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Dental Benefits in the 21st Century: Industry Trends and Opportunities

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Dental Benefits in the 21st Century: Industry Trends and Opportunities

  1. 1. DENTAL BENEFITS IN THE 21 st CENTURY INDUSTRY TRENDS AND OPPORTUNITIES
  2. 2. Course Goal: An Idea Merchant <ul><li>Share information and ideas that can help you provide better solutions to your current dental clients and prospects </li></ul><ul><ul><li>Overall Economic/Societal perspective </li></ul></ul><ul><ul><li>Impact on health </li></ul></ul><ul><ul><li>Historical overview (crystal ball) </li></ul></ul><ul><ul><li>Current trends </li></ul></ul><ul><ul><li>Market Opportunities </li></ul></ul>
  3. 3. Why “Dental” Hits Home <ul><li>Toothbrush is #1 invention Americans can’t live without* </li></ul><ul><li>Growing understanding of link to overall health </li></ul><ul><li>Makes employees more productive, loyal and happy </li></ul><ul><li>Expensive and getting more so </li></ul><ul><li>*2003 Lemelson-MIT Invention Index Survey </li></ul>
  4. 4. Dental Work Is Expensive…
  5. 5. …Very Expensive!
  6. 6. Adult Cleaning 1 Surface Amalgam Child’s 1 st Visit PFM Crown Denture (upper) Implant (prosthesis) Source:80 th percentile of Medicode (San Diego) How Expensive Is It?
  7. 7. Adult Cleaning 1 Surface Amalgam Child’s 1 st Visit PFM Crown Denture (upper) Implant (prosthesis) Source:80 th percentile of Medicode (San Diego) How Expensive Is It? $ 96
  8. 8. Adult Cleaning 1 Surface Amalgam Child’s 1 st Visit PFM Crown Denture (upper) Implant (prosthesis) Source:80 th percentile of Medicode (San Diego) How Expensive Is It? $ 96 $ 131
  9. 9. Adult Cleaning 1 Surface Amalgam Child’s 1 st Visit PFM Crown Denture (upper) Implant (prosthesis) Source:80 th percentile of Medicode (San Diego) How Expensive Is It? $ 319 $ 96 $ 131
  10. 10. Adult Cleaning 1 Surface Amalgam Child’s 1 st Visit PFM Crown Denture (upper) Implant (prosthesis) Source:80 th percentile of Medicode (San Diego) How Expensive Is It? $ 319 $ 96 $ 131 $1,000
  11. 11. Adult Cleaning 1 Surface Amalgam Child’s 1 st Visit PFM Crown Denture (upper) Implant (prosthesis) Source:80 th percentile of Medicode (San Diego) How Expensive Is It? $ 319 $ 96 $ 131 $1,000 $1,511
  12. 12. Adult Cleaning 1 Surface Amalgam Child’s 1 st Visit PFM Crown Denture (upper) Implant (prosthesis) Source:80 th percentile of Medicode (San Diego) How Expensive Is It? $ 96 $ 319 $1,000 $1,511 $2,524 $ 131
  13. 13. <ul><li>1980 $ 13.3 billion </li></ul><ul><li>1990 $ 31.5 billion </li></ul><ul><li>$ 56.0 billion </li></ul><ul><li>2005 $ 85.0 billion </li></ul><ul><li>2010 (projected) $108.9 billion </li></ul><ul><li>Source: U.S. Health Care Administration </li></ul>Dental Spending in the U.S.
