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Proposed higher tariffs on imported medical devices may have a significant impact on the dental industry.
In April, Bloomberg Businessweek published an article about President Donald Trump’s plan to impose higher tariffs on imported medical devices (something he plans to accomplish by renegotiating the terms of NAFTA). Those devices, of course, include imported dental restorations and materials, which account for 40 percent of dental restorations in the U.S. Because of the nature of the subject, the article also focused on the state of the dental laboratory industry in the U.S.
The author’s findings were rather bleak: Imported devices are a fraction of the cost of domestic devices, so a tariff would not even the playing field; domestic labs are closing as a result of overseas competition and industry consolidation; and machines may soon be taking over for dental technicians.
What it didn’t mention was that overseas competition and the U.S. response is a lose-lose situation for American dental labs, according to Elizabeth Curran, CDT, associate professor and director of dental laboratory technology at Arizona School of Dentistry and Oral Health. Because materials used by laboratories are considered medical devices, the materials imported to make domestic restorations would be subject to the same tariff as imported restorations, offsetting any competitive edge the president would hope to gain.
“From a laboratory industry standpoint, none of this is new,” says Bennett Napier, executive director of the National Association of Dental Laboratories. “We expect offshore will continue to grow because of the pricing formulas that DSOs tend to look for in a laboratory.”
While the discounted prices of imported restorations boost profits for practices, it’s not good for the rest of the industry, particularly labs and especially dental technicians. But Napier posits that competition, whether foreign or domestic, has always been and will always remain present. The key for labs is to focus on the “differentiators” that make them stand out.
For foreign competition, Napier’s differentiating questions are, “What are their value-added services?” and “What are the other elements of the relationship that they can provide that can’t be served from a laboratory that’s 5,000 miles away?”
“With digital technology, communication can happen from anywhere, but there are always going to be certain things that a U.S. lab can provide that a foreign lab can’t,” Napier says. “A U.S. lab is going to have to focus on and be very good at those differentiators so that the product is not looked at as a commodity.”
Calling dental restorations commodities “takes away from what we feel in our hearts is a service to people,” Curran says. “We don’t do widgets. We do patient-specific restorations.”
“I think that lab [owners and technicians] should separate themselves by educating and training themselves in fundamentals, learning more about clinical dentistry and being an asset to the dental practice - not by having lower prices,” says Steve McGowan of Arcus Laboratory, a two-person lab outside of Seattle. “I think lab techs need to be educated more in all aspects of dentistry, including material science and clinical dentistry. If labs turn into widget factories and have what I call ‘step workers,’ the lab owners will make good money, but the lab technicians and our profession will go down the tubes.”
Step workers, says McGowan, do not know how to make a tooth from start to finish. “I think what we have now is training instead of education,” he says. “Most of the training in this field is provided by manufacturers who train you to use a certain product, but don’t educate you on why you need to use it. I think that’s been going on for a long time, and I think it’s a huge mistake.”
To stay competitive in the U.S. market, lab owners should make sure their current and prospective clients know about all of the lab’s services.
“A lot of labs undersell all of what they offer,” Napier says. “They’re known for X, but they may provide X, Y and Z, and because of that a dentist may say, ‘Well, this lab can only do these types of restorations or these types of services, so I have to go to another lab for this product.’ They need to do a good job of communicating what they can provide, so at least they’re in the mix of conversation.”
According to the NADL 2017 Business Survey, 63 percent of labs provide multiple services (typically a combination of crown and bridge, ceramics and implants). The 37 percent that offer one service are more likely to be small labs, which tend to provide only dentures and removables or crowns and bridges.
For labs to stand out, they should emphasize their customer service elements and complex treatment planning or consulting services, “especially with large implant cases or areas related to surgical guides,” Napier says.
“There are all kinds of things that are growing as emerging areas of need from a dental client perspective, so they need to communicate that they can provide those kinds of services.”
He goes on to explain that full-mouth reconstruction and complex implant cases are a significant growth area for dentists and labs-that those cases truly require a partnership, in which the dentist and lab tech can work together on a treatment plan that may take up to six months. The final stages might see the dentist and technician working together on site, something that would be hard to replicate with a foreign lab, he says.
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The dental school graduate, according to Curran, has little training in the dental laboratory area, especially compared to those who graduated 25 years ago.
