By Anne Blythe
A legislative proposal put forward by the state Senate that dentists say could open the door for hedge funds and private equity firms to acquire, open and operate dental practices not run by licensed dentists in North Carolina has hit a hurdle in the state House of Representatives.
The House spending plan that received bipartisan support in an 86-20 vote among state representatives May 22 does not include language created by the other chamber that would allow for such a change. That’s just one of many differences the two legislative bodies have about what should be included in the state’s spending plan for the next two fiscal years.
The new North Carolina fiscal year begins July 1, and legislative leaders have told reporters that the two chambers are not close on bridging their differences.
Critics of private-equity dentistry say they hope the House wins on that point, at least.
The North Carolina State Board of Dental Examiners has long put up a significant barrier to dental practices not being owned by licensed dentists, despite some lawmakers’ efforts to change that and bring the state more in line with others that support such investment vehicles.
A report released last year by the American Dental Association showed that the percentage of dentists affiliated with private equity firms jumped from 6.6 percent nationwide in 2015 to 12.8 percent six years later.
The companies have come into dental markets in other states and offered greater access to capital for equipment or growth strategies. They also provide an opportunity to centralize the non-clinical administrative workload, reducing the need and cost at multiple sites.
The North Carolina dental board allows dental support or service organizations that offer opportunities for some of those combined-cost efforts. But North Carolina requires that these practices are owned by a dentist or association of two or more dentists who are licensed in the state, a requirement that can be limiting for established out-of-state companies.
A representative for Heartland Dental, a dental support organization that provides non-clinical support to more than 1,700 practices across the country, has a different take on the impact of the legislative proposals.
“The allegations that Wall Street hedge funds would be wielding pliers above a dental chair simply don’t hold up to real scrutiny,” said Pat Ryan, a former spokesperson for Senate leader Phil Berger (R-Eden), who now has his own public relations firm. “The proposal before the legislature would change nothing about the longstanding statutory requirement that licensed dentists own and operate the clinical portions of their practices. Rather, the proposal eases bureaucratic rules surrounding contracts between dentists and third-party organizations to manage non-clinical work like HR, marketing, and bookkeeping. Unfortunately, the Dental Board has been making it very difficult for dentists to freely enter into those contracts, and that’s a problem.”
New management model?
The head of the North Carolina Dental Society told NC Health News earlier this year that private equity in the dental industry has sparked much debate recently.
The idea can seem appealing on some levels, especially as new dental school graduates typically start their careers with large amounts of student debt, more than $300,000, according to the American Student Dental Association. That makes it difficult for a new dentist to hang out a shingle on their own or assume an existing practice. Instead, many new graduates gravitate toward larger practices that won’t require start-up costs and even offer higher salaries early in their career.
In some states, however, there have been complaints that private-equity dentistry companies can try to maximize profits without always prioritizing the patient’s needs and safety. Critics of the business model say that dentists might lose autonomy as the firms set treatment protocols and set staffing limits.
“If you look across the country now, almost every state or their attorney generals are trying to rein in venture capital, private equity, for profit, whatever influence in health care and/or dental care,” Jim Goodman, executive director of the North Carolina Dental Society, an influential lobbying organization for the state’s dentists, told NC Health News in April.
At the time, the Senate had released its spending plan including language that would open the door to private equity firms in the state’s dental industry. The dental society planned to talk with House members to try to tamp down any interest in such a change.
They seemed to find a responsive ear.
Other changes proposed by legislators
Lawmakers from the House and Senate have been engaged in backroom negotiations for nearly a month on how to bridge the differences in their spending plans.
They have been at odds over tax cuts, as well as the size of teacher and state employee pay raises. It’s not clear whether the changes in the Senate budget on how dental partnerships are defined will play much of a role in the negotiations between the chambers.
It’s also not yet clear whether Senate Bill 599, a proposal that would markedly change how state dental board members are selected, will go up for a vote in the state House.
That Senate proposal would increase the board size from eight to 10 members to include six licensed dentists, two licensed dental hygienists and two consumer advocates. Instead of the profession electing who they want to represent them on the board that oversees the profession in North Carolina, it would shift appointment power to elected officials.
State Sen. Amy Galey, a Burlington Republican, spoke about the proposed changes during a Senate Health Committee meeting in April, calling them necessary to keep a “very small group of dentists” in this state from being empowered “to make decisions that may in some cases be benefitting the profession more than the public at large.”
Galey contended it’s important for elected officials to appoint members of professional boards instead of letting the profession self-select their peers because “it is inherently problematic to risk self-dealing and self-protecting of the profession.”
“It’s just inherently full of risk for people to emphasize their own commercial interests over the interests of the public,” Galey added.
That bill, which the dental society was opposed to, has been in the House Committee on Rules, Calendar, and Operations since May 5, an indication the chamber doesn’t consider it an urgent issue.
Medicaid reimbursement rates
Anything can happen before the General Assembly nears the end of its work session, so critics of the proposals remain vigilant.
Elle Basile, public affairs senior manager for the dental society, told NC Health News this week they had hoped to see more lawmaker interest in House Bill 60, which would increase the Medicaid reimbursement rate for dental charges to 46 percent.
When North Carolina expanded Medicaid in 2023 to make hundreds of thousands of low-income residents eligible for government subsidized health care, it also put them in line for an array of dental services. But nearly 60 percent of North Carolina dentists decline Medicaid patients, largely because the reimbursement rate is 34 cents on the dollar — the same as it was in 2008.
The bill introduced by Republican representatives Brian Biggs, the house deputy majority whip from Trinity, Donny Lambeth of Winston-Salem, Larry Potts of Davidson County, and Tricia Cotham of Charlotte aims to change that. But it has been stuck in the House Committee on Appropriations since Feb. 6.
“We would really like to see a final budget package that includes the Medicaid rate change,” Basile said.
The dental society is keeping its focus on several prongs this legislative session, Basile added. “We’re watching most closely legislation that impacts access to care — Medicaid reimbursement rates, patient safety and patient care.”
Questions about private-equity dentistry, proposed changes to the board selection process and compensation for treating Medicaid patients “all have an impact on that,” Basile added. “We are hopeful.”
Clarification: This article has been updated to include comments from a representative for Heartland Dental, a private equity-backed dental support organization with more than 1,700 supported offices across the country. We also added an attribution to the assertion made in the opening paragraph.
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