Coast Dental Services, Inc. 
Author Message
 Coast Dental Services, Inc.

Coast Dental Services, Inc.

Suppose that you tallied up your dental payor mix (income)
for the past three years and you came up with these results:


Self-pay                65%---55%---36%
HMOs                   22%---26%---43%
Private insurers     12%---17%---19%
Medicaid                 1%----1%----2%

Would you be concerned? Are you heading towards a fiercely
competitive managed care environment? Unfortunately, the
outside shareholders who own about 70% -?  of this company
may not be aware of what the above table connotes.  They also
have contributed $59 million of which approximately $46.8
million remains from the 2 public offerings in 1997.


Here I am, once again trying to tie together dentistry, IPOs
(initial public offerings), and of course, managed care!

You know, its so easy to get caught up in our day-to-day
businesses. Dentistry is a pretty stressful activity what
with emergencies and other problems. So when a corporate
consolidator comes along, or when you look at a company
prospectus, its easy to miss what's written between the

My personal experience with Coastal Dental Services, Inc. is
zero.  A participating dentist has e-mailed me certain
questions about how business is being conducted.

If you sign on with any of the corporate consolidators, well,
you have limited ability to change "management." But that
does not stop you from letting your colleagues know at This is especially so if it is done
anonymously.  This particular guy (dentist) asked me to find
out what I can. I promised to report it right here at


Services and operations

"The Company is primarily responsible for the management and
administrative functions of its Dental Centers, but does not
provide dental care. The Company provides financial,
accounting, billing, training, marketing assistance and
collection services for a Coast P.A. and employs the Dental
Center's management and administrative personnel. A Coast
P.A. maintains full control over the dental practices of the
Coast Dentists, employs the Coast Dentists and their
hygienists and set standards of care in order to promote the
provision of quality dental care."

----excerpted from 1997 Annual Report. p. 4

How much are Services and Support Fees?

They range from 76% to 74% of the gross revenue, net of
refunds and discounts, of the Dental Center.

From this fee, they pay all operating and non-operating
expenses incurred at the Dental Center except for the
salaries and benefits of the Coast Dentists and dental
hygienists, federal and state income taxes, bad debt, and any
other expenses designated as an expense of the Coast P.A.


Number of centers   (Company Net revenue, dollars in

1992 -2 internal
1993 -2 internal ($1,194)
1994 -4 internal ($1.868)
1995 -3 internal ($3.325)
1996 -1 internal plus 17 external  ($8,128)
1997 -9 internal plus 20 external  ($20,035)

In other words, there are currently 58 centers. Company net
revenue in 1997 was $20.035 million.

Computed Averages, company:

1992 -
1993 - ($298.5)
1994 - ($233.5)
1995 - ($302.3)
1996 - ($280.3)
1997 - ($345.4)

(This is $ per office which represents 76% to 74% of the
combined dental office gross, in thousands --my computation -

There's some interesting analysis obtained from statements
about expenses. As example, dental supplies and laboratory
fees decreased from 14.8% to 14.2% from Dec. 31, 1996 to Dec.
31, 1997. They note:

"This decrease was caused primarily by the expansion into new
markets and the changing demographics have caused crowns and
dentures as a percentage of total product mix to decrease.
Crowns and dentures result in lab fees not incurred with
other dental products and procedures."

---excerpted from 1997 Annual Report. p. 11

What's not clear, although it was alluded to is, "What is the
dollar amount derived from capitation?"

"Year ended Dec. 31, 1996 Compared to Year Ended December 31,

"Capitation payments received from 11 managed care contracts
during the year ended December 31, 1996 accounted for $1.0
million of this increase."

(That is, $3.3 million to $8.1 million increase, 1995/1996).
-Report p.  12.



Joel M. Eichen, D.D.S.

Fri, 13 Jul 2001 03:00:00 GMT
 [ 1 post ] 

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