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Pediatric Dental Care Center

Eleanor Lin
Children’s Dental Health Clinic, Long Beach, CA
CASE HISTORY/BACKGROUND Dr. Blake Johnson, executive and clinical director of the
Pediatric Dental Care Center (PDCC), summarized the situation facing the clinic’s leadership
and board in 2016. In a climate where federal and state reimbursements are insufficient to cover
our costs, how is the clinic supposed to survive since the majority of our patients require federal
and state aid for payment of services? In only one out of the past 6 years did the PDCC generate
surpluses sufficient to cover the full cost of doing business. We are at a crossroads now as to how
to change our strategy. How could we uphold our mission to provide oral health services to the
underserved children in the greater South Bay Community, when the clinic is already running at
a loss, with little prospect for increased reimbursement for treating Medicaid patients, which
account for about 80% of our patient population?
Recent trends in healthcare had challenged both PDCC’s financial health and its mission. Dr.
Johnson is determined to continue providing dental treatment to one of the most vulnerable
populations, Denti-Care (dental Medicaid) children. His vision is that all children, especially
those who are uninsured and/or indigent, should have access to and receive excellent,
comprehensive dental care. The clinic has always had a large patient volume. After the 2007
recession, however, demand for services soared. Due to reductions in reimbursements—now
approximately 35% of the national average—many private pediatric dentists dropped out of the
government-insured programs, even as an increasing number of families were qualifying for
Medicaid. Initially, PDCC’s main clinic was located inside South Bay Memorial Hospital. About
five years ago the hospital renovated clinic offices next to the inpatient tower, and the clinic had
to move to the clinic building. Housed in a state-of-the-art building, PDCC was able to
implement an electronic dental record system and added new equipment, including digital X-
rays. Because the clinic is right next to the hospital PDCC’s dentists with surgical privileges use
the hospital’s operating room to perform oral surgery. This unique arrangement differentiates the
clinic from competitors and gives it a marketing advantage. However, in recent years, the clinic
has been unable to cover its expenses. Partly, this is because the rent in the new building is much
higher than when it was housed in the hospital. Compounding the problem were reimbursement
rates that had not changed since 2000 and a 10% across the board funding decrease in 2013
because of the state’s burgeoning budget deficit. While the state rescinded the across the board
budget reductions in 2015, reimbursement rates have not changed. Like PDCC, the hospital is
also experiencing decreases in reimbursement for Medicaid and Medicare patients. To respond to
changes caused by the Affordable Care Act, as well as offset declines in reimbursement, the
hospital is exploring the possibility of having one of its outpatient clinics become designated as a
federally qualified health center. Aware of PDCC’s financial situation, the hospital encouraged it
to become part of the federally qualified health center proposal.
THE ORGANIZATION
History of the Pediatric Dental Care Center
The PDCC was founded in 1932 as a not-for-profit organization. Its mission is “to deliver oral
health education and comprehensive treatment for economically disadvantaged children,
including complex medical considerations, while providing premier treatment in pediatric and
multispecialty dentistry.” Helped by its relationship with South Bay Memorial Hospital, the
PDCC expanded its services to include dental care for disabled children. In 2016, the clinic
provided dental services to 10,000 children who made 33,000 visits to the main clinic, as well as
to two satellite clinics located in Center City and Belle Vista Island. A dental education center is
located in the main clinic and a mobile clinic travels into the community to treat those who
cannot come to it. This commitment to serving the underserved is best captured by the phrase in
its logo and letterhead “every child deserves to smile.”
Dr. Blake Johnson
Dr. Johnson’s relationship with the PDCC started in high school when his parents encouraged
him to research career choices such as law, medicine, and dentistry. He shadowed a practitioner
of each profession and was especially drawn to the staff at the PDCC. He volunteered at PDCC
during high school and college while he earned his business degree. Following graduation, he
went to the University of the Pacific School of Dentistry. On graduating from dental school,
Johnson worked part time as an associate dentist and continued working at the PDCC. A year
later, he and his twin brother opened a private office and practiced there for about 8 years. Then
he bought out his brother and became a solo practitioner. After a year in solo practice, and even
