Murphy's Law: Data Interpretation - The 2008 ADA Survey of Dental Lab Use
Over one-half (54.7 percent) of the respondents who used independent labs noted that those labs provided Identalloy® stickers for prosthetics containing metal. Just under forty-five percent (44.6 percent) of respondents stated that their patients have requested material content information for a dental prosthesis or inquired about the materials that comprise a prosthesis.
Foreign dental labs were not used by the majority of respondents (90.1 percent). Additionally, the majority of domestic dental labs that respondents did employ did not outsource to foreign labs (75.1 percent).
The most important criteria for respondents when selecting a dental lab were the quality of work (96.7 percent extremely important), the reliability of the lab (85.4 percent extremely important), and on-time delivery (79.5 percent extremely important)
Approximately one in five respondents (18.9 percent) felt there was a shortage of dental lab technicians in their area. More than forty percent (40.5 percent) of respondents said their states’ dental labs were regulated by their state’s dental practice act. On the other hand, more than half (53.1 percent) of all respondents did not know if dental labs were regulated by their state’s dental practice act.
These are all excellent opportunities for us to educate our clients as to the current state of the profession of dental laboratory technology.
Here is one more number we should know.
One telling metric in the survey was the number of labs that each practice uses.
Approximately ninety percent (90.3 percent) of respondents that use independent dental labs use at least two different labs. More than three quarters of respondents (77.8 percent) use between two and four dental labs, while just over ten percent (12.5 percent) of respondents use five or more different dental labs. Only 9.7 percent use just one dental laboratory.
The average client uses just more than three different dental labs. Wow! Now that is a huge opportunity staring us in the face. Think of the math. If the average general practice is approaching $750,000 in annual revenue and 6.6 percent of that is the mean expense for dental labs, the typical client should have an annual lab bill of $50,000. Take the total number of clients you have and multiply by this average annual expense and voila, you will have your potential total lab revenue if every one of them was sending you everything they did.
Keep tracking with me now.
Your current annual sales divided by that new potential revenue number, multiplied by 100, will give you the average percent of client chair that you have. A lab I was working with recently had approximately $3 million in sales and 175 clients that send in work in an average month. 175 x $50,000 = $8,800,000. $3,000,000/$8,800,000 x 100 = 34 percent of chair. That’s just about what I have seen for all of the lab data reviewed.
Here is my point in clear mathematical English lab management speak.
Without one new client, I could potentially grow this lab from $3 million to more than $8 million by concentrating the current doctors work with into just one lab. Is $8.8 million achievable? Of course not. But a $300,000 to $600,000 incremental growth in same store sales is very believable. Even in this current economy.
Oops, I just slipped and use a retail business term: incremental same store sales.
That seems like a pretty stout metric to use.
No wonder the rest of the business world measures that.