Dentist Income Levels Slow to Recover Health Policy Resources

Health Policy Resources Center

Research Brief

Dentist Income Levels Slow to Recover

Authors: Marko Vujicic, Ph.D.; Thomas P. Wall, M.A., M.B.A.; Kamyar Nasseh, Ph.D.; Bradley Munson, B.A.

Health Policy Resources Center The ADA Health Policy Resources Center (HPRC) is a thought leader and recognized authority on critical policy issues Key Messages facing the dental profession.  Dentist incomes have been stable since 2009. Average annual GP dentist income was Through unbiased, innovative, $192,392 in 2011. empirical research, HPRC helps  Incomes began to decline in the mid-2000s, several years before the start of the Great dentists and policy makers make Recession. informed decisions that affect  There are important differences in dentist earnings by location, gender, and type of dental practices, the public and employment arrangement that warrant further analysis. the profession.

Who We Are Introduction

HPRC’s interdisciplinary team of Average real net income of general practitioner (GP) dentists in private practice has declined health economists, statisticians, sharply in recent years, reversing a decades-long trend of steady growth. As we and analysts has extensive expertise in policy research in demonstrated in an earlier analysis, this decline in income started well before the recent 1 dentistry and regularly economic downturn, known as the Great Recession . Our analysis also showed that a broad collaborates with researchers in set of factors contributed to the decline in net income, a very important one being a steady academia, the dental industry decrease in the utilization of dental care among the population. In turn, the decline in and consulting firms. utilization of dental care began in the early 2000s, well before the Great Recession, and 2 turned out to be driven entirely by a decline in dental care utilization among adults . Dental 2 Contact Us care utilization among U.S. children has steadily increased since 2000 .

Contact the Health Policy In this research brief, we present an update on trends in dentist earnings since 2009. The Resources Center for more U.S. economy is slowly beginning to recover and it is important to understand what has information on products and services at [email protected] or happened to dentist earnings since the end of the Great Recession. We present data for call 312.440.2928. both GP and specialist dentists and discuss income differentials related to practice ownership, demographic characteristics, and geographic location. We end by discussing the policy implications of our findings.

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Data & Methods

We rely on historical data from the American Dental hours per year) and trimmed the top and bottom 2.5% Association’s Survey of Dental Practice3. This annual of net income earners. We did not include hours survey is conducted on a nationally representative worked as an explanatory variable due to the high random sample of 4,000 to 17,000 dentists in private degree of discretion dentists have over working hours. practice. According to the most recent data available, We used data only for the period 1996-2011 where 91.7% of practicing dentists in the United States are in there was sufficient consistency in the definition of key private practice4. The response rates to the Survey of explanatory variables across time. Dental Practice varied from 17–50%. The most recent year for which data are available is 2011. The survey Statistical significance refers to the 5% level throughout, unless otherwise noted. oversampled specialists to ensure an adequate number of responses for statistical analysis. The dental specialties included within the ‘specialist’ category Results were oral and maxillofacial surgery, endodontics, orthodontics and dentofacial orthopedics, pediatric Figure 1 shows average annual net income of GP dentistry, periodontics, prosthodontics, oral and dentists in private practice from 1982 to 2011 in maxillofacial pathology, public health, and oral and constant 2011 dollars. The peak occurred in 2006 at a maxillofacial radiology. value of $219,501. By 2009, average net income fell to $191,495 representing an average annual decline of We defined dentist net income as gross billings minus 4.4%. This decline was statistically significant. The total practice expenses. We converted all nominal peak year is slightly different than in our previous values into constant 2011 dollars using the All Item 1 analysis where we included only owner GP dentists Consumer Price Index5. We merged geographic (the peak year was 2005). Since 2009, earnings have variables related to the location of the dental practice stabilized, with no statistically significant change. In using Rural-Urban Commuting Area (RUCA) codes6. 2011, average annual net income of GP dentists in The rural-urban classification used in this paper was private practice was $192,392. based on a zip-code version of the RUCA file that is considered less accurate than the census tract version. Figure 2 shows average real net income separately for Each dental practice in the study was assigned to a owner and employed GP dentists in private practice. RUCA category using the practice zip code. The pattern over time is very similar for the two groups. The peak year differs (2005 for owners, 2004 for We developed a dentist net income regression model employees) but the decline for both groups began well to analyze the effect of underlying demographic before the recent economic downturn. In 2011, the gap characteristics, such as age and gender. We used in average net income between owner and employed standard labor market explanatory variables7 to the GP dentists was $68,990 and was statistically extent they were available in the Survey of Dental significant. It is important to note that this is the Practice data set. For the regression analysis, we unadjusted gap and does not control for differences in limited our sample to GP dentists less than 74 years of demographic characteristics between owners and age who worked full-time (defined as more than 1,600 employees.

