Where we are & where we're headed

It’s not as if change is a new thing to the dental laboratory industry.

Innovation and embracing new materials, techniques and technologies always have been a part of running a successful dental lab business. However, the pace of that change seems to be continually accelerating, and labs need to constantly adjust to keep up.

The factors driving the changes come from a variety of internal and external sources, and what worked just a decade ago may no longer be the best plan to follow. Today labs must be ready to navigate ceaseless technological developments, global competition, changing patient populations, an evolving workforce and far more scrutiny from outside the industry. Adapting to meet these new challenges is a key to success today and tomorrow.

“Those people who were fat and happy cats in the early 2000s through around 2008, they’re having to find new ways of doing business,” said Jeff Stronk, owner of Treasure Dental Studio in Salt Lake City and President of the National Association of Dental Laboratories Board of Directors. “The labs have to evolve, they have to learn how to compete. I think part of the problem is that for all these years when things just ran so smooth, a lot of them were lab technicians who happened to have a business. They need to be businessmen who happen to own dental labs.”

Tech factors

One path to the increased efficiencies of running a successful business is through technology, which Stronk noted is shrinking the number of technicians required to produce the same amount of work in a lab. While staying up-to- date with new developments will always be important, he said it’s just as important for a lab to establish what type of business it wants to be so it stays closest with the technologies and developments that support that model. A lab will either need to scale up to produce in quantity or scale down to sell on high quality and unparalleled service.

“There’s going to be a dichotomy,” Stronk said. “Those smaller labs who cater to fewer clients and can give them incredible service and handle complicated cases, I think the labs that fit that niche will be just fine. Larger laboratories that are more production based will be fine, but they’re using technology now to find better ways to get things done without hiring more employees.”

Drake Precision Dental Laboratory Inc. in Charlotte, N.C., has been taking advantage of technology to position itself in that production lab arena, while still focusing on creating high quality prosthetics, said owner Billy Drake, CDT, who serves as Chair of the Cal-Lab Group. This year the 100-person operation added a CadBlu CAD/CAM system with a 3Shape scanner and a 3D Systems printer to increase production of copings and partials. That sort of investment is key to keeping the lab competitive, Drake said.

To stay up with the times, Drake said he and his management team are constantly traveling and talking with trusted industry contacts to see what’s new, what’s working and what might be a good fit at Drake. If he finds a technology he believes will provide a boost to his bottom line and a return on the investment in less than 20 months, the purchase usually makes sense. While smaller labs might have a more difficult time building a business model for such a quick return on investment, Drake said it’s still critical for them to “stay on the cusp” of new innovations.

“If somebody asks you about something you better be able to explain it to them, and if you don’t do it, you better be able to tell them why,” he said.

Outsourcing for tech access

Of course with the influx of milling centers and production outsource partners into the industry over the last decade, it’s now possible for even the smallest labs to offer dentists just about any product on the market. Stronk said this is great for smaller labs, and it creates a new sector of the industry with the size and financial structure capable of bringing innovative materials and technology to labs, and thereby to dentists and patients.

Robert Miller, CDT, founder of Custom Milling Technology Center (CMC) in Arvada, Colo., said production facilities open doors for labs of all sizes, but they can be especially valuable partners to small labs. Those labs can work with production centers such as CMC by sending in a model, but can really maximize their profit margins by investing in an open-architecture scanner to control the design of outsourced parts and increase the product offerings available to their dentists.

“There’s so many different areas where it allows them to stay competitive,” he said, citing lowered per-unit costs, faster turnaround times, streamlined fabrication workflows, eliminated shipping costs for digital designs, and with CMC there is no charge for return shipping.

While some technicians argued in the past that they could fabricate a crown via traditional methods faster than they could design one digitally, Miller said the software has been developed to the point where design time is reduced with improved functionality, and it will continue to progress. Having an open-architecture scanner allows labs of any size to broaden their product offerings including offering custom abutments, digitally designed partials and full contour ceramic restorations which have been a huge growth area at CMC. Miller said they can be equally profitable for any laboratory with a scanner.

