Collective agreements see the rot setting into Denmark's dentists
Dentist care is one of the few things Danes actually have to pay for (or adults have to at least). This might puzzle you, after all Denmark is well known around the world for its free healthcare. In fact, it puzzles many Danes as well. However, the fact that Danes have to pay for it isn’t really the core of the problem - the concern is that it’s so gosh darn expensive.
Take my mother for instance. She is due to have two crowns inserted. If she is to have it done in Denmark the price would add up to £1400. Luckily, my parents live near the Danish/German Border, so she’ll be able to have it done in Germany for just the half of the price - and she is not the only one who does this. Many other Danes does this too - even if they have to drive for 3 hours. But the fact of the matter is that it doesn’t have to be like this.
Children's dental care is paid by the state, but once you reach the age of majority you have to pay for yourself (although approximately 20% of your trip to the dentist is subsidised by the region). While prices to a large extent are decided by free market forces in the rest of the Nordic countries, prices in Denmark are set by collective agreement between dentists and regional politicians with several downsides to it.
The fact that a wide range of services are set by collective agreements means that dentists can’t compete on prices and provide discounts in order to attract more patients. However, it is stated specifically in the collective agreement that this only applies when dentists accept the subsidy. Surely if they don’t accept the subsidy, clinics are allowed to determine the price themselves, right?
That’s not the case, unfortunately. Landssamarbejdsudvalget (try saying that three times after a couple of shots of Aquavit),a complaint board with the competence of interpreting the collective agreement for dental care, have over several rounds uttered that dentists can’t provide discounts. This is even if they abstain from accepting the subsidy from the region.
Different dentist chains have still tried to, however. In one instance the dentist chain Godt Smil offered free check-ups for patients who hadn’t been to the dentist. A clinic, PLUS1, gave discounts on different services whose prices were determined by the collective agreement. However, in return they abstained from the subsidy which in theory would have been in compliance with the agreement. Overall, they managed to cut the price on one of their package deals by 82%. Keep in mind some of that saving is the public subsidy. Nevertheless, Landssamarbejdsudvalget still deemed it in contravention of the agreement. In taking on the Landssamarbejdsudvalget the dentist chains had bitten off more than they could chew.
The collective agreement also stipulates certain restrictions on ownership of dental clinics. These include owning more than two clinics and people who aren’t licensed dentists having a majority stake in a chain. A dentist has to seek permission from the regional complaint board to open more than two clinics. Conflict of interest may also arise because of the structure of the complaint board. The board consists of 3 dentists and 3 representatives from the region. Half of the members of the board can therefore potentially be competitors to the dentist seeking permission. Because the board have to decide unanimously, competitors can veto the decision.
A similar situation was seen in North Dakota, USA where the Dental Board, mainly elected by dentists themselves, regulates the profession. In 2006 the board tried to stop beauticians and hygienists from whitening customers teeth because they thought they were undercutting dentists in price. Luckily, the Federal Trade Committee objected and in 2015 the Supreme Court put an end to the anti-competitive moves.
People understandably call for government to step in because they are under the impression that markets can’t live up to the expectations they have for important parts of the health sectors such as dental care. Little do they know, the root of the problem lies with government regulation, not the market.
In fact, the Competition and Consumer Autority have said that parts of the collective agreement are ‘straight up illegal’. Unfortunately, the Competition and Consumer Authorities can’t process some of the anti-competitive elements in the agreement because the Ministry for Health has assessed that price and ownership relationships are a necessary consequence of regulations on the health area.
If anything is to be done to secure suitable prices while maintaining quality in dental care in Denmark, it will have to take on the collective bargaining review that begins this year. The Ministry first of all ought to differentiate the agreement from law. This would leave it up to the parties taking part in the bargaining to give clinics the opportunity to compete on prices as well as opening up the market to new foreign competitors.
Secondly, successful dentists who want to expand their business should be able to do so. This would enable them to take advantage of economies of scale. In addition, the restriction of ownership - i.e. a majority of a dental company has to be owned by dentists - hinder the possibility of professionalising the dental industry and learning from best practices elsewhere. Opening up to equity funds and private investors would allow those who already have a general experience with business operations to develop an efficient business with chances of enhanced productivity.
Allowing the market to flourish would provide the consumer with cheaper dental care of higher quality and save the regions pointless expenses.