Help Wanted - Hawaii's Economic Crisis




By Craig T. Kojima, Star-Bulletin
"I have a sense that most dentists' gross production
has been down the past couple of years, and I think it's a
direct offshoot of the economy."

Dr. Ronald Miller, President, Hawaii Dental Association



Bad times take bite
out of dental work

But in some cases, dentists
have been victims of their own success
in teaching preventive care

By Peter Wagner
Star-Bulletin

Dr. Jeffrey Zimmerman started feeling the pinch in his Honolulu dentistry practice 10 years ago.

Too many dentists, too few patients. Meddling insurance companies and managed care organizations. A bad economy.

"You have to decide what to do, work six days a week and try to make ends meet or go somewhere else and maybe have a little more free time," he said.

Zimmerman decided to move.

"It's been great here," he said after his recent move to Phoenix. "The area is booming."

Not so in Hawaii, where hard times have hit the tooth trade.

Trying to buy time on costly treatments, patients are putting off cleanings, cavities and other care. They're staying away from cosmetic treatments and going with silver instead of gold. And employers struggling with their bottom lines are opting for budget dental plans.

The downturn is eating not only at molars but also at dentists' pocketbooks -- some have seen revenues fall as much as 20 percent in recent years.

"I have a sense that most dentists' gross production has been down the past couple of years, and I think it's a direct offshoot of the economy," said Dr. Ronald Miller, president of the Hawaii Dental Association and a practitioner in Kailua for nearly 30 years. "Any time there was a recession on the mainland, visitors from the East or West would pull us out of it. My feeling is that this is the first real recession we've had here."

The 870-member association represents more than 80 percent of dentists in the state.

Among the hardest hit, Miller said, are orthodontists, periodontists and other specialists whose services are elective.

Dr. Henry Hammer, a longtime Kailua orthodontist, says his business is off 10 to 15 percent. But things would be worse, he said, were it not for business from nearby Marine Corps Base Hawaii, where dental care is subsidized by the military.

Still, Hammer has reduced his staff by about five.

Most agree the downturn reflects a slow economy, tight budgets and dwindling insurance benefits.

"Doctors are looking for ways to maintain their services," said Mike Stollar, director of dental products at the Hawaii Medical Service Association. "It's a struggle right now."

One key event, he said, was last year's cancellation of adult dental insurance under the state's QUEST and Medicaid programs. That left 104,000 low- and moderate-income residents -- one-tenth of the state's population -- unable to afford a visit to a dentist's office.

But dentistry was ratcheting down long before the economy went sour or the state decided to cut costs, Stollar said. He notes the number of services billed through HMSA has dropped nearly 18 percent in 15 years.

He believes the downturn can partly be explained by improved dental health in Hawaii. After years of preaching preventive hygiene and practicing improved methods of treatment, dentists have become victims of their own success.

"The better dentists take care of their patients, the less they need them -- it's sort of a paradox," Stollar said.

Moreover, as preventive treatments increase, expensive root canals and extractions decrease, he said. And so do revenues. "Prevention doesn't generate a lot of income."

Adding to business woes, he believes, is an overpopulation of dentists. Stollar notes that the number of dentists in Hawaii climbed from 700 to more than 900 in the past 15 years.

Zimmerman agrees.

"You can only put so many dentists in a finite area," he said.

Dr. Joyce Hagin, who practices general dentistry in Honolulu, has managed to keep her business stable. She credits her patients, who she says have learned the value of routine care.

Still she worries about the future -- particularly the growing influence of low-cost dental plans and managed-care organizations.

"One of the things dentists are concerned about is that they'll have to buy into the mainland PPOs (Preferred Provider Organizations)," said Hagin. "That means discounted fees, managed costs and managed care. And that's not always to the benefit of patients."

Hagin predicts the change will come, with newer dentists struggling with equipment loans being the first to join.

One organization, the Hawaii Independent Dental Alliance, signed up 180 doctors last year, something Stollar said would not have happened five years ago.

"Dentists are wildly independent," he said. "Traditionally, they've been a kind of cottage industry."

Meanwhile, Hagin worries about her patients.

"It's the old saying -- pay now or pay later," she said. "People will come in and say, I broke a tooth but it's not painful. How long can I postpone putting a filling in? But putting a small filling in now will probably prevent having to do a root canal, a crown or an extraction later."


Among real estate agents,
it's survival of the fittest

Membership in the Honolulu Board of
Realtors is down more than 50 percent

By Peter Wagner
Star-Bulletin

The booming real estate market of the 1980s has faded into legend. So have the legions of real estate agents who shuffled buyers and sellers like a deck of cards.

All that remains are weathering "For Sale" signs and a core of real estate agents able to adapt to new realities.

Some are doing well, cashing in on new markets for the falling prices. But overwhelmingly, Hawaii real estate is a tough business to be in these days.

"I was really busy for a couple of years, but things really took a nose dive," said John Heatherman, a former real estate agent and appraiser who called it quits. "I wasn't making any money."

Heatherman took a job at Honolulu Airport but recently gave that up after the 12-hour graveyard shifts took their toll. "The employment situation is really bad out there," he said.

Now looking for work in property management, Heatherman is not optimistic about the future.

He's not alone.

Statewide home sales

It's been a free fall at the Honolulu Board of Realtors, where membership has dropped from 7,900 to 3,850 licensed agents in the past six years. The drop mirrors a flagging market, where transactions went from 8,500 a year in 1991 to about 4,000 last year.

"I give a lot of credit to the Realtors who have hung in there and adapted to the market," said Scott Bradley, the board's president. "It's taking a much higher commitment to be a Realtor than it did 10 years ago."

The real estate market has long moved in 10-year cycles, with seven "up" years followed by three "down," Bradley said. But with six consecutive down years since 1991, we're into something new, he said.

"It's been more severe than anything in recent history."

It used to be a real estate agent just put buyer and seller together. Many were able to cash in on the bonanza on weekends, working regular jobs during the week. But the weekenders are all but gone, and the complexity of transactions has gone up exponentially.

"The trend has gone much more toward doing an awful lot of research of the market to protect buyers," he said.

Those who are staying on top are well versed in structural problems, insects and complex financing, Bradley said.

The downturn is evident at real estate schools as well.

"A lot of schools have gone belly up," said Patt Spencer, administrator of Vitousek Real Estate Schools. "There's no business out there and no money to pay for education."

Vitousek, billed as the largest and oldest real estate school in Hawaii, once offered five-week classes six times a year on Oahu. Now it's down to three.

Many former agents were part-timers able to fall back on regular jobs. But others are waiting on tables, clerking or finding other niches in real estate.

"Many are doing other things," said Betty Dower of Dower Realty Inc. "Many good agents are going to time share."

Selling time-share properties is simpler than homes, and clients are brought to the agent.

"Most real estate agents have to go out and find their clients," she said.

Dower Realty five years ago had 119 real estate agents. Now it has 52.

Among the survivors, Elinor "Iz" Campbell of Kahala Properties, says business has been good.

"Things are happening," she said. "There is a goodly amount of business out there because prices have dropped so much in recent years," she said.

But Campbell has an ace in the hole.

"I'm fortunate to be married to someone who has a regular salary," she said. "If I didn't, I might have gotten out of the business during the lean years."




Wanted: Your comments
What needs to be done to help Hawaii emerge from
its prolonged slump? Write to us at Letters to the
Editor/Economy, P.O. Box 3080, Honolulu, HI 96802
or e-mail us at editor@starbulletin.com and share
your suggestions. Please include your
daytime telephone number.




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