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Figure 3 shows average annual net income for $367,958. Similar to GP dentists, specialist dentist net specialist dentists. The peak was in 2007 at a value of income has been stable since 2009.

Figure 1: GP Dentist Average Annual Net Income (in 2011 dollars)

$300,000

$250,000

$200,000

$150,000 $219,501 $217,593 $213,392 $212,825 $211,775 $211,561 $211,415 $210,118 $205,324 $204,218 $197,266 $196,885 $192,392 $191,495

$100,000 $180,119 $173,594 $171,543 $171,523 $161,115 $152,150 $147,583 $146,012 $143,377 $142,702 $139,615 $138,518 $130,425 $128,858 $126,463 $50,000 $126,281

$0 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: American Dental Association, Health Policy Resources Center, Surveys of Dental Practice

Figure 2: GP Dentist Average Annual Net Income, Owner and Employed (in 2011 dollars)

$300,000 $228,127 $226,208 $222,128

$250,000 $221,133 $220,229 $218,298 $217,749 $216,732 $216,485 $213,437 $204,755 $203,909 $203,300 $202,022 $187,005 $181,345 $179,150 $200,000 $178,502 $167,784 $157,342 $152,365 $151,986 $149,564 $148,804 $143,462 $143,187 $134,058 $131,816 $129,322 $150,000 $128,206

$100,000 $156,411 $148,503 $145,387 $140,344 $135,071 $134,310 $133,970 $133,183 $131,746 $130,796 $50,000 $127,559 $118,616 $115,491 $107,700 $98,646 $106,337 $95,875 $103,330 $93,250 $100,707 $85,723 $85,535 $83,859 $82,848 $82,022 $80,477 $79,605 $79,423 $76,414 $0 $70,208 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Owner GPs Employed GPs

Source: American Dental Association, Health Policy Resources Center, Surveys of Dental Practice

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Figure 3: Specialist Dentist Average Annual Net Income (in 2011 dollars)

$400,000 $350,000 $300,000 $367,958

$250,000 $363,291 $359,994 $350,097 $343,459 $341,233 $335,209 $329,429 $328,080 $320,001 $316,778

$200,000 $313,873 $305,547 $304,627 $275,710 $271,570

$150,000 $265,080 $259,616 $242,894 $237,632 $236,891 $230,709 $228,059 $222,391 $221,186

$100,000 $213,161 $200,819 $198,552 $195,960 $193,425 $50,000 $0 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: American Dental Association, Health Policy Resources Center, Surveys of Dental Practice

Table 1 summarizes the net income regression results. The regression-adjusted decline in GP dentist net income from 2005 (the peak year once various factors are controlled for) to 2009 was smaller than the unadjusted decline. This indicates that changes in demographic and employment characteristics of dentists account for some of the decline in net income over this period. The regression results confirm that net income had been stable since 2009, and has not rebounded with the end of the Great Recession.

