The Financial Crisis: How Are You Doing?
Posted Apr 28, 2011 in LMT Surveys
- Business from July to November by region and lab size
- How has your business changed since the first half of 2008?
- Are you having collection problems with your clients?
Who could have known what lay in wait for our economy this fall? To get right to the point: business in the second half of 2008 is down.
In our June How's Business survey, we reported that business in the first half of 08 was good; 15% of you even said it was booming. In fact, over a third of the booming businesses said sales were up from 2007, mostly by double-digits!
So before the election--but after the financial fiasco that was October--we conducted another [brief] survey to find out how you've been doing since June and how you think the Wall Street debacle will affect you in the year ahead.
Now, only 7% say business is booming. None of the largest laboratory owners nor any size lab from the Pacific states or Kentucky, Tennessee, Alabama or Mississippi say it's booming either.
A third of our respondents from those states do say, still, business is "good." And, whereas 12% of nationwide respondents said business was "bleak" last spring, only 6% of you are saying it's bleak now. But overall, for most of you, it's "fair to slow." Click here for complete chart.
Many of you cited that the lengthy campaign season contributed to the economic uncertainty, saying you look forward to it finally being over. Now it is. Whether your preferred candidate won or lost, we're no longer in limbo and that's a good thing.
But, because it's over, the sobering reality of the depth and global ramifications of this debacle become clearer by the day. President-Elect Obama inherited a massive task: to lead us out of the worst financial crisis since the 1930s. It's going to take time, patience and the cooperation of the best economic minds to dig us out of this quagmire.
What Happens Now?
In the face of financial obstacles, we--as business owners--can throw in the towel or accept the individual challenges we face to find solutions that enable us to persevere and overcome. Some of us, in fact, may actually prosper as often happens in times of great adversity.
Our survey data gives us a sense of the pulse of our marketplace. As we move into 2009, LMT will stay in touch with you and on top of new developments. LMT has never been a magazine to dwell on negativity. We take note and inventory of what's in store and move forward; after all, it's the only direction open to any of us.
So we have to start with hope. Hope sustains us and gives us purpose. And attitude--particularly now--is critical; probably more so than ever before. How each of us approaches the months ahead will factor deeply into how well we and our businesses travel down the bumpy road.
Then there's knowledge. Knowledge, we know, is power. Put these basics together and you've got three of the most important tools in your survival kit.
Some laboratory owners have their tool kits packed and ready to roll. They are lucky to be in a position to take this turmoil in stride, confident in America's ability to overcome this difficult period in our history. Remaining upbeat and positive, they have that can-do attitude and are prepared to convert the work ahead into a challenge rather than get caught in a quagmire.
For example, Lew Corno, Lew Corno Dental Ceramics, Fanwood, New Jersey, says, "I don't think things will turn around until September 2009. It'll be a bit of a struggle, so we will tighten our belts until then."
This is pretty much how Don Killgo, owner of Georgia Dental Laboratory Inc. in Tucker, Georgia sees it as well. He says, "We are preparing for the worst while planning on the best. We feel very optimistic."
He adds that "the media is a big part of this problem, it's extremist. Anything that happens gets blown out of proportion (as long as it is negative) until something else comes along. People who live by emotions alone are affected in everything they do, including their dental work."
The Other Side of Midnight
But luck is not on everyone's side. Unfortunately, when hope is hard to unearth, emotions do get the best of us. Many lab owners--like many other American workers--are taking it on the chin.
It's terribly frustrating for those who work hard, pay their bills, are financially responsible and are victims of a mess created by irresponsible institutions and executives over whom we have no control.
The thing is, we're here and now we have to figure out how we're going to get through it.
Some laboratory owners say the health of their business has been affected by their market niche--in either a good or bad way; some believe they are affected because of the pocket or region of the country they're in. But most owners across the board are feeling a pinch created by the lack of cases coming in the door. People are deeply concerned about what's in store for them.
The Dreaded "L" Word
Layoffs are in the air and in the works. More than a dozen lab owners told us they're laying off employees and even thinking of closing their doors. For every dozen who speak up, there are probably a dozen more facing similar decisions.
