Small Smiles Heading For Shut Down?

[Cold Front]

Advertisement - Members don't see this ad

This is a company that got into a big start as a corporate dentistry, but found itself on the wrong side of the high standards and ethics of dentistry.

• Found in 1928 in Pueblo, Colorado to serve children from low-income families.
• In 1995 the second Small Smiles clinic opened in Colorado Springs, Colorado. Business increased after the clinic opened.
• In 2003, the founder retired very wealthy and his children continued the business.
• In 2004, Small Smiles emplyed almost 100 dentists (all general) at 70 locations in over 20 states.
• Later that year, reports of abusing children with papoose boards came to light.
• More reports of over billing medicaid insurance. In the state of Colorado alone, the medicaid bill was about $16 million in 2004 alone.
• In 2006, the founder's family sold their stake in the company to private equity company that has no history of dentistry or dental business.
• In 2010, US Department of Justice sued Small Smiles for false claims in their billings by various states, a settlement was reached for $24 million payable to states. State of New York received $4 million alone.
• Just days after the DOJ settlement was announced, a class action suit was filed in the U.S. District Court for the Northern District of Ohio. As a result, Small Smiles closed their Northern Ohio clinics.
• 2011, a New York law firm representing 10 families and their 30 children filed a lawsuit against Small Smiles dentists who performed unnecessary procedures and physically restrained children.
• In 2012, Small Smiles filed Chapter 11 bankruptcy. This means restructuring of the company while still keeping control of the business, but there is a court official/trustee who is designated to oversee the Chapter 11 case on a day to day.
• Later this year, the parents and children (aged 2 to 8) from 2011 (unnecessary work) lawsuit is upgraded to a class action. Small Smiles requested a motion to dismiss the suits at the court, judge denies it.
• Attorneys at local tv stations in certain states air commercials, asking viewers to call them if their young ones were seen at Small Smiles and had bad experience.

Can Small Smiles recover from this at this point?

 

[DrJeff]

It's really a viscous cycle of any business model that tends to rely on medicaid fees and volume.

There's seems to be this major misconception by so many out there, that aren't within the BUSINESS (and yes it is a business) of dentistry that we all operate with profit margins of 75-90% (far from the case under most circumstances) and that the gov't (be it state or federal, via the major insurance contracts, or themselves they write with whatever carrier they choose to administer) can keep squeezing fees down and that we'll all just go along with it.

There comes a point where the reimbursement levels get too low to cover our operating expenses, let alone make any profit, and as a result the dental provider needs to decide to drop medicaid patients (and typically face some guilt by some of those patients who feel they're entitlted to their "free" care, or possibly they'll look to do "extra work" so that with the low reimbursement fees that medicaod pays they can atleast generate enough to cover their expenses (most dentists will have a rough idea at what they need to collect (and hence produce) per hour to meet their expenses, that's just what's involved with running a business.

Medicaid real life scenario that I face in my office with adult medicaid patients.

If I have an adult medicaid patient who needs a 2 surface class II filling. First off, per the policies set in place by the state of CT where I practice, the only posterior direct filling material they'll pay for in an office that does both amalgam and composite restorations if amalgam. If the medicaid patient wants a composite posterior restoration, they are responsible for 100% of my usual fees, medicaid won't do as most insuarnce companies do and reimburse for the amalgam fee and then allow me to bill the difference directly to the patient between what a 2 surface amalgam and a 2 surface composite costs in my office (about $75). Then, I get reimbursed, not the full medicaid fee that I get for medicaid patients 21 and under - and that fee still has me writing off about $60 of what my usual fee is), but 52% of the "kids fee", so for that adult medicaid patient who needs a 2 surface class II restoration, i'm writing off about $125 of my usual fee - this has my reimbursement rate for that filling at less than 30% of my usual fee, and BELOW what my overhead is - that's real life for me

So if I choose to see a bunch of medicaid patients, to remain profitable, I either need to limit how many medicaid patients I can see (often at a loss) or increase my fees to my non medicaid patients to make up for what I loose on medicaid patients, or find other ways to increase revenue or decrease costs. If this is a preview of things to come once the "Affordable" Care Act gets implemented, the ethical issues facing corporate dentistry today will be spreading more and more into private practice. To operate a business and remain in business, one needs to be profitable. This is a concept that so many lawmakers either never knew, don't grasp, or don't seem to care about these days

 

[Cold Front]

Well said Doc.

Medicaid expansion will open the flood gates. The government currently catches 3% of all Medicaid fraud, imagine what raising the poverty line will do to the system.. More fraud, and government doesn't have the man power to catch the abusers.

Small Smiles currently stands on the edge, their chapter 11 bankruptcy means the courts are doing their books, states even threatened to take their Medicaid licenses away, but how do you run 60 offices under this climate? It's interesting to see how this story will end.

 

[DDGDDS]

Personally I think it is NOT going to end well for Small Smiles, Kool Smiles or any of the "Smiles". More reports of fraud, abuse and federal agents raiding these places in 2012 than ever before.

 

[Cold Front]

This is an interesting read... they were asked to hand over everything they do by the senate, from corporate emails to how doctors turn that class 1 lesion to SSC.

http://www.grassley.senate.gov/abou...Baucus-to-Church-Street-Health-Management.pdf