There are several other results worth noting in Table 1. Controlling for age, gender, and location, owner GP dentists earned, on average, $45,821 more per year than employed GP dentists. This is about two-thirds the unadjusted difference of $68,990. Female GP dentists earned, on average, $36,260 per year less than male dentists. The net income of GP dentists practicing in isolated rural areas was, on average, $24,993 lower than in urban areas.

Table 1: General Practitioner Net Income Regression Results

Variable Coefficient 2005 $15,344 ** 2009 -$6,099 Age $11,443 *** Age squared -$120 *** Owner $45,821 *** Female -$36,260 *** Large Rural $3,423 Small Rural $1,072 Isolated Rural -$24,993 *** Number of Observations 9,458

2 Adjusted r 0.08 Notes: Dependent variable is annual net income (in constant 2011 dollars). Control variables include a full set of year dummies, age, age squared, gender, ownership status, location, and region. Omitted values are '2011' for year, ‘employee’ for ownership status, 'male' for gender, and 'urban' for location. *** Significant at 1% level, ** Significant at 5% level, * Significant at 10% level. See methods section for description of sample.

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Discussion

While we only have two years of post-Great Recession and per-capita income largely determine the viability of 12, 13, 14 data, our results strongly suggest that dentist earnings a private practice located in a rural area . Our have not rebounded. There are some important analysis suggests the effects could become critical at potential consequences that are worth noting. If the isolated rural area level. earnings were to decline further, this could reduce the Other data are consistent with our finding of stagnating future supply of dentists since dentist net income net incomes and challenging economic times overall relative to dental education costs is an important 8 for dentists. A nationally representative survey of predictor of the dental applicant pool . In turn, this dentists in private practice indicated that 39% of could affect the viability of several new dental schools dentists reported being ‘not busy enough’ in 201115. that have opened recently or are planned. An overall This is significantly higher than the 2007 level of 19%. decline in dentist net income may also have an effect Results from the American Dental Association’s on the geographical distribution of dentists, the mix of Quarterly Dentist Economic Confidence Survey patients whom dentists are able to treat (for example, indicate that in the third quarter of 2012, 45% of patients covered by Medicaid versus those with private 1 dentists felt ‘negative’ about overall economic insurance) and dentists’ ability to provide charity care . conditions in their office compared to only 22% who felt Due to these potential consequences, it is important to ‘positive’16. closely track the pattern of dentist earnings in the coming years. The economics of dentistry are changing. Due to a confluence of several factors, the profession finds itself It is important to note that the gender and geography at what could be a critical crossroads. New models of effects cannot be interpreted as causal, since there are dental practice are emerging. There is rapid growth in many variables that our data do not capture that could large group practices and dental-service-organization- explain these differences. For example, employed supported practice models17 that are thought to be dentists or female dentists could differ in terms of their more cost-effective than traditional solo or small group patient mix, fee levels, or practice style. In fact, practices. Increased debt loads and changing previous research has suggested that fee levels, preferences related to practice and life styles among patient mix and practice style are important factors 9, 10 new graduates are likely to have long-term effects on explaining the gender gap in dentist earnings . the profession. Health reform, with its increased focus Unexplained gender differences in earnings have been on accountability, coordination of care, paying for reported for many health care professions. For outcomes and results rather than procedures, example, a recent study showed a significant gender combined with the continued fiscal challenges within gap in earnings among physicians that cannot be state budgets will lead to increased cost pressures on explained by specialty choice, practice setting, work 11 the dental care delivery system. hours, or other characteristics . In dentistry, the topic warrants further research. In terms of geography, our The pattern of utilization of dental care this past results indicate that GP dentists practicing in small and decade2 could also be signaling what could be a large rural areas did not have different net income dramatic shift in how adults – especially younger adults levels than dentists practicing in urban areas. Previous – utilize dental care and, more broadly, view oral studies have reported that a combination of population

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20 health. While more research is needed on the remains an important issue . Now more than ever, it is underlying causes of the decline in dental care crucial for dentists, the public, educators, and policy utilization among adults, the available evidence makers to work together to reduce barriers to dental indicates that while improved oral health18 might be a care to ensure all Americans have the opportunity to factor, increased financial barriers to care are certainly be mouth healthy for life. a key driving force19. Low oral health literacy also

This Research Brief was published by the American Dental Association’s Health Policy Resources Center.

