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7101 York Avenue South, Suite 300 Edina, Minnesota 55435-4407
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May 2009

Bulletin, May 2009

The Latest in Area Economic and Technical Trends
Exclusively to Clients and Friends of Advanced Practice Management

The Dental Dow Jones, First Quarter 2009:

The mature area practices sampled showed an average increase of 1.7% in production and 1.2% in collections compared to the first quarter of 2008.
Quarter to quarter 2008 to 2007 there was about 4% growth so the first quarter of this year has shown very little growth but there has been no big drop off either.

Patient flow as measured by exams is down about 1.7% although new patients are up 5.5%.

There has been a bit of a reduction in down time in the hygiene schedules and a bit of an increase in down time in Doctors’ schedules.

Growth certainly isn’t a given, but our industry remains outside the harshest of the country’s economic winds. Keep managing the factors within your control. There are many!!

AverageTotalProduction5_09

Midwest Dental:

Most often, when you think of multi-location group practices, “Metro” and “Park” come to mind. However, Metro and Park have now combined (as American Dental Partners affiliates) and have 57 practices. Midwest Dental, out of Mondovi, Wisconsin has 67 practices (42 in Wisconsin, 10 in Minnesota, 9 in Illinois, 4 in Iowa and 2 in Colorado).
I recently talked to Sean Epp, the Managing Director of Development* for Midwest. Midwest Dental’s business model is different than the other conglomerates because it’s based largely on one- and two-man practices. They see their model as a traditional practice.

For some dentists, Midwest Dental can be a viable transition option. They often employ the selling Doctor so it’s a possibility if you want to sell your practice but still would like to work for a while. Since the big merger a while back there hasn’t been a lot of news out of Park and Metro Dental. They still maintain separate websites. At one time I thought we’d see a diaspora of Doctors and patients but we haven’t seen that happen.

* Sean Epp, www.Midwest-Dental.com

Delta has been served

As reported in the Star Tribune on 4/27/09, The Smile Center has filed a $2.8 million lawsuit against Delta.
The Smile Center (Dr. Ed Silker and company) has five locations around the state. They take on quite a bit of Medical Assistance. Delta said it withheld money because the clinic provided significantly more services per patient than other clinics serving poor Minnesotans.

Is it possible to take Delta to court and win? Any Doctor who was, has or will be “audited” and been asked to refund money to Delta will find the outcome of this contest interesting.

Red Flag Rule delayed until August 1, 2009:

Don’t worry about it right now, and don’t buy the $250 manual for this (and HIPAA) that is being pushed by some companies in mail solicitations. If and when you need the compliance information, the MDA and ADA will have it for free.

Is an 18% finance charge illegal?

82% of the Dentists responding to our latest APM Technology, Procedure and Insurance Survey indicated they assess a finance charge. The great majority who do so charge 18%.

In late January, the Minnesota Attorney General’s office sued Allina alleging that Allina and a subsidiary violated Minnesota Usury Laws by charging rates of interest up to 18% per year on medical debts. The lawsuit also alleges that Allina and its subsidiary violated Minnesota’s consumer fraud laws. The suit settled last month whereby Allina and its subsidiaries agreed to repay the difference to the consumers between the 18% rate and the maximum allowed under Minnesota law.

I discussed the matter with David Aafedt* with the law firm of Winthrop and Weinstine, P.A. in Minneapolis. David was an assistant attorney general with the Minnesota Attorney General’s office from 1997 to 2003 where he represented the Minnesota Departments of Commerce and Health as well as the State of Minnesota in consumer enforcement litigation, administrative hearings and appeals.

Now in private practice, a significant part of David’s practice involves representing dentists, physicians, provider groups and other healthcare related businesses in conjunction with board or agency enforcement actions or investigations, as well as investigations or litigation brought by the Attorney General’s Office.

Minnesota’s Usury Law, as referenced in the Attorney General’s suit, indeed limits interest charged above 8% per year, subject to a number of exceptions. He indicated that although the Attorney General’s office has been investigating healthcare related billing and collections issues for the last three years, this is the first case where the focus of the Attorney General’s case has been the level of interest charged.

David went on to explain that although healthcare related billing and collection issues continue to be a strong area of interest for the Attorney General’s office, he has not seen the Attorney General target dental offices as part of any type of billing and collection related cases. Mr. Aafedt says, “That does not mean the Attorney General will not turn her focus to one or more dental offices should she feel that they are violating the law.”

It’s been my experience (and I’m not a lawyer!) that it’s not worth getting worried about or reacting to laws that aren’t being enforced (against Dentists). If and when this does get enforced, I think we’ll hear about it and Doctors should take action. In any case, accounts receivable ratios are one half what they used to be. Doctors are using third party financing, credit cards and are collecting more up front so there are fewer old accounts to assess carrying charges on. So, in-house finance charges are less and less an issue.

We have always advised, when push comes to shove, if a patient contests paying a carrying charge, just write it off.

I wouldn’t worry about it, but if it bugs you it’s not a big deal to reset your computer to charge 8%.

Our thanks to Mr. Aafedt for his research on this. He welcomes your calls should you have further questions.

* David Aafedt, Winthrop & Weinstine, P.A. Email: daafedt@winthrop.com

Phone: 612¬604¬6447 Website: www.winthrop.com

Sincerely,

BillBlueSig