The Competitive Advantage of Outsourcing

The laboratory-to-laboratory outsourcing market gained popularity in 2000 when Dale Dental opened as the first US laboratory dedicated to outsourcing. At this time, products like Procera (Nobel Biocare), In-Ceram (VITA Zahnfabrik), Wol-Ceram (Wol-Dent GmbH), Empress (Ivoclar Vivadent), and Captek (Argen) were widely prescribed, yet not many small laboratories could afford the equipment necessary to keep up with dentists' demands. Thus milling services proved to be very popular and eventually gave rise to an entirely new business model, the milling center. 

Milling centers began springing up in 2003 with the introduction of Lava™ zirconia (3M; 3M.com) and the start of the zirconia revolution. Because milling machines at that time sported a $200,000+ price tag, few laboratories could afford the system, but the milling centers offered small and medium laboratories the ability to purchase zirconia copings and frameworks and compete with their large laboratory competitors, with no capital investment.

Fast forward to 2017, the number of laboratories in the US has been halved, but the number of milling centers providing outsourcing services has increased dramatically. In 2004 a small laboratory could expect to pay $75 to $85 per unit. With the increase in supply, we now see prices as low as $22 per unit for a full-contour zirconia crown. The competitive advantage allows the laboratory to design the restoration to its level of quality, send the file to a milling center, and, when returned, to put its final touches on the crown in the form of staining or layering, or opt to receive a completed crown ready to be sent to the dentist. This provides the laboratory the opportunity to differentiate itself from its competitors and provide its clientele with the latest restorative options. With approximately 65% of laboratories having in-house milling capabilities, price pressures on zirconia restorations are expected to continue.

Metal framework fabrication for PFMs has also shown to be growing in popularity as more production centers offer print-and-cast products (Argen), milled metal (Strategy Milling), and Selective Laser Melting (Argen) copings and frameworks. No longer does a small laboratory need waxers, propane tanks, oxygen, and casting machines. All of these restorations can be designed on CAD software, the file sent, and a finished restoration returned and ready for porcelain application, with no waxing or casting, and no waste (Figure 1 and Figure 2). This is a big benefit to the small- or medium-sized laboratory, as it alleviates the need to retain large supplies of varying and expensive alloys and furthers the benefit gained by eliminating peripheral labor functions that are very cost intensive and don't add to the profit center of the laboratory.

The dental implant market is also a major driver in laboratory-to-laboratory outsourcing. With a compounded growth rate of 9.6%, and only 12% of all laboratories milling abutments in-house, custom abutments are an important profit center for milling centers and laboratories alike. The cost of milling machines capable of milling titanium along with increased FDA oversight have both contributed to the concentration of milling centers offering abutments versus in-house milling.  Major implant manufacturers such as Nobel Biocare, Zimmer Biomet, Straumann, and Dentsply/Atlantis have long been providing outsourcing services through their facilities and have been joined recently by Biohorizons/Vulcan and Implant Direct. Third-party providers such as Argen, CMC, and PREAT have stepped in to provide competitively priced options ideal for laboratories that simply design the abutment and send the digital file to the supplier. Panthera Dental has also found a niche in its own right, milling high precision bars with the option of double structures and a wide array of attachments for over 200 platforms. Even the smallest one-man laboratory can now offer world-class removable implant restorations while still using traditional denture processing methods, which is a win-win for both the laboratory and the dental practice. With numerous third-party manufacturers and the legacy companies, the choices for small and medium laboratories obtaining custom abutments and implant-retained substructures have never been more varied. These services provide the laboratory the ability to offer their clientele a highly sophisticated and customized implant supported restoration, with the support and often the valuable warranty of a legacy implant manufacturer and/or approved third-party vendor. The increase in competition has lowered prices, enhanced quality, and provided small and medium laboratories with a wide range of options for their implant offerings, including the milling of bars for overdentures (Figures 3 through 7).

Innovations in intraoral scanning are also having a profound effect on the small laboratory business model. Scanners such as the 3M Tru-Def and Carestream have long been the favorites of big-box laboratory scanner give-away programs, in exchange for restorative exclusivity. The laboratory provides the dental practice with the scanner and assumes all costs. With increased competition and popularity from the 3Shape Trios and Align iTero digital impression scanners, laboratories of all sizes have needed to conform to accept digital impression files from their clientele, which often needed to be converted into a physical model. This necessity has shaped the next generation of outsourcing— 3D printing of models. Small laboratories have the option of accepting digital impression files and sending them direct to a 3D printing center such as Whip Mix, Argen, or CMC, just to name a few, or they can process and print the files in-house using 3Shape or exocad software and a 3D model printer. Advances and demand for 3D printing technology has impacted pricing of these units. A technology that once cost $150,000 is now available with a higher resolution for as little as $3,500 from companies such as FormLabs for its Form2 printer. Once again, the small laboratory can compete with the big-box businesses with minimal capital investment by either sending their digital scans to their outsource partners or 3D print models in-house to fabricate or complete their restorations (Figure 8 and Figure 9).

Small laboratories offering removables are also set to benefit from the techno-revolution. Milling centers that offer printing services are able to provide 3D resin patterns for casting partial frameworks, which streamlines production by eliminating manual design and waxing. These 3D printed resins can be invested and cast to attain an ideal cast partial (Figure 10). 3DRPD (Montreal, QC) has taken this technology one step further by offering SLM partial frameworks with which any small laboratory with scan and design software can completely eliminate waxing and casting, and simply outsource and receive laser sintered frameworks. Outsourcing this labor intensive process allows the laboratory to focus on what it does best, which is the custom design by communicating with their clientele, and allow their outsource partners to fulfill the costly functions of manufacturing the cast partials.

Laboratories can also take advantage of the digital denture outsource providers for everything from full-arch removable prosthetics to implant supported dentures. Companies such as Avadent, Dentsply Sirona, and Kulzer offer opportunities for laboratories of all sizes to source out this once tedious and labor intensive process, while still being in control of the end product. Fixed-prosthetics laboratories with scan and design capabilities can now add removable digital dentures to their product offerings simply and easily through outsourcing, which could significantly increase the laboratory's profit center and bottom line.

For outsourcing service providers, the rapid changes in material technology along with the growing number of laboratories milling in-house means they have to stay nimble.

“Zirconia is still the king of milled materials” according the Craig Pickett, CDT, Technical Support Manager for Whip Mix Corporation, “but 3D printing is growing with the demand for surgical guides and especially models. You have no other choice if you're given a scan instead of an impression.” He adds, “Trending are the more translucent zirconia materials in the 1000 MPa range that can be used for anterior or posterior. Also, more laboratories are getting into scanning and designing as a first step, but they still need the milling center to produce restorations before they commit to purchasing their own mills or printers. The largest trend in this arena is for the milling center to become both a milling and printing center.”

Today's dental market is more challenging than ever for small- and medium-sized dental laboratories. The profession has seen immense change since 2005, and with change comes opportunity. Now more than ever, small laboratories have options and choices in finding outsourcing providers that will allow them to not only streamline production, but allow them to compete with much larger entities using the same or better materials and the same high-tech restorations, finished with the small-laboratory touch. The ability to offer their clients any and all types of dental restorations, current and emerging, allows the laboratory to increase their product offerings while maintaining full control of the design and finishing, or what's known as the laboratory's “signature touch.” In turn, this provides laboratories of all sizes a competitive playing field.

Rick Sonntag, RDT, is the owner of 4Points Dental Designs, Inc, located in St. Petersburg, Florida. The Dawson Academy, the American Academy of Cosmetic Dentistry, and others have recognized him for his expertise as a skilled and knowledgeable dental technician.