Market Power

Musings by an academic economist on the power of markets and the power over markets.

Monday, January 10, 2005

Dr. Teeth or the Medicine Show?

This morning's Wall Street Journal has this very interesting article about dentists and doctors. It tells the story of two brothers-in-law, one a medical doctor and the other a dentist. Dr. Bryson is the dentist (there is a quote from him below). Dentist salaries are surpassing those of similar types of medical dotors. Dentists are also working fewer hours, on average:

Once the poor relations in the medical field, dentists in the past few years have started making more money than many types of physicians, including internal-medicine doctors, pediatricians, psychiatrists, and those in family practice, according to survey data from the American Dental Association and American Medical Association.

On average, general dentists in 2000, the most recent year for which comparative data are available, earned $166,460 -- compared with $164,100 for general internal-medicine doctors, $145,700 for psychiatrists, $144,700 for family-practice physicians, and $137,800 for pediatricians. All indications are that dentists have at least kept pace with physicians since then.

Those figures are a sharp contrast to 1988, when the average general dentist made $78,000, two-thirds the level of the average internal-medicine doctor, and behind every other type of physician. From 1988 to 2000, dentists' incomes more than doubled, while the average physician's income grew 42%. The rate of inflation during that same period was 46%.

Factor in hours worked -- dentists tend to put in 40-hour weeks, the ADA says, while the AMA says physicians generally work 50 to 55 hours -- and the discrepancy is even greater.

But we don't have the kinds of dental problems these days that we had back in the 50's.

Dentists have grown richer even as cavities, once the main cause for visiting them, have declined, largely because of fluoridation of drinking water and improved preventive care. According to a study published in the Journal of the American Dental Association in 1999, cavities in 6-to-18-year-olds dropped by three-fifths from the early 1970s to the early 1990s -- even though many children in lower socioeconomic groups still lack adequate dental care.

As people born in the 1960s and later have grown into adulthood, they tend to need fewer fillings than their parents did and are keeping their teeth longer. Painful disease-related procedures such as root canals are declining, too.

What is happening to cause this switch? Three quotes from the article

In part, it's because dentists have avoided being flattened by the managed-care steamroller, and instead many have turned into upscale marketers. ...

Dentists wrung their hands over their inability to get more insurance coverage -- a failure that now looks heaven-sent. ...

"We shifted from needs-based dentistry to wants-based dentistry," says the youthful-looking Dr. Bryson, who has a dazzling smile. "It has totally transformed our practice and our personal lives. We see a much smaller number of patients, at a slower pace. I can't wait to get in in the morning."

Dentists, who aren't as highly regulated as many medical doctors, are thus able to steer their resources towards the things that consumers want most - cosmetic dental work. And both the patients and dentists are doing nicely, thank you.

So we have a tale of two professions. One is micromanaged. The professionals have had their reimbursements become stagnant while at the same time they have had their overhead increased, leaving them with less to take home. The micromanagement also means that their costs have increased. The other profession is not micromanaged (or at least not to the degree of the other profession), leaving the entrepreurial ability of the professional to decide where to put resources.

Medical care has been micromanaged in the hopes of making medical care affordable to all. I realize that doctors still make a comfortable living. Still, by making it affordable, the incentives to supply the medical care have also been altered as well - and not to the good side of the docket.

Crystal ball time: what has happened to the medical doctor profession will probably happen to the pharmacy profession as well.