State Regulators Consider Sale of Advantage Dental to National Company

The Oregon Division of Financial Regulation appeared poised to approve the sale of Advantage Community Holding Company to DentaQuest, after a public hearing in Salem on the sale of Advantage’s dental health insurance line to the nation’s second-largest oral health company, which is based in Boston.

The price of DentaQuest’s offer to Advantage have been kept confidential, although The Lund Report has requested that information from the state agency. If approved, DentaQuest would control 80 percent of Advantage, while a group of dentists from a second company, Advantage Consolidated, would retain 20 percent of the overall company.

“We are looking for a capital partner with a similar mission,” said Mike Shirtcliff, the president and founder of Advantage Dental. He said the capitalization will allow many of the company’s aging dentist investors to sell their equity and retire.

The new Advantage board would be composed of four officials from DentaQuest and two from Advantage’s operations. Patients will not see any immediate change, and the 42 Oregon clinics will retain the Advantage Dental name.

The Division of Financial Regulation, formerly known as the Oregon Insurance Division, has control over the sale because it includes the Advantage Dental Plan license for commercial dental insurance products, even though Advantage has not sold dental insurance since 2009, when it sold its book of business to Springfield-based PacificSource Health Plans.

A decision on the sale, which will determine whether the consolidation will adversely affect the Oregon dental insurance market, is expected by mid-summer. Public comment will be collected through May 4. The purchase will also affect the state’s coordinated care system, since Advantage is a small owner in the Coos Bay CCO, Western Oregon Advanced Health.

Advantage Dental, which was founded in 1994 as Roseburg Dental Services, has been a pioneer of the dental care organization model for Medicaid, where a for-profit collaborative of dentists assumes risk for their patients through per-patient monthly global budgets. Advantage, now based in Redmond, is also the exclusive dental provider for individuals with insurance through PacificSource in Idaho and Oregon. Advantage has dentists in those states as well as Washington.

Shirtcliff said that DentaQuest wants to propagate the Advantage model across the country to deliver Medicaid services. “They’re buying our knowledge base, and they want to take it to other states,” Shirtcliff told The Lund Report.

Currently, in most states, patients typically face much longer lines and more limited access due to a reliance on the broken discounted fee-for-service system, where dentists are paid at a meager piecemeal rate for some of the most difficult patients.

Many dentists balk at accepting Medicaid patients under that system, but Oregon has achieved success improving access by allowing dental care organizations to assume the risk for the overall oral health of a whole cart of patients, and receive payments regardless if a patient needs expensive dental work or even routine visits.

“Oregon has been very successful with this model,” said Jim Hawkins, a vice-president and general counsel for DentaQuest in Boston.

Due in part to the expansion of dental coverage to adults in the Oregon Health Plan -- and the expansion of Medicaid to all low-income adults below 138 percent of the poverty line in 2014, Advantage expanded its clinics by 22 percent two years ago, growing from 36 to 42 clinics and serving patients in every Oregon county.

DentaQuest is the largest dental provider for Medicaid in the United States and has a hybrid corporate structure -- its parent company, Dental Service of Massachusetts, is non-profit, and it has a non-profit institute and a foundation for oral health, but many of its subsidiaries that manage or provide dental care in 28 states are for-profit entities.

The DentaQuest Foundation donated $17 million in oral health grants in the past year. DentaQuest already provides dental services and vision services in Washington state.

“There’s hardly a part of the country we don’t serve, and we’ll be happy to color Oregon in shortly,” said Todd Cruse, the president of the DentaQuest Care Group, which directs dental care for patients in three Southern states from Nashville, Tenn.