“The laboratory’s ceramist simply applies stain and glaze, delivering an esthetic restoration,” he said. “As materials evolve, there will be less need for a ceramist to lay out multiple powders to layer a porcelain crown.”

In fact, Drake said while his lab is large enough to invest in production systems to keep work in-house, smaller labs might be in a better position because of the wide range of outsourcing currently available. When small labs can build a trusting relationship with a production center, they can offer the same array of products as a larger lab, which means not every production lab will need to be a large-scale operation.

“What it’s done is opened up some of the new techniques and the new labor saving products by offering it to all of the smaller competitors. It’s hurt the big guy a little bit and helped the little guy in my opinion,” Drake said.

But just as labs of all sizes need to keep up with the latest developments in the industry, production centers need to stay at the leading edge by adopting the best new material options and integrating production technologies that will remain useful. Miller said this makes choosing a production partner as critical as choosing any other supplier for your business.

“To stay relevant you have to be looking ahead to see what’s the next possible development, whether it be material or machines,” he said. “As rapidly as our industry is changing, so do the milling machines, the CAM software; if you don’t have the ability to make these purchases than how do you keep pace?”

But while finding a trusted production partner is vital to a successful outsource-based business plan, Mary Borg, President of SafeLink Consulting, said it’s just as important to stay on top of any regulations that might come into play when you work with a production partner who might be in a different state or country.

It’s also important to think of the totality of a technology’s impact because technologies such as CAD/CAM can change more than just a lab’s workflow. Borg said these technologies can impact the space requirements for shipping and receiving, as well as infection control protocols, and it’s important to consider these factors.

Globalization

Yet, just as technology is changing the way cases can move through a lab, it also has opened up the doors to competition from overseas labs. According to the NADL, 37% of the units placed by American dentists in 2010 were produced offshore.

These businesses can be difficult for American labs to compete against because of lower wages and workplace standards in China and other parts of Asia, which allow them to undercut local prices. While Stronk said international competition is here to stay, he sees positive trends taking root such as the rapidly rising wage expectations in China, especially among top Chinese technicians. The rising cost of international shipping also has impacted the financial advantages overseas labs have enjoyed.

“Economics are starting to play a factor with what’s going on in China, and that’s going to work to our advantage,” Stronk said.

Still some labs might find advantages of forming international partnerships, and certainly there will be dentists who look only at the bottom line, and thus will look overseas for their crowns, Drake said. While his lab doesn’t do any outsourcing, he believes any labs working with overseas parts would be best served by letting all of their doctors know some of the production is not done in the U.S., because hiding that information jeopardizes the trust that is so vital to the relationship between a dentist and a lab.

It’s also important information for dentists to be able to provide to their patients, Stronk said. Dentists need to be able to trust that the materials in the restorations they are seating match what they prescribed and patients have a right to know where those restorations were produced. Stronk added that such disclosure would help level the playing field with offshore labs, but it’s really about giving the patient the knowledge to make the choice between a crown made in China at one price or one made down the street at another.

“There’s not a shirt that you can buy and not an item of food that you can buy that doesn’t say what’s in it and where it comes from. When you replace a part of the human anatomy, I think it’s only fair that we learn that too,” he said.

Demand side changes

The changes sweeping the industry are not just impacting the supply side of things. The patient population is changing with aging Baby Boomers who are keeping more of their teeth and demanding high esthetics in their dental work. This is leading to an increase in demand for partial dentures and implant-supported restorations, Drake said.

“There’s tremendous competition and price pressure on anything fixed-crown and bridge-wise-but not as much with partials and dentures if you’re good at them,” he said. “A lot of fixed technicians look down their nose at removable technicians, which they should not because going forward, I’m not real sure that’s not where the action’s going to be anyway.”

Technology is certainly heading that way with modules for the design of partials and custom abutments now available with many of the CAD software applications. Miller said a scanner, CAD software and a production partner can bring any lab the ability to produce custom abutments, digitally designed partial frameworks or other types of substructures. Removables is a strong area of CAD/CAM growth that is likely to continue expanding. In the future Miller said he expects technology to print digitally designed dentures and more.

