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2.8 Entering into a Contract to Provide Oral Health Care
Entering into a contract incurs an obligation to provide oral health services to patients covered by the contract. Since serving this new group may interfere with the clinic’s ability to serve current patients, the clinic must be certain it has the capacity to meet both new and existing obligations. Clinics must consider the impact of a contract on its payer mix and revenue projections as well as how entering into the contract relates to the clinic’s mission. Contracts usually contain provisions with potential negative impacts (e.g., penalties for failure to perform). A clinic should obtain legal counsel before entering into a contract. In deciding whether to enter into a contract, it is important to be aware of the clinic’s per-unit cost for delivering services. Safety net dental clinics must recognize situations where the income provided by a contract does not adequately cover the cost of required services. For example, a $40,000 contract awarded to a clinic to provide 600 additional dental visits to families who are homeless may not cover the cost of providing those services. If the contract or grant is providing $66.67 per visit ($40,000/600 visits), but the clinic’s actual cost of providing dental care is $90 per visit, the clinic loses $23.33 on each visit. In such cases, clinic administrators must decide whether being able to serve additional patients outweighs the negative impact on financial sustainability. ADA maintains a contract-analysis service that analyzes third-party contracts, including contracts from managed care companies, and informs members about the provisions of the contracts so that they can make informed decisions about the implications of participation. The service is free but is only available to ADA members, primarily through their state ADA affiliate societies. ADA members can find out about the ADA Contract Analysis Program at the ADA Web site (membership required). |
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When a clinic enters into a contract to provide oral health care, the
payer is usually a public or private nonprofit agency or a dental benefit
program administrator. Examples of agencies that typically contract
for services include correctional institutions, employment services
agencies, Head Start programs, and long-term care facilities. Dental
benefit plans through these agencies may be preferred provider organization(PPOs)
or capitation plans (HMOs).
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