DENTAL LABORATORY OUTSOURCING

By: Richard Bernstein, MDT
ribe@asmdt.com 

Private practicing American dentists, dental offices/dental centers, dental school clinics, medical centers, hospital based outpatient dental clinics, union clinics, and some enterprising American dental laboratories owners have all enjoyed the global free
market opportunities brought by the BRIC countries. Wall Street recognizes the BRIC countries as the global emerging market countries. The BRIC countries are Brazil, Russia, India, and China. They are the leading providers of outsourced dental laboratory
restorations and China is currently the King or Emperor of outsourcing. Mexico also competes but they’re not currently on the same level as the BRIC countries.
To this end China’s steady economic and strategic growth has placed it as the current leader for outsourcing of dental laboratory (off shore) production. Many U. S. dental lab owners now send part or in some cases most of their lab-work to China. Much to our denials, Chinese labs for the most part are turning out quality lab work supposedly utilizing the same basic concepts, and materials that most U. S. labs use. In some situations, dentists whom are looking for less expensive dental laboratory restorations have caused
utilizing the outsourcing lab concept.
Outsourcing of dental lab work is not new; it’s had its roots in the U. S. for many years, although the future is now clouded because of a recent scare in Ohio over lead-tainted dental work from China. This is not just a U. S. phenomenon, European countries, and Asian countries such as Malaysia, and Indonesia, are experiencing the same outsourcing issues.
As stated in a March 4, 2008 Newsday article by Delthia Ricks, Foreign dental labs produce a substantial portion of Americans’ dental restorations according to Bennit Napier, Co-Executive Director of the National Association of Dental Laboratories located in Tallahassee, Florida. The FDA is supposed to regulate the raw materials used in dentistry that ends up in the U. S., and those labs are supposed to register with the FDA as well. In addition the Chinese labs are supposed to use FDA approved materials. However, according to the Newsday article, the FDA is inspecting less than 1% of the dental restorations coming in from China.
How outsourcing labs garnered a foothold here is quite understandable, they cut prices, they produced acceptable work, and they market their services well.
When a Chinese lab provides restorative lab services to U. S. dental schools the students in those schools get used to having their restorations produced offshore. When those students graduate dental school it’s a natural for them to also use Chinese or outsourcing lab services as well.
Some Chinese labs have hired and relocated European Master Dental Technologists for their labs. Some U.S. lab owners and U.S. dental suppliers have established joint venture partnerships with Chinese labs to provide lab services here and internationally as well.
How to compete with outsourcing is an industry wide issue. Many dental labs here have been able to structure a 2 tiered price list / fee schedule. Lower priced restorations are being outsourced and marketed as an economical option to their accounts. Some labs have lowered their prices and cut their margins to compete, and some smaller labs have merged with larger labs in the hope of becoming more competitive.
There are several ways to become more competitive at home, and make it more difficult for those outsourcing entities. They are as follows:

1. Provide lab restorative services in 2 or 3 days.
2. Provide accounts with in-office services such as shade taking in their dental offices.
3. Provide in-office patient photo services - before and after pictures.
4. Contribute more financial resources and work with the national, and state lab associations to provide better marketing of (made in the U.S.A.) lab services.

I believe the Dental Laboratory Association of New York (DLANY) is perhaps the best state run dental laboratory association in the country. Gary Spadaro, Jr. is doing a great job at DLANY as its President. If you don’t know Gary, get to know him, he can help you better understand the current Chinese outsourcing dilemma. Speaking about education, it’s my belief the ASMDT program offers the best quality educational programs for dental technologists in the U.S. As many of you know ASMDT students graduate with a Master’s Certificate which is widely recognized in dentistry both, in the U. S. and globally.
When you’re able to use MDT after your name it means you’ve earned a Masters Certificate from the American Society of Master Dental Technologist, affiliated with N.Y.U. College of Dentistry, Department of Continuing Education, for the past 30 years.
The larger dental labs in the U.S. for the longest period of time have consistently undercut the usual and customary quality lab fee structures. In addition, in the past the larger more established dental labs had the playing field all to themselves.
Now, the Chinese labs have been causing havoc to those larger labs in the U. S. by employing the same undercutting tactics they used on the smaller labs for decades themselves. We here in the U.S. have recently had to deal with the Chinese pet food scandal, and the tainted (lead painted) toys coming in from China, as well. Those problems have settled down, and the Chinese continue to produce both pet food and toys for the U. S. market.
Here’s what I say, stop sobbing in your beer, wake up and smell the coffee. The way to compete with the Chinese or for that matter, the Martians is to improve our dental laboratory educational systems. Become Masters, and help educate your accounts, teach them why they should provide better quality made in the U.S.A. restorations to their patients. Outsourcing to Chinese dental labs will probably continue, at least for the foreseeable future. If you send your work to China even though it’s your choice, the risks may be most dangerous to the patients of your accounts.
One thing to remember, from time immemorial, the only constant in business is change.