though his business was booming, Johnson felt some emptiness regarding his profession. He
wondered if he could do more. Through personal contacts, he heard about a dental clinic being
established for HIV/AIDS patients at the St. Joseph’s Medical Center. He sold his practice and
became director of that program, but he continued to work part time at the PDCC. A year later,
the PDCC’s clinical director wanted to step down and Johnson was recommended for the
position. Once he found a qualified replacement for his directorship at the HIV/AIDS clinic,
Johnson accepted the position as PDCC’s clinical director. Five years later, PDCC’s executive
director asked Johnson to replace her on her retirement. Even though this added significant
administrative responsibilities, Johnson accepted the challenge and became executive director
while continuing to serve as clinical director. As a leader, Johnson had a reputation as a hands-on
manager. His director of operations said, “He is everywhere at once, but he always gets things
done. Since he has practiced at the clinic himself, he has a rapport with the general and specialty
dentists who work here. They know he understands their perspective in providing patient-
centered treatment. He has worked with all of the veteran staff here as well, so he is very well
liked. Whenever he does a walk-through of the clinic he will offer to jump in and help if the
dentists are running behind schedule. This attitude of helping out wherever it’s needed is the
culture that pervades here. He has established a norm here where there is no such thing as ‘my
work,’ but the ‘team’s work’ instead. The work culture at the clinic is one of family. Everyone
helps one another, and everyone is motivated to do the best work possible efficiently.”
THE STAFF
Healthcare Providers
The PDCC employs 6 general dentists, 2 orthodontists, 4 pediatric dentists, 1 endodontist, 1 oral
surgeon, and 1 dental anesthesiologist (when there are intravenous sedation cases). The PDCC
also provides training for the region’s school of dentistry’s residency programs. There are 2–3
oral surgery residents who come one day per month and 3 full-time pediatric residents who see
patients daily at the PDCC. The regional U.S. Veterans Affairs Hospital also sends an endodontic
resident for training one day a month. The PDCC attracts dentists who enjoy working with
underprivileged children and giving back to the community. Although the majority of dentists at
the clinic have their own successful full-time practices, they see their PDCC practice as
rewarding, part-time community work. They like the work, they like the fact that patients are
appreciative, and they like the people with whom they work. This commitment is not without
some personal sacrifice, however. To meet the needs of children on Belle Vista Island, 25 miles
off shore, dentists have to take a ferry several times a month. Other dentists sometimes work in
the clinic’s mobile dental trailer to examine children at schools they visit. Dentists work 7:20
a.m. to 3:30 p.m.; other staff work 7:20 a.m. to 4 p.m., Monday through Friday, with a 70-minute
lunch break. Each dentist works with a dental assistant. As in private practice, dentists typically
treat two patients simultaneously. This method allows the dentist to dedicate one chair to patient
treatments that require a longer time and the other chair to examinations lasting 10–15 minutes.
The back-office clinic staff helps with clinical work and sterilization, and a front-office staff
handles billing, scheduling, and clerical work. Dental assistants regularly rotate among the
clinic’s dental specialties to keep their skills sharp and versatile. Some assistants even rotate to
work at the front desk with billing and scheduling. This proves helpful because if clarification is
needed for coding or eligibility during a procedure, dental assistants with experience working at
the front desk can answer these questions without stopping treatment. The dentists usually work
different days, so they don’t have much contact with each other. However, the dental assistants
and dentists have established good rapport because most have a long-term working relationship
with the clinic. Some pediatric dentists were pediatric residents recruited by PDCC for part-time
employment. Dental assistants who rotated through PDCC during their training also wanted to
work at the clinic, but openings are scarce. As Johnson proudly put it, “We have a lot of life-
timers.” Because PDCC is a children’s dental clinic, the dentists and their staff have seen many
patients grow up. Many patients feel close to the dentists even though a patient might see many
different dentists during their treatment at PDCC. Patients are not assigned to a specific dentist.
Instead, when appointments are made the patient will see whichever dentist is working that day.
Since each general dentist works one or two days a week, it is common that more than one
dentist completes a patient’s treatment plan. This process increases collaboration and oversight
because the treating dentist reviews the work of the previous dentist before proceeding with