With removables and implants looking to be the industry’s biggest growth segments, Stronk said technicians need to know the basics of dentures, implants, abutments and attachments if they hope to stay current. This is especially critical now as the number of American dental technology schools is shrinking with just 18 currently educating future technicians.

The changing workforce

This drain on formal training and industry knowledge is compounded by the pace of technological development being felt throughout the industry, Stronk said. Not only do the schools with dental technology programs struggle to keep up with the latest technology, but the industry doesn’t benefit from a high public profile that attracts outside interest, and dental schools have been reducing dental technology course requirements.

“With fewer schools educating technicians and dental schools not teaching dental technology, we have the blind leading the blind, and it’s going to come to a head in a few years,” Stronk said. “We’re going to have young dentists working with young dental technicians and neither one is going to know what the other one is doing.”

That’s a future the NADL and the American Dental Association are hoping to avoid, and Stronk said there are positive steps happening in this area. The ADA is asking dental schools to have students work directly with local labs, and the NADL helped create the Foundation for Dental Laboratory Technology, which is working to expand technician education opportunities.

Those expanded opportunities might look different than the education and training technicians received in the past, as Stronk said the role of dental technicians might be heading in new directions. With so many restorative options and materials available, lab technicians who stay up-to-date can position themselves as experts, providing valuable information to the dentist they collaborate with.

“That will set labs apart as far as being a commodity lab or a craftsman lab. With a commodity lab, the doctor better know what he wants off that menu because that’s what he’s going to get,” he said. “As a craftsman lab you can help direct the doctor in the direction that’s best for that particular restoration and that particular case. That way you get a better restoration for the patient.”

Under inspection

Even as the industry stands at an educational crossroads, it finds itself approaching a regulatory one as well. In the past dental laboratories have faced few government regulations and been able to operate in relative obscurity. Now, Borg said the FDA and OSHA are both beginning to look more closely at labs and the way they operate, and she expects more regulations to come in the future due to more attention from investment capital, new technologies and the increase in outsourced production.

“In the past they received the prescription from the dentists and then they manufactured the entire product. That business model has changed and is changing rapidly with technology and outsourcing. So our feeling is that the labs have been pretty insulated from risk in the past, but with those business models changing, they will become more regulated,” she said.

Labs today need to stay aware of the regulations and requirements they currently face and might even benefit from preparing to meet documentation and safety standards they may face in the future. Besides overlooked things such as workstation ergonomics for digital design, which are different than those for traditional lab tasks, Borg said labs preparing for greater regulation can actually help their business because most of the requirements will include enhanced quality control processes.

“I think labs that have an effective quality system will benefit financially and see greater loyalty from their dental clients when the work is right the first time,” she said.

Down the road

With so many forces impacting the industry, major changes may be underway. Technology means new processes, new materials and new ways of creating the same products. Miller said he believes in five-to-10-years if a lab really wants to remain relevant, they will absolutely need to have a scanner as the foundation for the digital platform, especially once digital impressions are more widely embraced.

But even as things change, core skills and knowledge will be required to run a successful dental lab. Stronk said technicians who focus on education and figure out where they can be an expert always will be valued by dentists. When a technician can reliably deliver what the dentist asks, he or she will succeed.

“You have to have a focus on something, you have to be a specialist on something, you have to be a go to guy on something,” he said.

What it comes down to today is still what it will come down to in the future and that’s a solid relationship between the dentist and the lab. Technology and outsourcing can let labs of all sizes remain competitive, and Drake said they just have to figure out where they fit and stay close to people they work with because, “if you don’t stay close you have no advantage over (any other lab).”

He’s not 100% sure what direction the industry will go next with materials and production technologies, but he plans to keep his business plan flexible, evaluate new options and jump when he sees an opportunity.

“I think it’s changing so rapidly that my outline now is six months to a year,” Drake said. “I don’t want to be a battleship, I want to be a little speedboat, so I can change if I need to.”