2.  Dental Education Financing and Emerging Challenges

Dental Education Financing: Trends and Outlook

Dental Education Costs:  Preparing dentists to enter professional practice is an expensive, labor-intensive undertaking.  Reported total expenditures for 4-year programs that educate dentists average $312,040 per dental student equivalent (DDSE ^[6] ) for public schools, $232,888 for private schools, and $183,596 for private-State related schools [ADA, 2004b]. ^[7]   These figures exclude expenditures for research, but represent other categories of expenditures (e.g., residency training) for which expenses are not reported separately. ^[8]   Problems associated with making direct comparisons of these and other figures based on DDSE as the unit of analysis are addressed elsewhere in this report.

Although the time allotted to the two major dental school curricular components is comparable, costs of providing clinical science instruction are, on average, about five times the costs of basic science instruction.  Basic science costs account for 9.4 percent of total expenditures on average in public schools, 6.8 percent in private schools, and 7.9 percent in State-related schools.  Physical plant and library costs add another 14.8 percent on average.  By far the largest category of expenditures, however, is clinical science instruction and clinic operations (excluding faculty practice), reported to be 41.6 percent of total expenditures overall and ranging from 39.5 percent in private schools to 42.1 percent in public schools.  Revenues generated from clinical services provided in student clinics help offset about one-third of these costs, leaving dental schools with a substantial financial deficit for this major portion of the curriculum.

The primary reason for the high relative cost of clinical instruction in dental education is that it: a) involves teaching a broad array of diagnostic, preventive, restorative and surgical procedures to individuals who start with no prior clinical experience; and b) takes place in clinics operated by dental schools primarily for the instruction of students.  This model for clinical education is very different from medicine, where most clinical instruction takes place after medical school (i.e., in residencies) in facilities operated by other entities primarily for delivering clinical services–e.g., hospitals or ambulatory care facilities.

Major Sources of Revenue for Predoctoral Dental Education

The ADA Survey of Predoctoral Dental Education (ADA, 2004b) reports that total revenue per DDSE (excluding research) averaged $70,501 in FYE 2002.  Public dental schools averaged $78,010 per DDSE, while private and private State-related schools averaged $58,222 and $45,899 per DDSE, respectively.  Major sources of revenue for dental education programs include tuition and fees, revenues from clinical operations and State appropriations (largely for public schools).  Details for these major sources of revenue are provided below.

Tuition and Fees: Revenue from tuition and fees per DDSE averaged $18,389 in 2002 or roughly 26 percent of dental schools’ total revenue per DDSE (excluding research), and ranged from $5,313 to $50,646 (ADA, 2004b).  Tuition and fees averaged $12,614 per DDSE for public schools in 2002, $26,133 for private State-related schools, and $31,026 private schools.  Dental school tuition and fees have risen by 5 percent per year on average from 1993-2002.

Revenue from Student Clinics: Revenues from “student-generated clinical services” average $10,531 per DDSE, or 13.1 percent of total dental school revenues, with a range of 12 percent for public schools to 16.8 percent for private schools.  Thus, student-generated clinic revenues cover only 31.5 percent of the total costs of clinic instruction and operations on average, producing a deficit of nearly 70 percent of the costs of clinical education and 25.5 percent of the total cost of educating a dentist.  Proposals for remedying this situation have called for expansion of clinical care programs and innovative financing schemes; to date, however, no general systematic strategy has been identified. 

Student-generated clinic income falls far short of covering the costs of clinical education and clinic operations, in part because predoctoral dental students (not faculty or allied health workers) provide most services directly as part of the educational process.  Services provided by students usually are offered at substantially reduced fees (typically 50 percent of local market rates) to compensate patients for the additional time required for students to provide services.  The situation is compounded by the fact that the “payer mix” of patients who seek care in dental school clinics generally is comprised of a substantial portion of patients on Medicaid (which typically provides low reimbursement for covered services and provides very limited coverage for adult services in most States) and patients who have no dental insurance.  In light of these circumstances, the revenue generated in student clinics is notable, but remains considerably below the cost of operating clinical teaching programs for dental students–and is likely to remain so because of the time required to teach students how to perform intricate technical procedures on patients in a manner that is safe and meets quality standards.