“They’re much more reliant on the expertise of the laboratory than they were, so that’s an issue,” Curran says. “As the laboratory market consolidates in the U.S., there are going to be fewer labs for dentists to work with. They need to make sure that they’re picking the right partner for their needs. It’s crucial that a dentist knows the questions to ask and knows what to look for so that they’re getting what they need for themselves and their patients.”
That’s why, according to Napier, the NADL’s focus in the last decade has been on transparency.
“We’re not pro-offshore or anti-offshore,” he says. “It’s a global world and that’s overall positive, but we’re also cognizant that from a medical device and health care perspective, transparency is a crucial piece of the puzzle. We don’t want to see dentists making a decision to work with a laboratory partner under the assumption that it’s domestically made when it’s produced offshore.”
McGowan tells of how the U.S. got to the point in which 40 percent of its restorations were imported. “When people were sending their work to China and getting $40 crowns, I was charging $400,” he says. “Those big labs were charging $100, which was dirt cheap. But they found out that their main competition was China, so they had to adjust to that. Many of them actually sent their work to China or elsewhere, and nobody knew about it.”
Now, the NADL’s campaign to increase transparency, called “What’s In Your Mouth?” seeks to inform patients and dentists about this issue. They write that the disconnect between patients and laboratories “can hinder the dissemination of critical information, such as where the restorations are produced or what materials they contain,” calling some labs that send all of their work abroad “fronts through which cheaply made foreign dental products are funneled to dentists for very low prices.”
This issue has been introduced in the Washington State Legislature through a bill that would force laboratories to disclose information about third-party providers.
Until all states require the same level of disclosure, the key, Napier says, is to verify-trust, but verify. “You may have worked with a lab for a while, and maybe had that lab referred to you by someone else, but just like with anything in business, do your due diligence to make sure that you can get whatever information you’re requesting from your lab.”
A basic question is, “Can you provide documentation that the raw materials you’re using are FDA-cleared for use?” According to Curran, materials on imports aren’t overseen by the FDA. “You’re not really sure you’re getting the specific material,” Curran says. “They might say they’re using FDA-approved porcelain, but in reality, it’s a knock-off brand.”
It’s also worth asking if the lab has gone through any voluntary certification, says Napier. If they have, ask what that entails.
“Those are all things that demonstrate sound business practices and give the dentist peace of mind,” Napier says. “If something happens with a particular case, [dentists] should know that the lab they’re working with has systems in place and has done what it’s required to do to be there as a resource. Either way, [they should know that] the lab is going to be a strong collaborative partner to work with.”
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Napier believes that the entire dental industry will continue to grow. “I think the domestic laboratory market will continue to grow as the clinical side grows,” he says. Despite competition with cheap imports, industry consolidation and the machine takeover, he believes it’s a good time for the laboratory industry.
“With digital dentistry, new materials and innovations, I think it’s exciting overall,” Napier says.
McGowan, on the other hand, isn’t so hopeful. Though he says that the decline of the lab industry in the U.S. is a complex issue, he believes that education for technicians is a big part of it. The trend of technicians choosing on-the-job training over formal education is a “death wish” for the industry.
“I think a formal education and a broad fundamental education are absolutely key,” McGowan says. “If someone says they’re a dentist, the public knows that they’ve had a certain level of education and they’ve all been trained on certain fundamentals. But if somebody says they’re a dental technician, it could mean anything.
“I think the NADL has sort of tried to make it easier for technicians because the numbers are plummeting, but I think the opposite needs to happen,” he continues. “It’s an interesting, complex and difficult job, and I think that it’s not easy, so I think trying to make it simpler is a big mistake.”
“The U.S. is the last non-third-world country not to regulate technicians,” Curran says. “We don’t have a broad support of regulation through an organization. I think a big reason is because the patients don’t understand that it’s a technician that makes a crown. The doctor is supposed to be the authority, but he doesn’t oversee anything the technicians do because most laboratories aren’t under direct supervision of a dentist.”
That opinion is in direct contradiction to the 2001 ADA report, Future of Dentistry. Its authors write, “Dental laboratory technicians typically fabricate the prostheses under a dentist's direction,” and, “The dentist must remain the repository of laboratory skill and knowledge.”
The report also concluded that education for lab techs was in “imminent demise” because the difference in salary between a formally educated technician and a technician trained on the job wasn’t sufficient for entry-level positions. It’s interesting to note that the report’s authors postulate that the decline in formal education may be because on-the-job training was better, and perhaps because of “reports, mostly anecdotal, of a steady migration of dental laboratory work to cheaper labor markets in Asia, as well as in Central and South America.”