University of Washington School of Dentistry: Improving Financial Health and Accountability

The School of Dentistry teaches its students through hands-on clinical practice, which also serves its public service mission. It operates 15 teaching and specialty-care clinics, offering services from preventive care to extensive restoration after traumatic injury.

Clinical practice is an important and expensive part of all dental school training. Faculty members supervise students closely, checking each step as the student completes it. They do this because students perform permanent dental and surgical procedures under the faculty member’s practitioner license. Furthermore, dental students are expected to perform surgery independently at the end of their four-year program. This is greater mastery than is required of medical school graduates, who practice under supervision for several years following graduation. The detailed supervision of student dentists means treatment often takes longer than at private dentists. The School sets lower fees to offset this inconvenience.

Clinical care also meets the School of Dentistry’s service mission by providing care to patients other dentists cannot or will not treat. This includes a large number of patients covered by Medicaid.

The School treats patients willing to accept longer treatment times, so students can gain necessary experience. Most of these patients cannot pay the full cost of care, and are covered by Medicaid. However, Washington’s Medicaid reimbursement rates are among the lowest in the country. Because the School depends on patients covered by this program, working with these low rates is beyond its control.

The School took out a loan from the University to create its Center for Pediatric Dentistry. However, the Center brought in only one-quarter of its projected revenue, in large part because of foreseeable problems in its revenue forecasts. The School has since redeveloped the building into the Magnuson Park Clinic, and houses other services there. However, revenue is still nowhere near the projected income.

The School must weigh the costs and benefits of its plans to maximize use of Magnuson Park Clinic. For example, it might reinstate a faculty practice. Some dental schools use faculty practices to generate significant revenue: the top-earning school reported net revenues of about $13 million a year. It could also pursue options such as:

• Expand clinic hours to include Saturdays, which could help patients avoid lost work or school hours
• Establish a new partnership with Seattle Children’s Hospital to serve patients that exceed Seattle Children’s capacity

The School has not formally assessed these options. We gave the School a template to help officials analyze each option’s costs and benefits. Open the template here.

In addition to the Center for Pediatric Dentistry, most of the School’s other clinics also lose money. The audit identified multiple points – between the patient’s check-in for treatment and payment by the patient’s insurer – where errors can creep in. Some errors can be resolved by closer attention to insurer rules or clearer School policies and procedures. Fixing other issues requires a better understanding of its own operations.

To do this means the School must improve its use of existing data and collect information on other metrics. The School recently adopted new performance measures, many of which align with leading practices. Nonetheless, it lacks some key information:

• Measures on clinical costs, staff productivity and collected revenue
• Detailed information about why an insurer denied payment
• Information for scheduling faculty and students

The School currently lacks strategic direction on how to balance its competing responsibilities. They include training student dentists, serving the community, and breaking even. But because the School lacks clear direction for achieving this balance, it also lacks the necessary policies and procedures to get there.

For example, the audit found that faculty members provide care they know will not be paid for out of a sense of ethical responsibility. However, the school lacks a clear charity care policy, to guide faculty on providing this type of care.

Writing and adhering to a strategic plan that spells out how to balance these responsibilities is a good first step. Because, while the School has taken steps to increase revenue, it is evident that no single action will be enough to clear its deficit.

We made recommendations to both the University and the School of Dentistry.

The University should make sure its academic experts get the training they need to manage their schools’ finances. When the University considers loans to its schools, it should have an impartial external specialist review the applications. In addition, the University should improve its guidance for financial stability plans, for times when schools get into financial difficulties.

The School of Dentistry can improve many aspects of it financial and business management processes. Key among them are:

• Track, understand and address the root causes of billing write-offs
• Inventory available reports and decide which ones all clinic administrators should regularly use
• Complete a cost-benefit analysis of options for the Magnuson Park Clinic
• Develop a clear policy for charity care, and ensure clinics works within the policy

Finally, the University and School must work together to establish a workable plan to address the School’s debt.