In focus: Dental cover

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April 2009 Features

Oh where is it all going to end? Will the continuous demise of the Welfare State eventually see us reading about people amputating their own limbs because they could not find access to an NHS hospital? Imagine the headline survey results: 16% surveyed said they had used the axe from the garden shed and 74% said they had downed a bottle of whisky to act as an anaesthetic

Well, judging by the results of a survey carried out by Which? this January/February, we are already halfway there. It suggests that three million people in England have resorted to DIY dentistry and a further three million know someone else who has. The grizzly findings included the revelations that 26% of those who admitted to taking a DIY approach had tried to pull out a tooth using pliers, 30% had tried to whiten their teeth with household cleaning products and 11% had used household glue to stick down a filling or a crown.

One can only hope that this online poll of 2,631 adults is grossly misrepresentative but, even if it is, there can be no doubting that NHS dentistry is in a truly sorry state and that its woes have accelerated markedly since the mass exodus of dentists following the introduction of the new NHS dental contacts in April 2006.

The government has responded to widespread concerns about the state of our oral health by initiating an independent review of NHS dentistry, which is due to report back later this year. As with previous reviews of the NHS, workplace health and long-term care funding, this will doubtless indicate that more investment is needed but, as the government is clearly in no position to afford this, you can not help wondering why it has wasted a small fortune on the review.

The flipside of all this is, of course, that it should bode well for everyone involved with dental cover because people will be all the more determined to safeguard against the soaring costs of private and - if they can access it - NHS dentistry. But, although the dental cover sector undoubtedly experienced a good couple of years in the aftermath of the 2006 NHS changes, it has had far less to crow about during the last 12 months. As in virtually all areas of commercial life, the credit crunch is biting.

THE INDIVIDUAL MARKET

The lion's share of the bad news comes from the individual market and, in particular, from providers of indemnity insurance cover (ie: insured schemes as opposed to capitation and maintenance plans). This is not good news for intermediaries, for whom the indemnity insurance products offer the only chance to sell standalone dental cover in the individual market - because capitation and maintenance plan providers deal directly with dentists.

Spokespeople from most indemnity insurance providers demonstrate the type of evasiveness and vagueness that stinks of uber-underachievement and say little to convince anyone that rumours of rocketing claims and of the market being flooded with CVs from departing personnel are misleading.

HSA, which resorted to altering the structure and raising the price of its individual indemnity insurance plan last November, refers to "steady growth" but acknowledges that "claims are definitely increasing at least in line with sales" while its sister company HealthSure, which launched a separate individual indemnity insurance plan in April 2007, has already ceased to offer it.

HealthSure reports that the withdrawal of the product is all part of the transition which will see both HSA and HealthSure products rebranded under the banner of their parent Simplyhealth Group later this year. Yet, strangely, HealthSure is unable to provide details of the timing of the product withdrawal, saying only that "there is no definite month or date to give, the plan has just been gradually phased out in the transition to become Simplyhealth."

Tesco Personal Finance, which launched two direct selling dental products in August 2007, is proud to report that it attracted over 60,000 customers in its first full year of business. Until pressed on the subject, however, it conveniently forgets to mention that it has both increased its prices and tightened its cover during the last year.

Universal Provident, although citing internal restructuring as mitigating circumstances, admits that it "hasn't been writing a great deal of new business." WPA has "not much to report" and Boots, which only deals direct, "can't give any indication of how the dental product is doing."

The only hint of positivity in the indemnity insurance area comes from Dencover, which entered the individual market in April 2006. It reports a 100% sales increase over the last eight months, albeit from a small base. But the company admits that it is doing "virtually nothing through intermediaries" on the individual side. This contrasts noticeably with its group dental insurance operation, which conducts around 80% of its business via intermediaries.

It will certainly be interesting to see whether Dencover, which cites the unusual simplicity of its product as being a critical success factor, is able to continue to buck the trend in the individual indemnity insurance market on a sustained basis because there are no shortage of commentators who suggest that the task is well nigh impossible.

Quentin Skinner, chairman of DPAS, which provides capitation, maintenance and membership plans, says: "For 20 years we've been suggesting that trying to apply indemnity insurance against the risk of the expected will always be a disaster in the individual market as you will always have adverse selection. Covering the likely as opposed to the unexpected is inevitably doomed to failure.

"The anecdotal feedback I've had bears out that the newer indemnity insurance providers start losing significant amounts of money after the first year. The first year is normally OK but as soon as people start claiming it all goes pear shaped. I've had two decades of experience of seeing the complete stupidity of providers trying to offer indemnity-type schemes, from supermarket brands to private medical insurance providers, but dental insurance only works when it applies to the risk of the unexpected."

However, even the capitation and maintenance plan providers do not appear to have had too much to write home about over the last year. DPAS, which reports that it is still growing at 15% a year, is the exception.

