LMT magazine's LAB DAY in Chicago is the industry's educational superdome and the place for product launches and breaking news in the U.S. This year, more than 3,100 attendees from 47 states and 49 countries came to learn about new techniques, shop for the latest products, and meet up with their peers to share business strategies. Below is an overview of the hot topics that inspried dialogue and debate during our profession's biggest weekend of the year:
Business Barometer: Mixed Reviews. A number of attendees were optimistic about the start of 2013 with many telling LMT that business was strong in January and February.
However, while the number of units coming into the lab is on the rise, some lab owners pointed out they're not their most profitable restorations, indicating a new trend: profit erosion. "Revenues are eroding. Our two most popular restorations, Bruxzir and e.max, are also our least expensive restorations," said Greg Thayer, Owner, Thayer Dental Lab, Mechanicsburg, PA. "Compared to PFMs, we're losing revenue on the units as well as the noble metal markup and the metal scrap recovery. You can't make it up in volume because there are only so many units you can make in a day."
Dentists continue to feel the pinch, too. At the Lab Summit, for instance, Dr. Gordon Christensen offered his view on the state of the dental market: "Gross production per doctor is down 9.1%, incomes are down, profits are down and the recession is lingering," he said. "Esthetic dentistry is still in demand but now it's different. Before the recession, eight out of 10 units were single units; today it's nine out of 10."
All-Ceramic Keeps Growing. The growing popularity of all-ceramic restorations continues to erode the PFM market. While PFMs are still prevalent, laboratories are increasingly fabricating zirconia, IPS e.max pressable lithium disilicate, and full contour restorations, shifting workloads from metal based to metal free.
Ivoclar Vivadent's Bob Ganley shared these numbers at the Cal-Lab meeting: "Although most sections of the industry are up, precious alloys were down 10% in 2012," he said. "Both press and CAD/CAM all ceramics are seeing a high growth rate while metal ceramics are down 2.5%."
While full contour is touted for its labor-saving technique, some technicians contend that a full contour restoration cannot be as esthetic as layered ceramic. Lee Culp thinks they can be. At Cal-Lab, Culp, CDT, CTO at DTI-Dental Technologies, Inc., made the case for full contour, showcasing dozens of beautiful restorations.
"The days of using 20 different porcelains to build up a tooth, as the first option, are long gone. You can get esthetics out of full contour. Everything I have always done has been based on simplicity," said Culp, who reports that more and more well-known dentists are turning to full contour zirconia, especially for patients who have a history of fracturing restorations. "We've been doing full contour for a long time—it was called a gold crown. Nobody said it wasn't artistic then."
Medical Device Tax a Hot Topic. The implications of the 2.3% Medical Device Tax that took effect in January were discussed at every meeting across the city. The consensus? The cost of doing business just went up. "Although most labs don't have to deal with paying the tax, the materials used will be taxed and who are the manufacturers going to recover that tax from? You guys, unless they decide to eat it," said Safelink's Gary Morgan, CDT, during his regulatory update at the Cal-Lab Meeting.
For laboratories that do have to pay the tax—those that offer items required to be listed with the FDA like sleep apnea devices, snore guards or any imported restoration—Bennett Napier, CAE, Executive Director of the NADL, offered some good news. "When the IRS published its final rule, it included a provision on the sale of medical devices to doctor's offices and hospitals. This means that when calculating the tax, you can use 75% of your selling price which reduces your tax liability. It's a silver lining," said Napier.
"Big Box" Dentistry on the Rise. Representing a major paradigm shift in our industry, more and more dentists are joining group practices—a trend also seen in the medical industry. "Medical doctors couldn't afford technology as single practitioners, which led to the growth of group practices," said Ganley. "Dentistry is following a similar pattern of consolidation. Right now, it's more obvious with dentists, but it will increasingly happen in labs, too."
In addition to the increased costs of technology, other factors contributing to this trend are the huge amount of debt faced by new dental school graduates; high costs associated with buying, establishing and maintaining a private practice; changing reimbursement models; and a business model that offers working mothers more flexibility. As this phenomenon continues—the ADA News reported that group dental practices have increased by 25% since 2010—many fear that the lower restoration fees sought by these high-volume practices will further erode prices and profits for laboratories.
Private Investment Firm Interest Continues. In recent years, our industry has seen increased interest from private equity firms like Beacon Bay Holdings which bought two laboratories in 2012: da Vinci Dental Studios in West Hills, CA, and Nu-Life Restoration in Long Island, NY. At the Lab Summit, Jennifer Stewart, one of the firm's Managing Partners, was on hand to share her view of the market. "This is a really exciting time to build some great organizations in the dental industry," said Stewart. "There's a place in the market for high-end labs like daVinci and the value market also has a place."
A Digital Disneyland. From scanners, milling and rapid prototyping machines, wax printers, software and materials, LAB DAY was ripe with the latest digital products and services for attendees to see up close and personal. The technology continues to advance rapidly and several manufacturers launched new equipment and announced system enhancements and new indications, many of them related to implants.
In the digital realm, the partnership trend continues as manufacturers team up to create compatibility between their systems, giving users access to a wider range of input and output devices and indications. For instance, Sirona is partnering with Argen to offer Digital Captek restorations through its infiniDent service, and Dentsply has developed a new, non-precious millable material, Krypton, for use in Sirona's inLab MC XL. In addition, NobelProcera, traditionally a closed system, will soon be partnering with 3Shape to enable 3Shape users to access NobelProcera Abutments in zirconia and titanium.
Implants Still Booming. The implant market isn't slowing down anytime soon. At Nobel Biocare's LAB DAY panel discussion, the company offered these statistics:
- 60 million people are edentulous in one arch or another.
- The "nearly edentulous"—those with two or more teeth per arch—will grow to 39 million by 2015.
- Projected growth for implant-supported restorations: 9.3% over the next four years.
- High-growth areas include custom abutments, small-diameter implants and 3D case planning using cone beam and surgical guides. "In the old days, implants were placed where the bone was and then we would beg you guys to bail us out," said Dr. David Little, Professionals in Dentistry, San Antonio, TX, at the Cal-Lab meeting. "Now we start with the end in mind and work in reverse. We can see the end result before we even start."
As the market grows and more and more dentists get involved, they're increasingly looking to their technician-partners for technical guidance. "The most exciting trend I'm seeing is how interested doctors are in communicating with us about complex implant cases," said Tom Wade, CDT, New Horizons Dental Lab, Broomfield, CO. "They're really willing to sit side by side to discuss and plan cases and it's not uncommon for me to meet with both the restorative dentist and the surgeon. I didn't see this years ago."
Competing with Offshoring. Always an emotional topic in our industry, the NADL's Bennett Napier used U.S. Customs data to report that offshore outsourcing plateaued and even scaled back in 2012. For instance, gross sales from products coming into the U.S. from China dropped from $35.5 million in 2011 to $33.5 million in 2012. "Since the U.S. economy is down and laboratory workloads are lighter, it makes sense that there's less work going offshore," said Napier.
With competition coming from all across the globe, it's critical for laboratories to figure out what's going to set them apart. "Geographical barriers aren't what they used to be and competition between labs is increasing—regionally, nationally and internationally," Ganley told Cal-Lab members. "You must understand who you are and have some kind of identifiable message on how you differentiate yourself. Now, that's more important than ever."
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