Dental services are an important and growing sector of the economy. From 1980 to 2005 annual dental expenditures increased at an average annual rate of 7.2 percent; and, as of 2005, at $86.7 billion, dental expenditures exceeded annual expenditures on coronary heart disease and cancer treatment, respectively.1
Of the annual growth in dental expenditures, almost one-third of the seven percent increase (2.3%) is attributable to dental price increases in excess of general inflation. Moreover, in 2004 more than one-third of the U.S. population over age 1 did not visit the dentist, a proportion that has barely changed since 1997.2
These figures highlight the size and growth of expenditures on dental care, but they also suggest a challenge for population health -- gaps in access to dental care that have not been ameliorated in the past decade and excess dental price inflation. To address these shortfalls in dental care sector performance, a variety of tools in public policy and practice innovation might be employed. For example, federal and state programs might (1) expand loan forgiveness programs for dentists practicing in underserved areas, (2) increase the scope of independent practice of dental hygiene in areas with compromised access, and (3) collaborate with the dental profession to encourage reduced prices and enhanced access to dental insurance for underserved populations.
Since it is beyond the scope of this paper to examine the full range of policy and practice instruments, the authors have chosen to focus on one practical mechanism for improved dental care performance -- dentist productivity
. Over the period 1960 – 1998, dentist visits per unit time worked increased 1.4 percent annually on average. However, in spite of this positive absolute trend–with the exception of the time frame 1960 to 1974 when dentist productivity grew by almost 4 percent per year -- annual productivity growth lagged overall growth in the US economy.1
illustrates the logical relationship between dentist productivity and other parameters of interest. An increase in productivity, defined as increased units of output of dental visits per unit of input (practice personnel and capital), leads to reduced cost per unit of output, other things being equal. Improved productivity correspondingly implies that more dental services could be produced with the same level of dentist workforce.3
Reduction in unit cost (improved efficiency
), in turn, increases the dentist’s willingness to supply services at any given price, represented pictorially as a shift from S(0) -- the original number of visits supplied at any given price -- to S(1) -- the new, potentially greater number of visits at the lower unit cost attained through increased productivity. In order to equilibrate supply and demand in the dental marketplace, price is now reduced from P(0) to P(1), and the aggregate quantity of visits delivered to patients rises from Q(0) to Q(1). The implication for oral health is that increases in dental output potentially result in improved access to dental care.
Relationships between Value, Cost, Efficiency, and Productivity
The preceding reasoning follows standard economic theory. While dental market behavior might not adhere precisely to this model because of the special professional, social, and regulatory aspects of dentistry, we do submit that this logic offers an accurate qualitative portrait of the impact of productivity on other parameters of interest to dental practitioners, patients, and policymakers. Even if dental practice is not perfectly competitive, improved productivity helps to contain the cost of dental services and thereby increase the supply of those services. The relationships in concentrate on price, unit cost per visit, and number of visits (quantity). Accordingly, the model’s implications for the effect of increased dentist productivity assume that other supply-side factors (e.g., dental workforce policy, input prices) and demand-side influences (e.g., levels of income, dental insurance) stay the same and should be judged in that context.
Changes over time in relative dental price, dentist productivity, utilization per capita are broadly consistent with the model of .3
During 1960-1974 when productivity (output per dentist) rose 3.95% per year, relative dental prices increased by 0.87% per year. In contrast, during 1991-1998 dentist productivity rose only 1.05 per year, while relative dental prices rose 2.22%. This comparison, while based solely on correlation, is suggestive of the hypothesized inverse relation between productivity and dentist prices. The same data3
suggest an inverse relation between the rate of increase in relative dental prices and utilization per person, which is consistent with the logic of : reduced prices lead to increased demand. Put differently, reductions in price (other things equal) are associated with improved access.
Benefits of increased productivity are realized initially by the owner-dentist and the dental practice4,5
, but -- to the extent that private practice productivity benefits are passed through to patients and the larger society -- there are potential long-run gains to a broader set of stakeholders. For example, increased productivity would allow dentists to expand services to patients for the same input of time, while improving returns on investments in dental education made by individual dentists and by states and federal government. The extent to which such improvements accrue to patients and the public versus to the private dental practice will depend on market and regulatory forces: ease of entry into dentistry and dental auxiliary professions; availability of comparative information on access, pricing, and quality of dental services; and the extent to which dental insurance insulates patients from the cost consequences of their dental treatment choices.
Prior empirical work on dentist productivity, including the impact of expanded function auxiliaries, is more than three decades old and potentially out of date with respect to current patterns of dental practice.6, 7, 8, 9
The vintage of this empirical work supplies one important rationale for our paper: to ascertain whether relationships appear to have altered appreciably over the past 30 years. The earlier papers show that output, measured in visits, is largely a function of the number of dentist hours worked; smaller increases are contributed by increased use of dental assistants and hygienists, and a greater number of operatories. These studies consistently find a positive relationship between dentist experience and productivity.6,7, 8, 9
While positive, the slope of the relationship with productivity decreases with experience -- thus exhibiting diminishing marginal returns analogous to those of labor and capital.
In the current study, the authors examine the production of dental visits as influenced by: labor inputs (dentist time, and number of dental assistants and hygienists), capital inputs (number of operatories), practice characteristics (ownership status and payer mix), and years of dentist experience. The empirical model of production is based on theory10,11
and previous empirical studies of dental6,7, 8, 9
and physician services.10,11
. In selecting dentist visits as the measure of output, we follow the general convention of previous studies, while acknowledging that general dentist visits represent an intermediate
output on the way to the ultimate goal of improved population oral health.