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References

1. Vujicic M, Lazar V, Wall T, Munson B. An analysis of dentists’ incomes, 1996-2009. JADA 2012;143(5):452-460. 2. Wall T, Vujicic M, Nasseh K. Recent trends in the utilization of dental care in the United States, JDE 2012; 76(8):1020- 1027. 3. For more details, see: American Dental Association, Health Policy Resources Center. 2010 Survey of Dental Practice: Income from the Private Practice of Dentistry. Chicago: American Dental Association; 2011. 4. American Dental Association, Health Policy Resources Center, Distribution of Dentists in the United States by Region and State, 2009. Chicago: American Dental Association; 2011. 5. U.S. Department of Labor, Bureau of Labor Statistics. Consumer price index. www.bls.gov/cpi/home.htm. Accessed Feb. 15, 2012. 6. Washington, Wyoming, Alaska, Montana and Idaho (WWAMI) Rural Health Research Center. http://depts.washington.edu/uwruca/ Accessed Nov. 30, 2012. 7. Lemieux T. The Mincer equation thirty years after schooling, experience, and earnings. In S. Grossbard-Shechtman (Ed.), Jacob Mincer, a Pioneer of Modern Labor Economics. Springer Verlag; 2006. 8. Nash K, Brown J. The structure and economics of dental education. JDE 2012; 76(8): 987-995. 9. Brown LJ, Lazar V. Differences in net incomes of male and female owner general practitioners. JADA 1998;129(3):373- 378. 10. Riley JL, Gordan VV, Rouisse KM, McClelland J, Gilbert GH; for the Dental Practice-Based Research Network Collaborative Group. Differences in male and female dentists’ practice patterns regarding diagnosis and treatment of dental caries: findings from The Dental Practice-Based Research Network. JADA 2011;142(4):429-440. 11. Lo Sasso A, Richards M, Chou C, Gerber S. The $16,819 pay gap for newly trained physicians: the unexplained trend of men earning more than women. Health Affairs 30. No. 2(2011):193:201. 12. Wall TP, Brown LJ. The urban and rural distribution of dentists, 2000. JADA. 2007;138:1003-11. 13. Nash KD. Geographic Distribution of Dentists in the United States. Health Policy Resources Center. Chicago: American Dental Association; 2011. 14. Waldman HB, Chaudhry RA. Update on the changing numbers and distribution of periodontists. J Periodontol. 2009 May;80(5):711-8. 15. Unpublished data from the American Dental Association, Health Policy Resources Center, Survey of Dental Practice. 16. American Dental Association, Health Policy Resources Center, Dentists' Economic Confidence—Third Quarter of 2012 (September 2012) Available at: http://www.ada.org/1441.aspx (accessed 12/14/2012) 17. Guay A, Wall T, Petersen B, Lazar V. Evolving trends in size and structure of group dental practices in the United States. JDE 2012; 76(8):1036-1044. 18. Dye BA, Tan S, Smith V, Lewis BG, Barker LK, Thornton-Evans G, et al. Trends in oral health status: United States, 1988–1994 and 1999–2004. National Center for Health Statistics. Vital Health Stat 11(248). 2007. 19. American Dental Association, Breaking Down Barriers to Oral Health for all Americans: the Role of Finance. Chicago: American Dental Association: 2012 20. American Dental Association, 2012 Consumer Awareness Survey. Chicago: American Dental Association, 2012.

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Suggested Citation

Vujicic M, Wall T, Nasseh K. Dentist Income Levels Slow to Recover. Health Policy Resources Center Research Brief. American Dental Association. December 2012. Available from: http://www.ada.org/sections/professionalResources/pdfs/HPRCBrief_0213_1.pdf