Potential effects of opportunity cost on dental school patients

Abstract

Predoctoral clinic fees are set below those of private practices to attract patients. Treatment in a predoctoral clinic requires more and longer appointments and patients spend more time waiting to be seen than in a private practice. This time has a value that economists call opportunity cost, the value of the next best alternative (the hourly wage for an employed patient). A model comparing total cost (fee plus opportunity cost) of treatment in dental schools and private practices for insured and uninsured patients is presented. As patient income increases, the total cost of some treatment plans becomes higher in dental schools than in private practices. To insured patients, however, the out-of-pocket cost of a treatment plan depends on copayments rather than fees. This makes predoctoral clinics less competitive. Considering opportunity cost further increases dental schools' lack of competitiveness. For insured patients, more treatment plans will have a lower total cost in private practice. Clinic directors must realize that if opportunity costs are not reduced, the market may dictate that fees be lowered to remain competitive with private practitioners. They are in competition for patients based on total cost, and efficiencies that reduce opportunity cost may increase revenue and attract patients.