State Appropriations: On average, public dental schools received $35,466 per DDSE from State appropriations for dental education programs in 2002, with a range from $11,858 to $70,901 (ADA, 2004b).  Private State-related dental schools received an average of $5,541 from State appropriations; the range was between $2,196 and $14,272.  The majority of private dental schools received no State appropriations in 2002; however, one private school received $8,968 per DDSE and four other private schools received State appropriations ranging from $821 to $1,568 per DDSE. 

Federal Involvement in Dental Education

Involvement of the Federal government in dental education stems largely from Title VII, Section 747, of the Public Health Service Act, which initially was designed to address the supply and distribution of health professionals and the recruitment and retention of underrepresented minorities in the health professions. 

A recent review of Title VII, Section 747, activity (ACTPCMD, 2001) cites 10 legislative acts passed between 1963 and 1998 that have shaped the focus of Title VII, Section 747, primary care training programs (including programs in dentistry) over time.  Highlights include the following.

• 1963 – The Health Professions Education Assistance Act (Public Law 88-129) was enacted to increase the general supply of physicians and ensure the financial viability of health professions schools.  In exchange for Federal assistance, largely in the form of medical school construction grants, schools were required to increase their first-year enrollments by 5 percent and maintain the increases for at least 10 years. 
• 1965 – The Health Professions Educational Assistance Amendments (Public Law 89-290) provided matching grants to assist in construction of teaching facilities for schools of medicine, dentistry, osteopathic medicine, optometry and podiatry.  Grants also were provided for student education loans. 
• 1968 – The Health Manpower Act (Public Law 90-490) funded additional initiatives to strengthen, improve or expand programs to train health professionals.
• 1971 / 1976: The 1971 Comprehensive Health Manpower Training Act (Public Law 92-157) and the 1976 Health Professions Education Assistance Act (Public Law 94-484) focused on increasing the supply of primary care and dental providers, improving geographic distribution of providers, and increasing the number of minorities in the health professions.  Grants also were provided for postgraduate training of physicians and dentists and for health professions teacher training.
• 1981 / 1985 / 1988 – The 1981 Omnibus Budget Reconciliation Act (Public Law 97-35), the1985 Health Professions Training Assistance Act (Public Law 99-129) and the 1988 Health Professions Reauthorization Act (Public Law 100-607) largely continued previous legislation.
• 1992 – The Health Professions Education Extension Amendments (Public Law 102-408) shifted the focus of Title VII, Section 747, by linking training of primary care providers to efforts to address workforce shortages in medically underserved communities (MUCs). 
• 1998 – The Health Professions Education Partnerships Act, (Public Law 105-392) re-authorized and consolidated 44 different Federal health professions training programs previously authorized under titles VII and VIII of the Public Health Service Act into the Primary Care Medicine and Dentistry cluster.  This legislation continued to focus on the production of primary care physicians, dentists, pediatric dentists and physician assistants and on getting primary care health care providers into MUCs.  This act also established the Advisory Committee on Training in Primary Care Medicine and Dentistry.   

Thus, the initial impetus of Federal workforce legislation was focused on expanding the supply of physicians and dentists to address concerns about access to services and maldistribution of providers. This infusion of Federal funds not only stimulated the creation of 13 new dental schools between 1960 and 1980, it also prompted the expansion of class sizes in existing schools so that the overall production of dentists increased from 3,775 in 1970-71, to roughly 5,300 per year during the latter half of the 1970s, to a high of 5,756 in 1982-83.  Federal funds also allowed for much-needed upgrades to dental school physical plants.  A major motivation for the expanded Federal role in health professions education beginning in the 1960s was the anticipated increase in utilization of services as a result of new Federal programs (Medicare and Medicaid).  Although dentistry’s involvement in these Federal health benefits programs eventually was limited, important Federal support for basic dental education programs was provided between 1960 and 1980.

However, severe curtailment of Federal funding and dental schools’ inability to identify replacement funds, along with economic and political changes that began in the early 1980s, combined to create a set of forces that led to a substantial reduction of the output of dentists beginning in the 1980s.  These reductions virtually erased the expansion of dental school enrollment initiated by the Federal government during the 1960s and 1970s.  Seven of the Nation’s 60 dental schools–all private schools–closed between 1985 and 2000, an eerie reminder of a caution raised in the 1926 Gies report about the need for adequate public support for dental education and the pitfalls of expecting to conduct dental education on a “commercial basis.” 

Medical school enrollment did not experience a similar decline.  One plausible reason may be the basic difference in financing the clinical portions of the respective medical and dental education curricula. 

