The great surge in sales of dental insurance over the past few years could be halted if government plans to revitalise National Health Service (NHS) dentistry take hold. But questions remain over the effectiveness of prime minister Tony Blair’s £100m blitz on tracts of the country where NHS dentists are as rare as a painless extraction.
The revamp comes into operation in April 2001 when patients desperately seeking an NHS dentist will be able to telephone NHS Direct. The telephone service is taking over the “dentist hunting” role of health authorities. At the same time, £18m extra goes to dentists who are “committed” to the NHS and £35m will be spent on improving premises. There will be investment in projects such as 50 new Dental Access Centres, where salaried dentists will mop up unmet demand. It may look impressive, but what will actually happen?
The relevance to intermediaries selling dental cover will not be lost because polls show people are reluctant to pay for private treatment – even with its advantages of greater punctuality and better work – if NHS treatment is available. This is due to the gulf in charges.
Currently, adults pay 80 per cent of NHS charges. That means dentures cost £107.60 and a precious metal crown £63.84. Once the private dentist is in a free market, the patient not only picks up the 20 per cent formerly paid by the state but all the dentist’s other expenses. So a crown could cost about £200 and root canal treatment £800 if several teeth are involved. A bridge could cost £1,100 privately and an implant £2,000.
Against this background, it is hardly surprising that well over a million people have dental insurance and a further two million gain some cover through cash plans. Denplan, with 68 per cent of the corporate market, according to research recently conducted by employee benefits consultants Towers Perrin, tells the story. In 1993, it had 200,000 policyholders and, in 1994, 500,000. Between 1998 and 2000, Denplan’s total rose from 850,000 to the current one million.
According to the Towers Perrin research, Bupa has a nine per cent market share and Cigna four per cent. Bupa, which claims 140,000 dental policyholders five years after launching into the field, now reckons growth is tailing off to an annual 13 per cent. Cigna claims 50,000 dental policyholders.
Clearly, it has been a happy period for insurers. But could the natural slowing of the growth cycle and improved state dentistry combine to kill off the bonanza? Much depends on how Blair’s plans, which were announced in detail by health minister Lord Hunt in September 2000, work out.
The British Dental Association (BDA) reckons the state service needs £150m a year for the next five years to match increases in other parts of the NHS. Hunt’s £100m, which becomes available in April, is spread over two years.
It is in the nature of politics that professional bodies, such as the BDA, seldom declare themselves completely content with state spending increases, however generous. Nevertheless, early results of a poll among Britain’s 21,000 dentists on the planned revamp suggest that the profession is distinctly underwhelmed.
BDA special adviser Michael Watson says: “Your friendly neighbourhood dentist will be pretty pessimistic about the scheme. Dentists don’t think the initiative will recover much of the ground lost to the private sector and it won’t encourage dentists back to the NHS. It’s all a bit irrelevant.”
Watson adds that, while “there’s nothing there” for the general dental practitioner, salaried dentists, who are employed by health authorities, would benefit. This could have some effect. He says: “It should not be forgotten that Tony Blair has staked a lot, both in cash and political kudos, to get this working.”
To help rein in the future cost of the NHS dental service, health ministers are currently examining various possibilities, most of which could affect the public’s appetite for buying insurance.
• requiring NHS patients to pay for all “cosmetic” work such as bridges – “cosmetic” being broadly interpreted • the introduction of “dental therapists” – upmarket hygienists who would also do minor procedures such as fillings under the dentist’s prescription • reducing the frequency of check ups especially in those with healthy teeth.
Returning to the government’s plans for this spring, Watson points to a possible flaw in using NHS Direct to locate dentists willing to expand their NHS lists. Lord Hunt’s idea appears to be predicated on the assumption that “moving dentists around” – in Watson’s words – is all that is required. The BDA reckons the real problem lies in a nationwide shortage of 570 dentists.
This point seems to underpin the optimism among insurers about the long term outlook for business. A typical reaction is that of BCWA, which has seen its dental business grow at around 25 per cent a year since it entered the field four years ago. BCWA commercial manager Richard Esler sees no reason why growth should not continue. He says: “I know the government has come out with its NHS dentistry for all but I can’t see how they are going to get enough dentists to do the job.”
Another reason for optimism is that corporate schemes and cash plans cover NHS charges – which are far from insignificant – as well as private fees. Employees rate the perk highly while employers see dental cover as a useful recruitment and retention tool.
Cigna spokesperson Lynda Hardy Maskell says: “Of all insurance, dental cover is the one that everyone uses. In the corporate market (which makes up 40 per cent of Cigna’s dental business), we highlight the fact that it is affordable by almost any company. It is low cost and a tangible benefit to employer and employee because you know it is the one you are going to use. You are going to get value – £10 or £15 a month is a low cost to an employer.”
The individual market is hampered by the constraint in most schemes that individuals must be in good dental health before the dentist takes them on – and then on rates as high as £26 a month. Then there are administrative fees and profits for commercial operators such as Denplan. The BDA frankly advises people carefully to weigh up the cost-effectiveness of such schemes.
Hardy Maskell says: “The corporate market is different. Companies recognise that anything that can cut down on the 12.5m working days lost to dental absence is a benefit and the way customer service is handled and the way claims are handled is extremely important.”
Esler reckons that price stability is a key selling point in the corporate market. Dental premiums, in contrast to private medical insurance (PMI), have not rocketed over the past few years.
Esler quotes the example of BCWA’s corporate plan which covers all NHS charges and some private. He says: “Premiums have been £97.50 per annum for four years. It is very price stable. We find it quite difficult explaining to our clients because they are used to PMI-style increases. To be honest, I think a lot of them don’t actually believe us when we say it.”
On the Towers Perrin research, emphasising Denplan’s dominance, Esler attributes some of its corporate success to a high profile earned in the individual market. He says: “With the Denplan scheme it is the dentist who is carrying the risk in that he assesses what the annual value of treating you is going to be and you pay that plus an annual administration fee to Denplan.”
Patients, once they are satisfied with a dentist, are unlikely to change. They are therefore as much a captive market as the patient having root canal treatment trapped in the dentist’s chair.
Denplan brand development executive Adele Snell says: “Our corporate people are very good at constantly assessing the market and moving with it.
“We are very flexible and good at fitting in with a company’s requirements. Companies can access our products over the internet and we provide information on CD-Roms. We are very sensitive about the pricing issue.”
Staff in companies with good web and email systems can link direct with Denplan, removing from the company the stress of administering the plan. Employees abroad are given a 24-hour helpline number so they can contact a nearby dentist for emergencies.
Denplan’s use of its brand name is a lesson to rivals such as Cigna. As Hardy Maskell admits: “Denplan has enormous brand recognition from being in the individual market and being one of the first players there.”