treatment. The dentists believe this ensures the clinic’s standard of care is high because the
quality of work one day is visible to a different dentist at the next appointment. Johnson knew
that, although he could not pay competitive salaries to attract high-quality dentists, he could
offset this disadvantage by providing a rewarding and enjoyable experience to the dentists who
worked there. Since most of the dentists are part time, Johnson felt that the most effective use of
their time was treating patients rather than participating in the clinic’s staff meetings. While this
approach creates an environment in which dentists feel their services are valued and make an
impact, most learned little about the financial and operational challenges at the clinic. Without a
way for dentists to get information about the issues faced by the clinic they had to rely on their
staff to “fill them in.” Unfortunately, most staff were not able to provide the detailed information
the dentists sought. The most expensive treatments performed at the clinic are procedures
involving a dental surgeon and a dental anesthesiologist. Reimbursement for these services pays
some of the additional expense but does not cover the actual cost of providing the care. This is
true for nonsurgical dental procedures too. The problem of “less than cost” reimbursement is
exacerbated when residents provide care because the reimbursement rate for their services is
much lower than that received by a fully licensed dentist. Even though the dentists are key to
providing patient care, Johnson believes it’s the clinic staff who make it different from other area
dental clinics. This view of the importance of staff to the clinic’s operations is reflected in its pay
and benefits. Dentists are generally compensated at a rate lower than the market average, but
dental assistants and clerical staff are paid at market rates. Since nearly all staff are women, the
organization adopted policies that reflect that reality. Among the more significant is the paid
maternity leave policy and flexible work schedules that allow staff to deal with the inevitable
family or childcare issues. More than half of employees have benefited from these policies.
These “progressive” policies can cause significant problems scheduling employees, which
reduces efficiency. Despite the problems, however, most staff enjoy working at the clinic and
working as a team. Because of the camaraderie, they know each other well, and some have
formed friendships that continue outside work. Even though there isn’t much room for
advancement, most find the work they do and the team-oriented environment unique to the
PDCC.
THE PATIENTS
One factor that makes working and volunteering at the PDCC unique is the patients, who are
grateful for getting the care they need in a way that makes them feel special. Most patients are
poor, and finding affordable dental health services is difficult. While most patients (about 75%)
are covered by Denti-Care (Medicaid), reimbursement for those services fails to cover the cost of
care. The next largest group (17%) is covered through a public-private partnership between the
county department of health services and private, community-based providers, who try to meet
the needs of families who do not qualify for Medicaid or other assistance programs. The
remainder (roughly 8%) of patients are billed on a sliding scale according to income.
Reimbursements from non-Denti-Care sources are higher than those from Denti-Care, but here,
too, costs are not covered. While 85% of pediatric patients are bilingual, 90% of parents speak
only Spanish. This is problematic; the majority of dentists have limited Spanish proficiency.
Most office staff are bilingual in Spanish and English, so dentists often have to rely on bilingual
assistants to translate treatment information, postoperative instructions, and information for
patients and families. Since dental treatment makes many people nervous, talking about the
procedure in the patient’s native language is important. Staff does an excellent job providing a
calming atmosphere for children, but that does not overcome the problem of most dentists being
unable to communicate directly with parents about the treatment and associated risks. The clinic
averages 225 new patients monthly. Key factors attracting patients to the clinic are its reputation
and the affordability of its services. Unfortunately, what was affordable for patients was not
affordable to the clinic. In 2013, the state program, Denti-Care, reduced benefits because of poor
economic conditions. This resulted in fewer covered patients, and those who were covered had
limits on the number and types of treatment that would be reimbursed. While the state recently
rescinded these across-the-board reductions in its Medicaid programs, the clinic still had
financial shortfalls. Johnson notes that, although the clinic has been somewhat successful in
offsetting deficits with grants and fundraising, it has been increasingly difficult to find enough
donor support to cover reimbursement shortfalls.