Skinner continues: "We are winning customers off our competitors because we are good value but the market as a whole has gone fairly flat after a couple of years of phenomenal growth. The fact that dentists are now earning rather more than expected out of the NHS dental contract has been a contributory factor."

Market leader Denplan reports that it acquired over 100,000 new patients during 2008, but this represents a reduction of around 20% on the previous year's new business figures and is way below the 300,000 new customers it put on its books during 2006. Practice Plan, the other significant player, refers to "modest growth in overall terms "and maintains that it is "strategically optimistic."

Graham Penfold, technical director of Practice Plan, says: "It's a long time since the last recession in 1989/91 and, as the first NHS dental contracts were in 1990 and the exodus of NHS dentists didn't accelerate until 1992, a lot of private practices haven't experienced a recession yet. Consumers may delay treatment, which would lead to a dampening effect on appointments for private dentists but it won't effect capitation and maintenance plans generally, because plan- holders have already paid for their dental sessions through their monthly payments."

THE GROUP MARKET

The group dental market, thanks to the participation of a range of sizeable intermediaries able to express objective opinions, requires far less interpretation of deafening provider silences.

John Rice, senior healthcare consultant at national employee benefit consultants Lorica Consulting, says: "To date we have not seen the sort of wholesale removal of this benefit which the economic climate might suggest would occur. In general, those clients with company funded plans are continuing to offer them and those who operate voluntary plans are, likewise making no changes.

"In the small number of instances when there has been change, clients have withdrawn the dental plan either on the grounds of consistent low use by employees or have, as a result of a merger, undertaken a root and branch review of the benefits package and replaced the conventional insurance with some form of cash plan provision."

But it is possible that the worst is still to come. Philip Gregory, healthcare consultant at national specialist intermediary Jelf Group, observes that companies are wanting to review benefits in a way that he has not experienced before during his 12 year career.

He says: "Company-paid business is slowing down in the current climate but flex remains steady, although timescales are slipping a bit and both new flex and new company paid schemes are tending to be put back. We haven't yet had anyone cancelling a dental scheme and we are not anticipating it happening but I wouldn't be amazed if it did. Some companies are switching to lower benefit schemes and co- payment schemes to cut costs."

Of the four main established players in the group dental market, none report progress that is less than respectable for 2008 but none are claiming to have broken any new business records either. Denplan saw net growth of 20%, NDP "continued to experienced double digit compound growth", Bupa volunteers "an increase in volume of registrations of around 5%" and CIGNA HealthCare refers to "steady new business that increased by under 5%."

Michelle Bishop, business development manager at NDP, says: "We are seeing continuous demand for our products and while we have experienced a reduction in small company-paid schemes, which represent a very small proportion of our business, we have seen growth through increased take-up within existing schemes. Inevitably the large number of employees being made redundant may reflect on membership but we anticipate that the growth of membership from existing schemes will be reflected in schemes renewing in 2009 as people pay more attention to the benefits available to them.

"Dental insurance will be popular as it offers an affordable, realistic monthly premium, while providing a benefit which is accessible to all. Companies are looking to enhance their employees' access to benefits as an attempt to compensate for the lack of pay increases in 2009, and dental insurance offers an excellent method of enhancing the overall healthcare package at minimal cost.

"We have some indications that, while companies are looking to reduce or at best maintain the premium spend on insurances, dental is being investigated as a potential method of compensating employees for reductions in other benefits."

While these established players maintain that they hardly ever come across the newer entrants at pitches for company-paid business, it is newer players - who are starting from much smaller bases - who report the strongest growth stories. HSA describes 2008 as "a record year" but does not volunteer any percentage sales increase, and Dencover reports a 50% sales increase over the last eight months.

On the other hand, Medicash, which brought out a corporate dental plan in April 2008, says that sales have been "very disappointing". This contrasts noticeably with demand for its corporate cash plan business, which increased by 19% during 2008.

Peter Lauris, sales and marketing director at Medicash, says: "We responded to brokers who said they wanted this product but in reality there appears to be little demand. It seems that companies looking for value feel that cash plans make more sense but the dental product is still part of our armoury and it could gain in appeal during the economic upturn when people have made money."

FLEX SCHEMES

But the newer players, including even Medicash, are clearly beginning to make their mark in the flex arena which, significantly, is commonly stressed to be the main growth area. Dental insurance within flex is normally offered as a voluntary benefit (ie without an employer-funded component) and take-up rates vary between around 4% and 20%, depending on factors such as location, demographics and type of scheme.

Iain Laws, commercial director at national employee benefit consultants Enrich, says: "The newer players like Dencover, HSA and Medicash are proving just as popular in flex because they are highly flexible and, although their service standards originally left much to be desired, they have now corrected that. Dental cover is the popular voluntary benefit within flex and I haven't come across a flex scheme without dental in there."

