Aligning Your DSO and Dental Laboratory to Build A Positive, Long-Term, and Profitable Relationship

GDN recently interviewed Daniel Alter, a dental laboratory veteran with extensive experience in all aspects of the lab market, from lab ownership to university professor of restorative dentistry, dental lab magazine executive editor, and laboratory consultant/advisor.

In our interview, we discuss the state of the dental laboratory space and how it relates to dental support organizations.  Alter provides his thoughts on the dental laboratory market’s perspective on DSOs, concrete strategies for DSOs and dental group practices to build the best possible working relationships with labs, and what the future holds for the relationship between dental labs and DSOs.

GDN: You have been involved in the dental laboratory space for well over 20 years. What trends have you observed in the laboratory market in the past 5-10 years?

DA:
The dental laboratory market has experienced a paradigm shift in the way restorative prosthetics are fabricated over the past 5-10 years. It has been very exciting, particularly in the CAD/CAM space, and continues to be with significant innovations and restorative treatment solutions that were previously unavailable. This provides us, as a restorative dental community, the opportunity to offer elevated treatment options and solutions, all while maintaining a high level of standards, consistency and repeatability for our dentist clients and patients.

While extraordinary progress has been made with equipment and workflows, similar progress and innovations in material sciences has spawned unique restorative materials like Zirconia, resins, high impact polymers and more.

GDN: Please describe the current state of the lab market and how it relates to solo practices versus group practices/DSOs?

DA:
The laboratory market has seen a change in business strategy and implementation to accommodate the changing times and dentist client demands. With that said, dentists historically have utilized a laboratory’s services that they have grown to trust and appreciate, and who meets their needs for their practice, as well as can be developed as a partner or resource for restorative and technological expertise. This strategy still stands.

Both solo practices and group practices/DSOs may utilize the same laboratory for the above mentioned benefits. What’s most important is that their business models and expectations need to align well with their chosen laboratory in order to avoid any frustrations for both parties. Understanding the laboratory’s working philosophy, knowledge base, esthetic standards, price structure, turnaround time, and restorative fabrication capacity are all essential to having a positive experience.

GDN: What are the lab market’s biggest challenges when it comes to dealing with DSOs as opposed to solo practitioners?

DA: The biggest challenge for the dental laboratory market when it comes to dealing with DSOs as opposed to solo practitioners is aligning their business models properly with the intended client.

With a solo practitioner, the dialog at the onset, followed with good working communications directly with the decision maker, will yield great results, particularly if there are any potential challenges that can be identified and remedied immediately.

Depending on how the DSO operates, and who the decision makers are within the organization, will dictate where potential challenges may be present. Understanding the organization’s priorities will induce a more transparent and productive engagement and allow the laboratory to align and meet the organization’s needs best.

GDN: What are the biggest benefits to working with DSOs over solo practitioners?

DA: The biggest benefit to working with a DSO is the potential for restorative volume. Certainly a group or DSO, which has multiple locations with multiple practitioners and specialties, has the potential of  more restorative needs than a solo practitioner. Acquiring a large volume client would add to the laboratory’s revenue stream and afford the laboratory the ability to grow in human assets and technology. However, for the smaller laboratory, that benefit may present a challenge with meeting the demands and placing ‘all their eggs in one basket.’  If either scenarios occur with a negative outcome, this can severely and negatively impact the small laboratory’s business.

GDN: What strategies should DSOs employ to develop and secure the best working relationship with their labs?

DA: DSOs should employ and develop a strong line of communication with their laboratory to secure the best working relationship possible. Communicate the priorities well and clearly, whether it be price, esthetics, standards, product(s) or whatever. Present a sticking point for the organization, then work with the laboratory to meet those priorities well. Education is a wonderful venue to meet these priorities together. DSOs should collaborate with their laboratory and learn together; this provides a level of comradory and provides a space for mutual communication and perspectives. It is very much a two way street, where it’s a work in progress for both parties. Dental laboratories always strive to provide the best service they are capable of providing.

GDN: Discuss price pressures from DSOs and how labs are addressing those.

DA: In a capitalist society, the checks/balances and price pressures are organically produced through competition and supply/demand. DSOs are able to generate a significant demand by offering services at discounted rates that solo practitioners cannot or choose not to meet. The significant demand for restorative prosthetics is very attractive for some dental laboratories who in turn are requested to discount their services and products. Most often, in order to meet those requested discounted rates, certain products and services are subjected to materials that are off brand and/or workflows and solutions that are not the ultimate of care for the patient. As the old adage claims, ‘you get what you pay for.’  The key for success is finding a good balance where all parties benefit, including and ultimately the patient.

GDN: Looking ahead short term and long term, what do you see changing and/or remaining the same in the laboratory space?

DA: Moving forward, the laboratory space will consistently strategize to become cost effective in order to acquire greater share of the market, all while striving to maintain a high level of esthetics and standards of care for the patient. Some laboratories have taken this approach and are seeing great growth and momentum, while other laboratories are finding themselves slowly unable to compete. Digitization, in the form of CAD/CAM, has provided these laboratories an added level of lean manufacturing that allows them to be more productive with less resources, therefore gaining a competitive edge.

In the long term, I think there will be two polar business models in the laboratory space. The first, is a growing dental laboratory who is using sound business principles to acquire better means off fabrication, products, technology, services and workflows in order to be competitive and consistently striving for a larger market share. The other segment will be the Boutique 1-3 dental technologist laboratory, whose focus is keenly targeting to meet very high standards for the discerning dentist client and patient, at an elevated cost.

 

Daniel Alter MSc, MDT, CDT
Professor of Restorative Dentistry, CUNY
Executive Editor, Inside Dental Technology

 


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