Western Dental’s Business Model or Western Dental’s Business Strategy?

Western Dental is one of the largest Denti-Cal providers in the state of California. How big, you say? Western Dental is reported to serve between 650,000 and 700,000 patients annually with a higher Medi-Cal payer mix since the implementation of Medicaid expansion California.

Typically, new patients are a good thing. But it is possible to have too much of a good thing when it comes to payer mix, particularly when Denti-Cal's reimbursement rates actually decreased by 10 percent in 2013? That came on the heels of no payment rate increases since 2000-2001.

I don't think the timing on this is any accident. When you twin the recent Supreme Court decision in Armstrong (holding that Medicaid providers do not have standing to challenge the adequacy of a state's Medicaid reimbursement rates) with prior decisions like Douglas (holding that Medicaid beneficiaries also lack standing to challenge a state law that sets the low reimbursement system in place), you see that market exit or partial market exit is pretty much Western Dental's only immediate option.  And so Western Dental has announced its decision to stop accepting new patients under Denti-Cal.

Lots of hand wringing has ensued. Yet the "crisis" was predictable. What is unpredictable is whether this will force California to get serious about licensing dental therapists.

 

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