Dental Laboratory Industry Blog

In dentistry everybody knows what’s going on in the clinical world of dentistry but no one knows what’s going on in the dental laboratory industry, why is that? Dental laboratory fees account to 10 – 20% of a dental practices turnover according to Christie & Co reports. Wouldn’t you like to know what’s going on with your supplier that is an integral part of your dental practice?

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I wrote a blog post back in 2017 called “Do you think quality dental laboratory work is worth it?” at this point of time, laboratories was in competition to lowering prices to below the cost of manufacturing the restoration on the hope of receiving large volumes to compensate, we also had out sourcing from abroad to compete with. As you know every business needs money to survive and sadly many dental laboratory businesses operated with low profit margins for many years (as explained in my blog post from 2017 and what happens in this situation).

Due to 1000s of dental laboratories in the UK operating in this way the value or dental restorations was de-valued to a point where a PBC was available for £18. Let’s break this down, if a PBC takes on average 4 hours to manufacture with nothing else to do from casting models to layering ceramic and national minim wage in 2017 was at £7.20 , 4 X £7.20 = £28.80 on labour cost alone, not taking into consideration dental technicians hourly rates are higher, materials, overheads and god forbid a free remake to take into account. A phrase my old boss used to say “You can stack the work high and work all the hours with no profit at the of the day”. It's crazy to think this is what was actually was going on! The numbers speak for themselves, also cash flow in the UK lab industry runs on a credit account basis so you don't get the money upfront you have to wait a whole month before this and possibly longer in some cases.

Then COVID -19 hit, this closed the doors on many businesses, this left the market open to laboratories who did not operate like this. Due to the scarcity of dental laboratories, the demand was high! prices was raised, laboratories including myself turned away accounts we did not want or need and kept the accounts that had more value. Let me explain, for myself, value in terms of the the clinical work and information received which made that account an asset as it was what we needed as a business to manufacture the restoration. As the account cost less to service as they are not cutting corners and the end product is accepted by the patient, which in turn saves time, generates money and covers costs which works for everyone. You’ll see on social media, when ever I get complimented on social media about a case I have done I always say , “Great clinical work = Great Technical work” which is true, anyone who disagrees… Come see me!

Now the accounts that was turned away did have value in terms of generating money and cash flow, which in turn made the account and asset but also a liability as it was dependent on the amount of work generated. The accounts generated money, yes! but they cost more to service. They did not do the clinical work or information which is needed to manufacture the restoration and cut corners on stages and materials which in turn always leads to remakes or more clinical time to fit the appliance. This type of account generally requires more of our attention, time, technical and clinical knowledge with phone calls for missing information and technical conversations, remakes, retakes on impressions, re-delivering cases back and forth which all costs money. This generates the same amount of money as the end product is accepted by the patient but has cost more to service the account which makes the account a liability. This is some of the aspects I consider especially when I get that phone call that states “If you don’t do x y and z, we will use an another lab!”

The things I stand for as a laboratory business owner is quality, value and consistency with creating assets that nurture a diverse team to support the growth of the company which in turn support the development of the team.

… But wait! there’s a new kid in town!

Venture capitalist firms, they have seen what is going on in the dental lab industry and is now turning the laboratory world from being privately owned into a corporate one.... Stay tuned for my views on this in the next blog on this topic!