  14. 14. Dental Spending in the U.S. <ul><ul><li>How Americans Pay </li></ul></ul><ul><ul><li>Private Health Insurance $27.7 billion </li></ul></ul><ul><ul><ul><li>Out of Pocket Payments $25.6 billion </li></ul></ul></ul><ul><ul><ul><li>All Other $ 5.1 billion </li></ul></ul></ul><ul><li>Source: U.S. Health Care Administration </li></ul>
  15. 17. Dental Is Important To Society <ul><li>People with dental benefits are twice as likely to go to the dentist </li></ul><ul><li>Every $1 spent on preventive dentistry saves over $4 in restorative costs </li></ul><ul><li>Poor dental health impacts every age group </li></ul><ul><li>Direct link between dental disease and major health problems </li></ul><ul><li>Source: National Institute of Health </li></ul>
  16. 18. Importance to Children <ul><li>Dental caries (tooth decay) is the most common chronic childhood disease – 5 times more common than asthma and 7 times more common than hay fever </li></ul><ul><li>Over 50 percent of 5-9 year-old children have at least one cavity or filling, and 78 percent among 17 year-olds </li></ul><ul><li>51 million lost school hours each year </li></ul><ul><li>Pain and suffering due to untreated diseases can lead to problems in eating, speaking, and attending to learning </li></ul><ul><li>Source: Department of Health and Human Services </li></ul>
  17. 19. Importance to Adults <ul><li>For every adult 19 years or older without medical insurance, there are three without dental insurance </li></ul><ul><li>164 million hours of lost work each year </li></ul><ul><li>Source: Department of Health and Human Services </li></ul>
  18. 20. Importance to Older Adults <ul><li>Most older adults lose their dental insurance when they retire </li></ul><ul><li>30% of adults 65 years and older wear dentures (compared to 46% 20 years ago) </li></ul><ul><li>23% of 65-74 year-olds have severe periodontal disease </li></ul><ul><li>Source: Department of Health and Human Services </li></ul>
  19. 21. Periodontal Disease is a Nationwide Epidemic <ul><li>80% of adults will have some form of periodontal disease </li></ul><ul><li>2 nd most prevalent disease in U.S. after heart disease </li></ul><ul><li>Affects more than 50 million people </li></ul><ul><li>Only 15-20% receive treatment </li></ul><ul><li>$6 billion is spent annually to treat the disease in the US </li></ul><ul><li>Source: U.S. Department of Heath and Human Services </li></ul>
  20. 22. The Link Between Periodontal Disease and Overall Health <ul><li>Systemic </li></ul><ul><ul><li>Diabetes </li></ul></ul><ul><ul><li>Heart Disease </li></ul></ul><ul><ul><li>Respiratory Disease </li></ul></ul><ul><ul><li>Osteoporosis </li></ul></ul><ul><ul><li>Pre-term, low birth weights </li></ul></ul><ul><ul><li>Pancreatic Cancer </li></ul></ul><ul><ul><li>Pneumonia </li></ul></ul>
  21. 23. History Repeats Itself * Decade of Growth 2000’s 1990’s POS 1990’s 1980’s PPO 1980’s 1970’s HMO 1960’s 1940’s Insurance Dental * Medical *
  22. 24. 21 st Century Medical Trends <ul><li>2002 HealthAllies Survey </li></ul><ul><li>2004 Medicare discount Rx card legislation </li></ul><ul><li>2005 CalPERS decision to place cost above access </li></ul><ul><li>2006 DMHC decision to regulate discount plans </li></ul><ul><li>2006 Wal-Mart Launches $4 Rx </li></ul><ul><li>2006 Guardian Survey found 89% of Americans understand oral-health connection </li></ul>
  23. 25. 21 st Century Medical Trends <ul><li>2007 average employee healthcare cost is $7,211* </li></ul><ul><li>Between 2000 and 2007** </li></ul><ul><ul><li>Cost of providing health benefits rose 100% </li></ul></ul><ul><ul><li>Worker wages increased 25% </li></ul></ul><ul><ul><li>Overall inflation increased 21 percent </li></ul></ul><ul><li>Employee Health Coverage Continues to Erode </li></ul><ul><ul><li>6.4 million fewer workers with employer-provided health insurance in 2006 than 2000 </li></ul></ul><ul><li>*Source: EBRI Issue Brief, Dec. 2007 </li></ul><ul><li>**Source: Economic Policy Institute </li></ul>
  24. 26. 21 st Century Medical Trends <ul><li>Integrated medical-dental health plans </li></ul><ul><ul><li>2007 Aetna/Columbia University study </li></ul></ul><ul><ul><ul><li>145,000 member study found early treatment of perio care resulted in lower overall medical costs for members with diabetes, coronary artery disease and stroke </li></ul></ul></ul><ul><ul><li>2008 BC/BS of Tennessee </li></ul></ul><ul><ul><ul><li>Members who received diagnostic or preventive care had 2% lower healthcare costs ($5.5 million/annual savings) </li></ul></ul></ul><ul><ul><ul><li>16% fewer admissions </li></ul></ul></ul><ul><ul><ul><li>Fewer incidences of coronary artery disease, congestive heart failure, diabetes and hypertension </li></ul></ul></ul>
  25. 27. 21 st Century Medical Trends <ul><li>Health risk appraisals are offered by 83 percent of companies (up 18% from ’07)* </li></ul><ul><li>Introduction of tiered PPO network benefits </li></ul><ul><li>CDHPs offered & enrolled increase </li></ul><ul><ul><li>Nearing 50% of employers offer or expect to offer </li></ul></ul><ul><li>*Source: Watson Wyatt/National Business Group on Health </li></ul>
