A new plan aims to put the University of Washington’s School of Dentistry on firm financial footing after it ran up a $29 million deficit over a decade.
Over the past 10 years, the University of Washington’s School of Dentistry has amassed a $29 million deficit, unable to earn as much as it thought from its patients — who largely rely on Medicaid — after the school took on debt to renovate a building on the grounds of Magnuson Park.
On Thursday, the UW Board of Regents reviewed a plan to erase the deficit by seeking larger reimbursements for dental services, cutting $3.5 million in expenses, reducing the size of the staff through attrition, reorganizing the department and optimizing space. The plan is expected to be adopted after further review by interim Provost Jerry Baldasty.
It will take at least five years, and maybe longer, to erase the deficit, said Chris Malins, UW associate vice president in the school’s treasury office.
The changes are not expected to affect the school’s dental services for children.
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The deficit started small, then grew because the Magnuson clinic has attracted far fewer patients than the university projected when it approved the renovation project in 2009, said Joel Berg, dentistry-school dean. And 65 percent of the patients being seen by the dental school are on Medicaid, which doesn’t cover the cost of the services.
Berg said the deficit is largely the result of the UW’s role as a safety net for patients on Medicaid.
A major focus of the school is its Center for Pediatric Dentistry, which was started in 2010 in partnership with Seattle Children’s and serves children with complex medical issues — many of whom are on Medicaid.
But Medicaid reimbursement is based on the procedure, not the number of times a patient visits the clinic. A child with autism might need to visit the clinic repeatedly before feeling comfortable enough to have a dentist work on his or her teeth, for example; but those first visits — when no work is done — aren’t covered by Medicaid.
In recent years, the volume of patient growth has been slower than the school expected. And the growth has disproportionately come from patients who have special health-care needs, Berg said.
Of the debt, about $17 million is for the Center for Pediatric Dentistry in the Washington Dental Services building in Magnuson Park, just off Sand Point Way Northeast; the building is owned by the UW. Another $12 million comes from operating losses associated with the school’s other clinical site, in the Magnuson Health Sciences Center adjacent to the UW Medical Center.
Berg said the UW-owned building in Magnuson was considered a good location for the pediatric center because of ample free parking and its proximity to bus routes.
The deficit is being absorbed into the UW’s overall budget of $6.8 billion, said Sarah Hall, an assistant vice provost in the Office of Planning and Budgeting. It is a “small piece of the pie,” she said, and does not create financial problems for the university.
Because the dentistry school didn’t meet its debt obligations, the school was required by UW governing rules to come up with a plan to manage the deficits, and meet with the Board of Regents.
The UW’s School of Dentistry is the only dental school in a five-state area that includes Washington, Wyoming, Alaska, Montana and Idaho. It has an enrollment this year of 251 pre-doctoral students and 58 postdoctoral students.
It is known nationally for having a unique commitment to patients — especially children — with special needs, said Richard Valachovic, president and CEO of the American Dental Education Association. “They’re looked at as one of the most effective schools of providing that care,” he said.
Valachovic said many patients on Medicaid have complicated dental-health issues, and the low reimbursements are a national problem. In addition, dental schools cost more per student to operate than even medical schools because they run their own clinics. As a result, nationally they’ve been disproportionately affected by the years of state funding cuts to higher education that took place during the recession.
Berg said the recovery plan will stabilize the losses accrued over a decade, and balance the school’s $36 million annual budget. It includes $1.5 million in grant money from Seattle Children’s, to care for those patients that otherwise would be seen at the Sand Point children’s hospital, Malins said.
Berg said the UW dental-clinic system has changed the way it does business. For example, third-year dental students this year are seeing more than twice as many patients as last year’s students did. The school has also streamlined the clinic system to make it more efficient, he said.
And it is trying to expand the number of patients it serves who are privately insured, because reimbursements for those patients are higher. Still, Berg told the regents Thursday: “We need some marketing help.”
Berg said UW dentistry’s focus on caring for underserved patients has resulted in graduates who have “a spirit of social responsibility” — they’re more likely to want to work in places where people traditionally do not get good dental care. In addition, the school runs a small program in Spokane, and 75 percent of its graduates end up working in Eastern Washington, where dentists are in short supply.
“Many parts of our state desperately need oral-health care,” he said.
Berg said he was confident the financial plan would put the dental school on the right footing.
“We’ve stopped the bleeding, we’re going to be able to provide the care without losing money this year,” he said. “I’m convinced we’ll be financially sustainable.”
Information in this article, originally published April 14, 2016, was corrected on April 14, 2016. A previous version incorrectly stated that the University of Washington would raise prices to help erase the School of Dentistry’s deficit. It also had an incorrect percentage for the number of Medicaid patients.