Federal Appropriations for Predoctoral Dental Education: The American Dental Association (ADA, 2004b) reports that Federal support for dental education averaged $4,627 per DDSE in 2002; however, that figure applies only to the six schools that received Federal appropriations for predoctoral dental education.  Moreover, that figure is highly skewed by Federal appropriations for one private school that received $25,102 per DDSE.  Federal support for the other five schools that received Federal appropriations for basic dental education ranged from $9 to $1,989 per DDSE.  The remaining 50 dental schools received no Federal appropriations for basic dental education.

Summary and Outlook: Federal efforts in the 1960s and 1970s created a temporary increase in the production of dentists and had only a limited effect on redistributing dentists into underserved areas.  More recent Federal support has focused on training practitioners to address primary care needs of the population, which in dentistry has taken the form of start-up funding for general dentistry and pediatric dentistry residency programs.  These residency programs provide considerable amounts of dental services to the underserved and enhance the ability of future dentists to treat underserved populations.  However, additional incentives (discussed below) are necessary to influence dentists’ decisions to practice in underserved areas or to provide services for underserved segments of the population.

Loss of Federal support, declining State appropriations and limitations on student-generated clinical revenue has resulted in greater reliance on tuition and fees during the past 2 decades.  Many are concerned about the effects of this change on the affordability of dental education–particularly for economically disadvantaged students–and subsequent career and practice decisions.  Dentists who have substantial student debt (as a result of rising tuition levels) are unlikely to participate in public programs such as Medicaid that generally provide relatively low levels of reimbursement.  At least in the short-term, it seems likely that dental schools will continue to attract students because of the relatively good rate of return on investment in dental education.  However, rising dental education costs that translate into rising levels of student indebtedness are likely to influence who attends dental school as well as the segments of the population dentists are likely to treat upon graduation.

Emerging Challenges

Escalating Dental Education Program Costs: Dental education is an expensive undertaking.  Total reported expenditures (excluding research) per DDSE for the 54 schools reporting data for FY 2002 averaged $70,501 per year, with a range of $36,934 to $116,835 per year.  Reported costs vary by type of school, with reported average total expenditures per DDSE per year of $78,010 for public schools, $58,222 for private schools, and $45,899 for private-State related schools.  Clinical instruction is the major driver of dental education costs.

Escalating Levels of Student Indebtedness: Student indebtedness has become a significant issue for dental education.  ADEA (Haden NK et al., 2003) reported that indebtedness for dental school graduates averaged $118,720 in 2003, with public school graduates averaging $105,350 and private/State-related school graduates averaging $152,525.  The primary driver of student indebtedness has been escalating tuition costs that now exceed $50,000 per DDSE per year in some private institutions and average $12,614 per year for public schools, $31,026 per year for private schools and $26,113 per year for State-related schools.  The effect of rising tuition costs and levels of student indebtedness and their potential effect on the affordability of dental education–especially for economically disadvantaged students–and career decisions (e.g., practice location, decisions regarding specialization and participation in public programs such as Medicaid) are of growing concern to students, families, educators and policymakers alike.

Growing Faculty Shortages: In 1999, the American Association of Dental Schools (AADS, now the American Dental Education Association or ADEA) published the results of a major study of faculty in the Nation’s dental schools (Haden NK et al., 2000).  The study concluded that, “Dental education now faces a new crisis.  This crisis is a shortage of faculty … insufficient numbers of faculty to meet the educational needs of students” (Haden NK et al., 2000).  The AADS report tied the impending shortage of faculty to declining trends in the total number of dental school faculty, recent graduates who do not pursue academic careers, increases in faculty vacancies and faculty aging (that will likely lead to greater numbers retiring from the number entering faculty positions).

Vacant budgeted full-time faculty positions have increased since 1992 for both clinical and basic science positions.  Vacant clinical science positions increased from 139 in 1992 to 245 in 2000— a 76.3 percent increase.  The number of vacant basic science positions increased from 16 in 1992 to 27 in 2000, an increase of 68.8 percent (ADA, 2004a).  Fewer sources of revenue–including public support for dental education–and resultant declining faculty salaries compared to the incomes of dentists in private practice are viewed as major contributors to widespread vacant dental school faculty positions.  The growing gap between faculty salaries and practicing dentists’ incomes (which are increasing at rates roughly double those of faculty salaries) is a critical issue that must be addressed soon in order to avoid a widespread crisis in dental education.