frontline presentation Dollars and Dentists which featured a nonprofit operation in Alabama. How can you operate a profitable dental clinic based primarily on Medicaid reimbursements? I decided to contact Sarrell Dentals CEO, Jeff Parker, and get answers beyond the television report. I was not interested in clinical operations, as their track record speaks for itself. I wanted to know the business model that allows them to be successful on margins that are foreign to solo dental practices. Our conversation led me to ask Jeff Parker to prepare a feature article for KDA TODAY. To meet the projected expansion of Medicaid in Kentucky we are going to have to begin looking at new practice models and Sarrell Dental is a work in progress. John A. Thompson, DMD
Recently, Sarrell Dental has been thrust into the national spotlight through our appearance on PBSs Frontline special, Dollars and Dentists. Following the special, I was contacted by Dr. John Thompson to discuss our methods, and he has given me the honor of writing this article exclusively for the Kentucky Dental Association.
Sarrell Dental is a 501(c)(3) non-profit, incorporated entity. We follow the basic structure of most public hospitals, in that they are governed by a board of directors charged with maximizing the benefit to and the care received by the community. No board member is compensated for their service on the board. Several dentists were instrumental in founding Sarrell Dental, and three of our current board members are dentists. Sarrell was founded by the Cornell educated cardiologist, Dr. Warren Sarrell, who is also the current board chairman. As with many hospitals, Sarrell Dentals CEO is not from the medical profession.
Today, Sarrell Dental has progressed to fourteen brick-and-mortar office locations, and operates a mobile dental bus that visits schools throughout the state (of Alabama). We are a self-sustaining non-profit, meaning we do not rely on grants or cash donations. We operate primarily from Medicaid and CHIP reimbursements.
Our success speaks for itself. We have had 30 consecutive quarters of record patient growth. We have experienced over 350,000 patient visits without a single patient complaint to the Alabama Board of Dental Examiners. Our average reimbursement per patient visit has decreased from $328 in 2005 to $131 in 2011 (See Figure 1). Please remember, this is not a Medicaid reimbursement number. It includes all work and all reimbursements we receive, including the higher reimbursements from CHIP and specialty work we do, such as oral surgery. Best of all, in every Medicaid audit we have had, we have never paid back a single penny. The longer an office is open, the lower the reimbursement per, patient visit (See Figure 2). We believe this proves we are eliminating caries among the poorest children in some of the poorest counties in the United States. If these numbers do not convince you that we run a caring, quality dental practice, nothing I write further will convince you otherwise.
Our offices look much like yours, with KaVo handpieces, electronic health records, digital panographs, etc. We also take every patients blood pressure and temperature and record their height and weight, giving a copy of this information to the parent. Like most hospitals, Sarrell Dental maintains a very clear distinction between clinic management and business management. Only dentists set treatment plans and determine what will be done, or will not be done, with their patients.
To us, the standard of care is the standard of care and it is never compromised. We have a Chief Dental Officer who regularly audits every dentists work. He sends them a written evaluation of what he observed and if improvement is needed. All dentists report directly to our Chief Dental Officer.
The Sarrell Model and Its Success
So what differentiates our practice from yours? Clinically, there is little difference. The difference is in the business model. This is why out-of-state dentists come to visit our offices. As an example, in the next thirty days from this writing, we will be visited by representatives from an East Coast dental school and a Midwestern dental school, along with two multi-dentist private practices from outside Alabama. They are not coming to learn how to fill a cavity. They come because they realize our differentiating factors are on the business side.
Sarrell Dentals first differentiating factor is how we view our patients. As noted in the Frontline piece, Dr. Cesar Sabates, the immediate past president of the Florida Dental Association stated, Dentistry is, in fact, a business. We agree with Donna Hyland, CEO of Childrens Healthcare of Atlanta. She is an ex-Home Depot executive now running one of the nations premier healthcare organizations. In her July 8, 2012, interview with the Atlanta Journal Constitution she stated, The customer is No. 1, 2, and 3. Her patients, our patients and your patients are also customers. Customers have choices and they speak with their feet. They choose where to grocery shop, where they bank, and what dentist to see. We must be open when it is convenient for them. We are open six days a week, 8 a.m. to 6 p.m., every week in our larger locations. Other offices are also open when it is convenient for our customers. For instance, some have hours of 10 a.m. to 7 p.m. We stay late until the last patient is seen. Yes, that poses a hardship for our staff, but we are there for the child, our patient, our customer.
