Subsidized clinic putting NJ dentists out of business?

Dentists in Perth Amboy, NJ, say they are being driven out of business because they can't compete with a medical clinic that gets substantial state and federal subsidies.

The heavily subsidized, nonprofit Jewish Renaissance Medical Center has a "dominant, anticompetitive advantage over private practitioners," Jaime Morales, DMD, told DrBicuspid.com. "I don't see why we have to compete with the government."

The Jewish Renaissance Medical Center is a federally qualified health center (FQHC) that provides pediatric, internal medicine, obstetrics/gynecology, and dental care. Alan Goldsmith, PhD, founder and president of the center, said that most of his dental patients are charity care or Medicaid cases. About 66% are charity patients, 31% are on Medicaid, 2% have private insurance, and 1% are self-pay patients, he told DrBicuspid.com.

The Jewish Renaissance Medical has opened nine medical centers in New Jersey since 2001. In addition, Goldsmith has five school-based clinics in Newark that also get state and federal money. These faith-based groups help people who are 125% over the poverty level, and they have given money to people who were being evicted and whose electricity was being turned off, he said.

"Our mission is to help the poor, working with children and the underserved population," Goldsmith said. "We take charity and Medicaid patients that other doctors refuse. They say we're taking away their business, but they were never their patients in the first place."

Richard B. Kahn, DDS, New Jersey Dental Association president, said the center shouldn't be allowed to accept patients with insurance or the means to pay because it receives such extensive government grants and subsidies.

"They're poaching patients with private insurance and those who can afford to pay. It's really disingenuous to the spirit of the federal policy," he told DrBicuspid.com. "I have no problem with FQHCs. This place went in under the guise of helping the underserved, but they have become entrepreneurial."

The center shouldn't be allowed to treat patients with incomes that exceed the maximum allowed under the Medicaid program, he added. Taking patients with insurance or incomes higher than the poverty level gives the center an unfair advantage over private practitioners.

"There are so many poor people out there that need care. I think it's egregious that a facility set up under federal auspices is poaching people who have the means to pay," he said.

Reimbursed per visit

The center is reimbursed on a per visit basis, instead of the per procedure basis that dentists get under Medicaid, Dr. Kahn noted.

"There's no incentive to not stretch out visits," he said. "People have figured out ways to game the system. The law allows that; it's just not what FQHCs are there for."

The state pays $101 per visit, part of the $2.4 million in charity care funds from New Jersey, Goldsmith said. But the center will exhaust its state funding by February and will have to cover about $2.5 million in expenses on its own for the rest of the year if subsequent funding isn't made available, he noted.

"We provide services that we sometimes aren't reimbursed for," he said. The center made $600,000 in profit last year, he added. (Click here for the center's financial information.)

The center cannot turn away patients, Goldsmith said, and patients pay on a sliding scale based on federal guidelines and incomes that are verified. Most patient co-pays are $5 to $10.

Goldsmith said he doesn't know how much federal funding the center gets but it applies for grants "like everybody else." The center is audited by state, federal, and Medicaid agencies every year, Goldsmith noted.

George Likakis, DDS, estimates that he has lost 35% of his patients to the center. In addition, he said, a local oral surgeon is going out of business because he can't compete financially with the government dollars that go into the center.

Most dentists would be happy to do procedures for the same amount as the clinic charges, Dr. Likakis said. For example, the clinic collects $101 plus a $10 patient co-pay for performing a restoration, more if multiple visits are required. "Absolutely, I would gladly take $110 to do a filling, and I think most other dentists would too," he said.

Insured patients have figured out that the center's co-pay is much cheaper than the co-pay required by their insurance, Dr. Likakis pointed out. "They're avoiding the co-pay," he told DrBicuspid.com. "Instead of paying $250, they go there and pay $10."

Because most of the town's residents are low-income, nearly everyone can be classified as a charity case, effectively absorbing the entire patient pool, he added.

According to Goldsmith, Perth Amboy has a population of 50,000, of which only 6,000 come to the center for dental work and only 3% are self-pay or insured patients. "So where are the other 44,000 people going?" he asked.

"This is capitalism," Goldsmith noted. "People can go anywhere they want to go."

Some Perth Amboy dentists complain that the center doesn't refer patients it cannot treat to private practitioners. But most dentists won't take low-income patients, Goldsmith said, and only one -- Maureen Fraser, DDS -- accepts Medicaid patients.

Goldsmith paid for the building and its equipment and is responsible for the dentists' salaries "just like everybody else," he said. In fact, he took out a $100,000 loan on his home to pay for rehabilitation on the building because "I have faith in what we do," he said. He recouped the loan after the center started making money.

But the private dentists maintain they simply can't compete.

"We have mortgages, we purchased property, we set up our lives around poor people," Dr. Likakis said. "We chose to practice in an area where we knew we weren't going to make a lot of money."

Susan Walsh, MD, deputy commissioner of the New Jersey Department of Health and Senior Services, has advised the dentists to contact state and federal representatives who can make changes in the allocation and distribution of state and federal funds.

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