The effects of reimbursement that did not cover the cost of care, increasing dental needs in the
community, and the inability of fundraising to provide enough support were a threat to the long-
term viability of PDCC. The largest expenditure in clinics like PDCC consists of salaries and
wages. Other clinics report that salaries and wages account for 74% of total budget. In contrast,
salaries and wages at PDCC are higher. Nonetheless, the PDCC board and senior executives feel
that current salary and benefits are appropriate and fair. Unfortunately, continuing reimbursement
shortfalls may force management to eliminate one full-time equivalent dentist and reduce the
days of coverage by community-based dentists.
RESPONDING TO THE CHANGING ECONOMIC LANDSCAPE
Faced with declining revenue and increasing demand for services, the state made severe cuts to
a range of safety net programs. Since healthcare is a major budget item, the state opted to meet
increased need by reducing reimbursement for most services, as well as limiting the number of
services provided and the frequency with which they are offered. These changes rippled through
the provider network, causing some to limit services or reduce access to patients they would
otherwise serve.

The impact on the PDCC was significant. Consistent with their mission, however, they strove to
provide the same quality and amount of care. Simultaneously, the PDCC sought ways to improve
efficiency and find other sources of revenue. One way to increase revenue was to join The
Children’s Clinic (TCC) at the South Bay Memorial Hospital and become a federally qualified
health center. Federally qualified health centers must provide primary care for all ages. They are
reimbursed with a more generous capitation rate. Required services include preventive health,
mental health and substance abuse, transportation, and dental care for adults and children on site
or by arrangement with another provider. 2 In his report to the board, Johnson noted that
generous reimbursement as part of a federally qualified health center would improve the PDCC’s
financial status. As an example, he noted per visit reimbursement ranged from $100 to $400 per
patient, depending on the treatment. By comparison, reimbursement for similar treatment under
Denti-Care was no more than $80. One challenge to qualifying as a federally qualified health
center is that at least 51% of the clinic’s board members must be persons served by the
organization. Since a federally qualified health center must serve all of the underserved
population, PDCC might be required to treat adults. Such a change would mean a major
investment of time and money for training and supplies and development of new treatment
protocols. A federally qualified health center designation alone would not provide the funding to
meet higher-cost procedures, such as operating room time and intravenous sedation. An
additional concern is that the federally qualified health center payment system might incentivize
providers to provide less treatment, or to spend less time with each patient. And, as with any
government program, what might be economically feasible today may not be in the future. As
Blake Johnson reflected on changes in the healthcare environment, he wondered how the
organization should respond. He wondered if there were other collaborative options with the
children’s clinic or other organizations that might not require changes to PDCC’s governing
board or its range of services.

DISCUSSION QUESTIONS
1. Is the PDCC at a crossroads?
Yes, the PDCC is at a crossroads. The clinic faces financial difficulties due to low Medicaid
reimbursement rates, increasing costs, and growing demand for its services. The clinic must
decide whether to change its strategy, form partnerships, or find alternative funding sources
to remain sustainable while continuing to serve its mission.
Alternate Answer:
Yes, the PDCC is undoubtedly at a crossroads. The clinic’s financial struggles are worsening
due to inadequate reimbursement rates for Medicaid patients, who make up the majority of
its patient base. Additionally, rent and operational costs have increased since relocating to a
new building. Despite the clinic’s commitment to its mission, it is unable to sustain itself
under the current financial model. With growing demand for services, limited funding, and
the possibility of budget cuts, the PDCC must decide whether to continue its current model,
seek partnerships, or completely restructure its approach to providing care. The leadership
faces the challenge of maintaining high-quality care while ensuring financial viability. If the
clinic fails to adapt, it risks being unable to continue serving underserved children in the
community. This critical juncture requires a reassessment of operational strategy to secure a
sustainable future.
2. Must the PDCC change its operational strategy?
 Yes, PDCC must adapt its strategy to ensure financial stability. Possible changes could
include forming partnerships, expanding services to increase revenue, improving
efficiency in operations, and seeking additional funding sources such as grants and
donations.

