Private equity firms have found a profit center in the teeth of poor children
, which the firms are getting to by buying or backing dental management firms and getting their dentists aggressively into the business of over-treating kids on Medicaid. Just as Mitt Romney's work at Bain Capital was about creating investor profit, not jobs (whatever he may claim now), this is about creating investor profit, not healthy teeth. For instance:
On May 2, All Smiles Dental Center Inc., a management company owned by Chicago-based Valor Equity Partners, filed for bankruptcy protection. Its hand was forced in part by a Texas Medicaid action cutting off payment to some of its clinics because of allegedly “excessive” and “inappropriate” orthodontic care, according to an All Smiles executive’s affidavit included in the filing. All Smiles was part of a state audit in which 90 percent of Medicaid claims for orthodontic braces were found to be invalid because they weren’t medically needed, according to Christine Ellis, one of the auditors.
In some cases, the braces may have been put on children's baby teeth.
Another dental management services company, ReachOut Healthcare America, which is owned by Morgan Stanley Private Equity, specializes in going into schools and treating kids in bulk. And when quantity is the priority, well, you make some mistakes. Like the case where six-year-old Sabrina Martinez's teeth were drilled "even after the student’s mother, Valerie Davila, told the company she was seeing a family dentist and didn’t need any work." But, see, there was another student named Sabrina Martinez, and if you're just trying to get through the most procedures you can on the most kids you can, you don't necessarily take time to tell one Sabrina Martinez from another. In another case:
When ReachOut called Stacey Gagnon to tell her the mobile dentist was coming to Isaac’s school, she said she explained that he had seizures and other serious medical conditions. ReachOut was told he could have a cleaning and oral hygiene education, nothing else, according to Gagnon.
After that call, ReachOut dentists held Isaac Gagnon down and gave him two steel crowns, two pulpotomies and 10 X-rays.
Cases like this obviously require individual dentists to suck, both as dentists and as human beings. But if it's just about individuals, such stories don't happen to scale. That takes big money—things like private equity involvement pushing dental management services companies to expand the scope of what they do from providing services like billing and scheduling to coming closer to directing actual medical decisions, something that is potentially in violation of "State laws [that] broadly say only licensed dentists or firms they own can practice dentistry." Some states are cracking down, and the U.S. Senate is investigating possible overbilling by several firms. But while regulating these abuses is an important first step, private equity firms will find the next under-regulated point of entry into profiting off of the massive inequality that leaves poor families vulnerable to such abuses and creates no meaningful disincentives to rich investors doing things like this again and again.