A second differentiating factor is talent. We aggressively recruit for the best young talent, not just in Alabama, but also the nation. We regularly hire top of their class undergraduates, MBAs and MBA/JDs. If an undergraduate working for us wants an MBA, we pay for it. If one of our staff gets into UAB Dental School, we pay for it. How does a non-profit in rural Alabama attract such talent? Thats easy. Great talent only wants to work with great talent. Why do the University of Kentucky and University of Louisville basketball teams generally have top recruiting classes each year? It is simple, the best want to play with the best and to be part of a winning team. Just as important, I believe most of us want to do something positive for society. Many in my generation contemplated the Peace Corps, until we found out the pay and living conditions. At Sarrell, we pay well, and you have the opportunity to advance, not based on your age or seniority, but strictly by your ability. Moreover, you are progressing while helping American children who lack access to dental care. It is a very compelling call for many young people.
A third differentiating factor is buying power. We do not get buying power from being a non-profit. We get buying power because of our scale and the ability to buy in very large quantities. Early on, we hired a top sales person from a very large dental supplier. We got an idea of the industry margin structure. We told all four major suppliers in our area, We do not want donuts, Alabama football tickets or free golf. We do not even want you in our office disrupting our staff. All we want is the best price and service. This came as a shock to all four. Now, we have our supply and equipment costs down to industry lows and we use automated ordering. Automated ordering reduces paper, obsolescence of supplies, allows for JIT inventory and maximizes cash flow.
A fourth differentiating factor, and what many respected clinicians who visit us say is the most important, is our dental education and outreach. We regularly, at our expense, pay retired dentists to screen Alabama schoolchildren. Please note: we screen every child, regardless of income, who presents with a consent form. We then do our utmost to ensure every child who needs care is referred to a dental home. This is a very complex and elaborate program involving a Sarrell community outreach person in every community where we have an office. We make certain all consent forms are filled out properly and we work with the school nurses, administrators, and teachers to screen and educate the 50,000+ children we reached in 2011.
We work closely with Head Start programs. In fact, we were named Alabamas Head Start Corporation of the Year in 2010. We screen and educate their children and provide pro bono work to pregnant Head Start mothers who lack dental insurance. We are at health fairs, community health meetings, Boys and Girls Clubs, PTOs, etc., and educate not only children, but also their parents. We put on free football, basketball, and soccer camps for all children throughout Alabama.
Our fifth differentiating factor is our call centers. Callers are not simply someone in a converted broom closet running down a list of numbers as quickly as they can, or someone at the front desk trying to call, bill insurance, and assist patients at a check-in window. Our callers are mostly college graduates, or college students working part-time. They must be personable and likeable on the phone, and must understand the needs of the dental office. Stacking names up on the book will merely grind an office to a halt. Our callers must schedule intelligently and know how long each procedure will take. They must also build a rapport with the family, often through only the telephone. It is a difficult task, and it requires a special personality. Some people have questioned the need for a dedicated caller, but some simple math shows just how valuable they are. For example, if the average chair utilization rate is 50% for Medicaid patients, and a dentist has twelve blocks of time in a day (forty minutes per patient), then the dentist has wasted over four hours of time, through no fault of his or her own. Using Sarrells nationally low reimbursement per visit figure of $131, if a caller can simply move the show rate to 67%, or two additional patients per day, then the caller is generating over $65,000 per year. Note that these are not cold calls to recruit patients, but simply maximizing the existing patients an office already has. Sarrells chair utilization rate is over 95%.
All of these differentiating factors came down to one thing, scale. To again quote Donna Hyland of Childrens Healthcare of Atlanta, The biggest challenge in pediatrics is scale. In every business, scale is an issue. Scale, to me, is not how many patients you can push through a single office. Scale is having multiple access points, in our case, 14 offices. We choose to grow organically (internal growth, no acquisitions). The topic of scale brings up a word that many fear: consolidation. Dentistry has been a fragmented, cottage industry, much like physicians were a few decades ago. Whether we like it or not, consolidation is inevitable. It is in any fragmented industry, from hardware stores to medical practices.
Without scale, Sarrell Dental is no different from a solo practitioner who cannot operate successfully on Medicaid or CHIP reimbursements. I am not suggesting the end is near, but to remain competitive long term, you must partner to gain scale.
I truly believe we are all working towards the same goal: the improvement of oral health and access to dental care for Americas children. This goal must be met either by best demonstrated practices emanating from the dental community, or if we continue to fail, the government or other special interests will impose their solutions. The Sarrell model is one proven answer. We need more.
Mr. Parker is a retired businessman and currently teaches as the Executive-in-Residence at Jacksonville State University. There, he instructs the capstone classes in both the undergraduate and MBA tracks. Out of graduate school, he worked for world class organizations such as General Foods, ConAgra, and Sara Lee. At 31, he reached the divisional CEO level, and by 40 he had retired. In 2005, Mr. Parker was asked by Dr. Warren Sarrell to come and look at the clinic he had founded, and to offer any advice that might improve it. He has continued to serve the organization ever since. For more information on Sarrell Dental or to contact Mr. Parker directly, please visit www.sarrelldental.org.
This article may be freely copied or reproduced ONLY in its entirety. For reproduction of specific sections, please contact the author, Jeffrey Parker, at Sarrell Dental.