Alternate Answer:
Yes, the PDCC must change its operational strategy to ensure long-term sustainability.
The current model, which relies heavily on Medicaid reimbursements that do not cover
the full cost of services, is unsustainable. The clinic must explore alternative revenue
sources, such as grants, partnerships, or additional fundraising efforts. One potential
strategy is increasing efficiency by optimizing scheduling and resource allocation.
Another option is expanding services to non-Medicaid patients who can pay higher rates,
creating a cross-subsidy model to support lower-income patients. Additionally, the PDCC
could consider diversifying its services by offering preventive care programs that reduce
the need for high-cost treatments. Staff training and development programs could also
improve productivity and patient care outcomes. Without a shift in strategy, the clinic will
continue to struggle financially and may eventually have to cut services or staff,
compromising its mission.
3. How can the PDCC meet its mission to provide oral healthcare to underserved children in
the greater South Bay community?
PDCC can continue to serve underserved children by:
 Seeking alternative funding sources (grants, donations, partnerships).
 Increasing efficiency in clinic operations (reducing costs, optimizing scheduling,
expanding mobile clinics).
 Partnering with organizations that align with its mission to access better reimbursement
programs.
 Advocating for policy changes that increase Medicaid reimbursements for dental
services.

Alternate Answer:
To fulfill its mission, the PDCC must secure financial stability while continuing to serve
underserved children. One approach is to strengthen its grant and fundraising initiatives
by engaging local businesses, charitable organizations, and philanthropic donors.
Expanding public-private partnerships could also provide financial relief and support for
the clinic’s operations. Additionally, the clinic could focus on preventive care to reduce
the long-term costs of treatment. Educational outreach programs that teach children and
parents about oral hygiene could help decrease the need for costly dental procedures.
Another option is to develop a tiered payment system where non-Medicaid patients pay
full price, offsetting costs for low-income families. Improving operational efficiency,
such as reducing appointment wait times and optimizing staff schedules, can also help the
 clinic manage expenses while maintaining quality care. By adopting a multi-faceted
approach, the PDCC can continue serving children while addressing financial challenges.

4. How should PDCC respond to the request to partner with the hospital and the children’s
clinic and become a federally qualified health center?
PDCC should carefully evaluate the benefits and challenges of this partnership. The
increased reimbursement rates and financial stability may help sustain the clinic, but the
required governance structure changes and potential expansion to adult services could
require additional resources. PDCC should conduct a financial feasibility study before
committing to this transition.
Alternate Answer:
Becoming a federally qualified health center (FQHC) could offer financial relief to the
PDCC by increasing reimbursement rates and securing federal funding. However, this
transition comes with challenges. To qualify, the clinic must meet strict federal
guidelines, including serving a broader patient population, such as adults, which would
require additional resources, training, and staffing adjustments. Additionally, 51% of the
governing board must be made up of patients, which could shift decision-making power.
While the FQHC model provides stability, it may also limit the clinic’s flexibility in
decision-making. PDCC should carefully evaluate whether the financial benefits
outweigh the administrative and operational changes required. If partnering with the
hospital and children’s clinic as an FQHC aligns with PDCC’s long-term goals, it could
be a viable solution. However, if the transition would dilute its core mission, alternative
strategies should be explored.
5. What other options should be considered?
Other potential options include:
 Expanding private-pay services or public-private partnerships to increase revenue.
 Strengthening fundraising and grant-seeking efforts.
 Advocating for higher Medicaid reimbursement rates at the state level.
 Collaborating with dental schools to receive subsidized staffing support.
 Exploring cost-cutting measures, such as adjusting clinic hours or staffing models
without compromising care quality.

Alternate Answer:
Apart from becoming a federally qualified health center, the PDCC should explore other
options to strengthen its financial sustainability. One potential approach is forming
partnerships with private dental practices that can provide additional funding or support
for specialized care. The clinic could also seek corporate sponsorships or expand its
grant-writing efforts to secure more funding. Another strategy is introducing a sliding fee
scale for patients who do not qualify for Medicaid, allowing the clinic to generate
additional revenue. Additionally, telehealth services could be implemented to provide
remote consultations, reducing operational costs while maintaining patient access to care.
Exploring efficiency improvements, such as better appointment scheduling and utilizing
digital technology to streamline operations, could also help reduce costs. By diversifying
its revenue streams and enhancing efficiency, the PDCC can continue to fulfill its mission
while ensuring long-term financial stability.