  26. 28. 21 st Century Medical Trends <ul><li>Growing Medical Voluntary Market* </li></ul><ul><ul><li>Growing individual market – 27 million according to the US Census Bureau </li></ul></ul><ul><ul><li>Ninety-four percent of medical brokers sell at least some voluntary products </li></ul></ul><ul><ul><li>Problematic for carriers </li></ul></ul><ul><li>Growing use of the internet for information** </li></ul><ul><ul><li>Plays a role in nearly 60% of all health insurance sales </li></ul></ul><ul><ul><li>71% of insured people with a carrier for less than three years are still shopping online for insurance </li></ul></ul><ul><li>Medical tourism: alive and growing </li></ul><ul><ul><li>*Eastbridge 2007 Spotlight Report </li></ul></ul><ul><li>**Norvax </li></ul>
  27. 29. Traditional Dental Benefits <ul><li>PPO Plans have grown 68% over last 6 years and represent 54% of the dental market </li></ul><ul><li>Insurance plans have shrunk 53% and now represent 23% of the dental market </li></ul><ul><li>Dental HMO’s have declined 50% and now represent 14% of the dental market </li></ul><ul><li>Discount Dental Plans account for 8% of the dental market </li></ul><ul><li>Direct Reimbursement Plans account for less than 1% of the dental market </li></ul><ul><li>Source: National Association of Dental Plans </li></ul>
  28. 31. What Do Employers Want? <ul><li>Better benefits for less money </li></ul><ul><ul><li>Money is always an issue </li></ul></ul><ul><ul><li>DHMO Irony </li></ul></ul><ul><li>Network is important - a differentiator </li></ul><ul><ul><li>Size </li></ul></ul><ul><ul><li>Discounts </li></ul></ul><ul><ul><li>Standalone “Best in Class” until outcomes are linked to medical costs (still waiting) </li></ul></ul>
  29. 32. Maximizing your PPO Plans <ul><li>Expand your network options </li></ul><ul><ul><li>Tiered Fee-For-Service Networks (POS) </li></ul></ul><ul><ul><li>PPO/EPO </li></ul></ul><ul><ul><li>PPO/DHMO </li></ul></ul><ul><li>Dual-Purpose PPO networks </li></ul><ul><ul><li>Free benefits as long as the list of exclusions and limitations </li></ul></ul><ul><li>Preventive Plus plans </li></ul><ul><li>M aximum A llowable C harge plans </li></ul>
  30. 33. Understanding Dental Networks <ul><li>Golden Age of Dentistry – dentists have the upper hand </li></ul><ul><li>Dual-purpose PPOs </li></ul><ul><li>Network Size: Caveat Emptor </li></ul><ul><li>Network discounts: fixed vs. percentage </li></ul><ul><li>Specialist discounts </li></ul><ul><ul><li>Are they different? </li></ul></ul><ul><ul><li>Are they included? </li></ul></ul>
  31. 34. New Types of Plans <ul><li>Exclusive Provider Organization (EPO) </li></ul><ul><ul><li>Insured </li></ul></ul><ul><ul><li>Deeper discounted – smaller network </li></ul></ul><ul><li>Self Funding Increasing </li></ul><ul><ul><li>Predictable and non-catastrophic </li></ul></ul><ul><ul><li>Direct Reimbursement (“simple” self-funding) </li></ul></ul><ul><li>Dental Discount Plans </li></ul>
  32. 35. New Bells and Whistles <ul><li>Rollover maximums </li></ul><ul><li>Family vs. individual maximums </li></ul><ul><li>Escalating maximums </li></ul><ul><li>Diagnostic & Preventative maximums </li></ul><ul><li>Coverage for dental implants </li></ul><ul><li>Coverage for teeth whitening </li></ul><ul><li>Coverage for pregnant women </li></ul>
  33. 36. Dental Plan Opportunities <ul><li>Everyone should have a network (groups and individuals) </li></ul><ul><ul><li>PPO </li></ul></ul><ul><ul><li>EPO </li></ul></ul><ul><ul><li>DHMO </li></ul></ul><ul><ul><li>Discount </li></ul></ul><ul><li>Add deeper discounted networks for additional savings </li></ul><ul><ul><li>EPO or DHMO with a PPO </li></ul></ul><ul><ul><li>PPO with deeper discounts </li></ul></ul><ul><ul><li>PPO with discounts for non-covered services </li></ul></ul>
  34. 37. Dental Plan Opportunities <ul><li>Use networks that expand coverage without costing more </li></ul><ul><li>Direct Reimbursement (“simple” self-funding) </li></ul><ul><li>Discount Plans </li></ul><ul><ul><li>Sharp & FDH Access </li></ul></ul>
  35. 38. Conclusions <ul><li>Dentistry is expensive and getting more expensive </li></ul><ul><ul><li>much less than medical but much faster than inflation </li></ul></ul><ul><li>Dental health directly impacts overall health </li></ul><ul><li>The Dental Benefits Industry generally follows the Medical Industry </li></ul><ul><li>Every client or prospect has options for improving or adding a dental benefit </li></ul>
  36. 39. Conclusions <ul><li>Options exist for you to save your clients money without taking away benefits </li></ul><ul><ul><li>Network enhancements </li></ul></ul><ul><ul><li>Plan design modifications </li></ul></ul><ul><ul><li>New products </li></ul></ul><ul><li>Brokers play an important role in educating their clients and prospects </li></ul><ul><ul><li>Health & welfare and savings </li></ul></ul>

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