Jelf Group estimates that as many as 60% to 70% of its new dental schemes are now going the flex route but it is clear that there is greater momentum in this respect with larger companies - who are more likely to deal with benefit consultants - than with smaller ones. This is despite the fact that the wonders of modern technology have ensured that a flex scheme can now be a viable proposition for organisations with as few as 100 employees.

Pam Whelan, corporate dental sales manager at Denplan, says: "Last year we saw companies with less than 500 employees going the flex route but this year it only tends to be the larger ones. A lot of smaller firms invite us to call back again in six months' time, explaining that they are battening down the hatches and making redundancies. All we can do is to make sure we are well placed to take advantage when things pick up."

Nevertheless, CIGNA HealthCare, which is now doing most of its large dental schemes via flex, observes a possible trend towards slightly lower take-up rates on new schemes.

Kirsty Jagielko, head of product management at CIGNA HealthCare, says: "We are very positive for the market in the longer term but take-up rates for new schemes are around 6% to 7% compared to our average of 10%. It's early days but this could be a sign of a downturn. We also find that a new trend for paying by direct debit as opposed to the traditional salary deduction isn't really working during the current economic climate because it has made employees more conscious that they are parting with money."

PRACTICE-BASED CORPORATE PLANS

Outside the flex arena, a trend towards practice-based corporate plans which restrict employees to using one or more specified local dentists is also a potentially a very important development because it greatly limits the amount of time that employees spend away from the office.

Enrich's Laws says: "We see practice- based corporate plans as an exciting way forward as the benefits/cost analysis stacks up from reduced absenteeism. No employee contributions are needed for check-ups or routine fillings, which gives out a very powerful preventative message."

Barbican Dental Care, the most established of the practice-based corporate players, provides a monthly maintenance plan to 20 companies based in the City and Canary Wharf via four dental practices. Employees are given free preventative treatment, including check-ups, hygienist visits, X-rays and fillings, as well as emergency treatment and worldwide accident and emergency cover. Although they are required to pay for the more expensive procedures, like crowns, extractions, route canals and bridges, they receive a 25% discount on them.

Neil Sikka, principal of Barbican Dental Care, says: "Using the approach saves three hours in absenteeism per employee per visit. Employees can visit a number of specified practices in the area but we try to encourage them to build a relationship with one dentist.

"We are growing at 25% a year and our business model clearly works so, although we have started in London, there is no reason why we shouldn't be in any major city. We are looking at opportunities in Leeds, Manchester and Glasgow but we still haven't even touched the surface in London yet, where we intend to have at least 50 practices."

Should such ambitious expansion plans ever be realised it could see the standard dental insurers reappraising their business models. In fact, Bupa already provides onsite dental services to many of its big clients and its research shows that having such a facility saves employers an average of 4.2 hours per appointment.

Nevertheless, even Barbican Dental Care acknowledges that expansion would be difficult in these desperate times, so whatever grandiose plans the standard players may be cooking up it is likely that simply ticking over will be the main ambition for the foreseeable future.

PRODUCT NEWS

Somewhat predictably, the credit crunch has ensured that genuine product news is thin on the ground as companies watch and wait to see how things pan out But in December 2008 DENCOVER launched a stand-alone global accident and emergency product for individuals, costing only It aims primarily to fill gaps for those whose travel policies don't cover dental but it also caters for UK people who have emergencies. A worldwide helpline has a list of dentists that can be accessed out of hours NDP also launched an accident and emergency plan - but for the corporate market - in February 2009, costing from Otherwise, most product news amounts to little more than minor tweaks. In April 2009 DENPLAN started allowing employees to claim back 100% of NHS treatment costs across its full range of company benefit plans. It also removed restrictions from Scotland and Northern Ireland, which were previously exempt from the plans In October 2008 CIGNA HEALTHCARE launched Oral Health Optimum, a top-of-the-range option for its co- insurance range, with oral cancer cover of In February 2009 the PERMANENT HEALTH COMPANY (PHC) launched the Company Dental Plan, a company paid plan available to groups with a minimum of three employees. It offers three levels of cover (Bronze, Silver and Gold), "simple benefits and competitive premiums", and discounts for groups with 10 or more employees."

Check out our product reviews at the back of this month's issue.

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Additional information:

Leeds Dentists, Leeds Dental Practice, Dental Team in Leeds
'A 25-year review of general anaesthesia at the Leeds Dental
Continuing Dental Education Sites
Ken Stark!
Dental nurse teaching qualification - Trovit Jobs
Nat_post
Dental Education Schools & Colleges
Mr David WaringPosition-Consultant Orthodontist - Manchester
Wandering Medic ' Leeds Dental Hospital ' code
Orthodontics in Leeds by Clarendon Dental Spa, specialist

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