2008 Fee Survey
Posted Dec 01, 2008 in LMT Surveys
Pacific region, complete dentures Fees are up 8% nationwide over the last two years, according to a comparison of LMT's 2008 and 2006 Fee Surveys. Prices have increased across the board for all specialties and 70% of respondents say profitability has improved or remained stable over the last two years. An analysis of the data reveals these nine key findings:
1. Pacific states come out on top. The Pacific states—including Alaska, Washington, Oregon, California and Hawaii—have the highest fees, charging an average 9% over the national average. On the opposite end of the spectrum, states in the East North Central region—Ohio, Indiana, Illinois, Michigan and Wisconsin--receive the lowest compensation for their work, with prices that are 9% under the national average.
2. Dentures are booming. Once again, complete denture fees are up the most of any department: by 16% since 2006. The findings come as no surprise given the buzz in this specialty over the last two years, and factors like a growing demand from an aging population, success of implants, increasing consumer awareness of esthetics, and product developments continue to drive this market.
Removable implant prosthetics are also hot, with fees significantly higher than they were in 2006. For example, the price for a diagnostic setup is up 57% from $53 in 2006 to $83 this year. On the other hand, orthodontic, fixed implant and C&B fees are fairly stable, up by 3%, 4% and 6% respectively.
3. Two-person labs charge the most. An assessment of fees by laboratory size shows that two-person laboratories command the highest fees, charging 7% above the national average, and three- to five-person labs are second in line, charging 3% over the national average.
4. Profitability is up for 38% of respondents over the last two years—by an average of 17%—and they cite raising fees, increased sales and CAD/CAM automation as key factors. Thirty percent report no change in profitability, while another one-third have experienced a decrease. Top reasons for waning profitability include higher materials and overhead costs, lower sales, retiring accounts and a poor economy.
5. There's a direct correlation between laboratory size and increased profitability. For instance, 62% of labs with over 20 employees saw an increase in profitability since 2006 compared to only 31% of one-person operations.
6. One-person labs aren't keeping up. These owners have the lowest fees, charging 6% below the national average and were the only size laboratory most likely to report an overall decrease in profitability. One respondent offers this assessment: "I believe we're shifting to a Wal-Mart dental lab world. The big labs are buying out the small ones, getting the work done cheaply offshore, and the small labs can't keep up with the lowering prices. I don't know a single doctor who has ever lowered prices but, unfortunately, I know of several small labs that have done so in the last two years just to remain competitive and get some work in the door."
7. There's a shift toward higher gross sales. There's a noticeable shift in respondents' total gross sales into higher brackets. For instance, the number of laboratories taking in between $301,000 and $2 million in sales has increased by 10%—from 22% to 32%—in the last two years.
8. A six-figure income isn't uncommon. Nearly one-third of respondents report a total personal gross income of over $100,000 annually; this figure is before taxes but includes salary, benefits, bonuses, company car and other perks. However, owners are most likely to report an income of between $61,000 and $80,000.
9. Operating profit is still a mystery to a quarter of the respondents*—the same as it was in 2006. Among those who do know their numbers, 40% report an operating profit of more than 20%. One-third of labs with six to 20 employees have an operating profit of between 10-20%, the same profit as nearly half of those with over 20 employees.
*Operating Profit: Also called EBIT (earnings before interest and taxes) or operating income, Operating Profit is a measure of a company's earning power from ongoing operations, equal to earnings before deduction of interest payments and income taxes.
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