1. Yes, the Pediatric Dental Care Clinic (PDCC) is at a crossroads and the organization
is in a financial bind that might cost it its existence and thus, deprive the less
fortunate children in the South Bay area of its services. To point out the facts, just like
Dr. Susan Thomas, the director of a clinic, encountered, the Medicaid reimbursement
rates have been decreasing over time, thus not even covering the cost of services. On
the other hand, the decision to switch to a new location has more modern
environment but it also has increased the rent and operational costs. At the same
time, the clinic is not gaining profits as its continuous endless patient influx,
especially from poor families, just came to depend on its services.

2. Indeed, PDCC needs to re-formulate its operational strategy in order for the clinic to
become sustainable. From the case, we learn that the clinic's revenues depend heavily
on Medicaid that in return provides the clinic with reimbursement rates that are too
low in order for the clinic to meet the expenses. As Dr. Thomas says, the said model
is “financially unsustainable in the long run.” Additionally, PDCC's recent move into
the new facility in downtown South Bay has driven the rentals cost up even higher,
further increasing its spending and decreasing budget ceiling. Among the alternatives
that are viable include the generation of revenues by expanding the services into the
privately insured or self-paying patients, as the board member Lisa Moretti suggests.
Another alternative includes the improvement in the efficiency by reducing the no-
show appointments and maximizing the scheduling of the employees. PDCC may
also explore alliances with the surrounding hospitals like the South Bay Children's
Clinic, and they might have the ability to share the resources and the funds. Without
the major strategic overhaul, the clinic is on the verge of meltdown and therefore
cannot continue providing services to the most needed. If the PDCC does not
implement significant changes in the operational activities, it may have negative
effects that lead towards the lay-offs of the faculty or the department closure, and the
outcome would be the loss of the essential dental services for the thousands of the
children.
3. PDCC's mission is to serve the underpriviliged children, but upholding this mission
requires the stability in terms of money. According to the case, PDCC depends
heavily on low-reimbursement government insurance because it serves more than
85% patients by using Medicaid. As Dr. Thomas has already received funds from the
South Bay Health Foundation earlier, PDCC might increase the grant-writing activity
in order to maintain its successful operations. Staff member Rachel Martinez also
suggested that preventive dental programs must be implemented in the school
because that would decrease the number of emergency treatments that cost heavily.
James Connors, one among the suggestions by the board member, is that PDCC must
work closely with the companies and philanthropists around the area in order to
receive several aids like sponsorships and donations. In these manners, PDCC would
overcome the financial barriers and remain positive towards its predominantly goal
by increasing the fundraising activity, enhancing the operational effectiveness, and
developing strategic business plan with the same type of organizations.

4. PDCC would potentially be able to ensure regular financing by becoming a Federally

Qualified Health Center (FQHC) but this would not be without issues. As the case
shows, PDCC would be able to become a FQHC by the means of a partnership
proposal by South Bay Children's Clinic and South Bay Regional Hospital that would
potentially result in better rates of payment as well as the ability to apply for federal
grants. However, as Dr. Thomas said, this would result in changes, such as treating
patients who are adults and altering the composition of the board so that the board
would have a 51% patient-elected composition. This would ease the cost burden as
mentioned above, yet at the same time PDCC’s pediatric focus would potentially
suffer somewhat. Yet, FQHCs have very strict federal regulations that would
potentially limit PDCC’s operations. In order to determine if the cost savings
outweigh the challenges, PDCC should conduct a feasibility study before deciding. If
it does, the change would be worthwhile for PDCC; if not, the organization would
have to pursue alternative financing options.

5. PDCC has several alternatives other than becoming a FQHC if it is to remain

financially sustainable. Subsidization of Medicaid patients by the tiered payment
system where patients who earn more pay full prices has been proposed by one of the
board members, Lisa Moretti. Since the South Bay Dental Association has shown
interest in financing community dental programs, the establishment of corporate
sponsorships is another alternative. PDCC also has the potential to minimize in-clinic
expenses by offering remote consultation and follow-ups by expanding telehealth
services as proposed by Rachel Martinez. Increased fundraising activities by
conducting community charity events, as stated in the case, may also result in the
generation of additional revenues. PDCC will continue fulfilling its mission while
ensuring long-term fiscal stability by diversifying the source of funds, becoming more
efficient, and seeking innovative alternatives.