To those of you who are contemplating layoffs, does it have to come down to this? For decades, decision-makers have complained about the labor shortage and the lack of experienced technicians available. Now you feel like you can't hold on to those you have. Is there another way to handle this?
Perhaps now is the right time for you to form a partnership with another lab--one that complements your product line. Another option is to find another lab that can absorb your staff and you. Take a look at LMT's Classified Help Wanted Ads before you give up or let others go. I count 20 ads in this issue from laboratories that are looking not just for one technician but for multiple technicians!
If that's not an option for you at this time, maybe your employees can afford to use this downtime to take an unpaid extra-long vacation instead of getting a pink slip. Be creative. This is a great time to form alliances and think about implementing outside-the-box work schedules.
Reassess Your Marketing
If you have some downtime, try taking advantage of the break to reassess your marketing program. Consider this Michigan lab owner's approach: "We'll continue to stay slow but I see this as a good opportunity to market to new accounts..."
Are you positioned to meet the needs of the greatest number of dentists? In other words, have you made a conscious choice about to whom you market? Many dentists respond well to those who provide a high level of personalized service.
"This is a great time to become more creative in how we market ourselves to dentists and do more to retain the relationships we've worked so hard to build," says John Tecca, Aesthetic Oral Arts, Livingston, Montana.
If you can weather the storm, you know there will be blue skies ahead. Use this time to strengthen your weaknesses while continuing to seek opportunities that allow you to take the fullest advantage of your strengths.
Here's a look at what you and your peers are experiencing so far:
Niche Markets: Several lab owners say their particular niche is responsible for their economic health--good or poor. Several report a decline in large cases and see more requests for non-precious PFMs; others say single-unit PFMs are down. What follows are quotes from various laboratory owners on this topic:
- Northwest "Our lab does 90% anterior cases and we are typically scheduled out a month. Right now, November is about half full, whereas last year it was booked right away and a very good month. But I'm optimistic that it will fill in."
- Oregon "Our business remains healthy but we are limited to implant-supported dentistry. We have noticed a decline in the larger treatment plan cases."
- California "We are seeing fewer veneer cases and fewer big reconstruction cases. We are still seeing implant work, but many of those cases were started last year."
- Illinois "I create a poor man's bridgework. I'm affordable. I do partial frameworks only and I do them well."
- Iowa "My lab business is booming! I have specialized in high-end removable dentures/partials, implant-supported prostheses and titanium laser-welded bar cases. I feel the smaller, specialty labs will not be as badly affected as others. Patients who can afford these types of restorations already have the money to pay for them."
- Pennsylvania "We are seeing less crown and bridge work. We are seeing an uptick in implant cases and more complex work. That seems to be what is leveling us out. The reason I went into this business is because people will always find money when they are in pain and when they want to look better. Pain and vanity are the keys to success in the dental lab business. "But I think overall business will be down. We are trying to expand our marketing and sales efforts to minimize the effects." --Mark Frichtel, co-owner of Jesse and Frichtel, Pittsburgh
Some dental plans are comprehensive and cover extensive restorative work; many more plans only cover expenses up to $1,000. But a common thread of concern seems to surround insurance reimbursement policies for dental work:
- Georgia "I think dentists have out-priced themselves for the past decade, and it's finally catching up to them. Insurance companies have tightened their grip on the percentage they'll pay, therefore the initial cost to the patient is higher. For example, if a dentist charges $1000 for a crown, three years ago the patient would have to come up with 20%, or $200. Today, the insurance company may only pay 50% so the patient now has to come up with $500. In today's economy, people are more reluctant to spend that $500, so they wait."
- Florida "Insurance does not cover the higher prices dentists are charging. Insurers have not kept up with the changes so the benefits aren't covering enough and patients have to pay more out of pocket. I think that is why we are not as recession-proof as the medical side of healthcare. People will put off dentistry unless they are in pain." --Barbara Rodriguez, Precision Dental Studio, Jacksonville
- Arkansas "What I'm seeing is that insurance company payouts are not keeping up with rising costs. Doctors are dictating what my fee will be because of this. This has never happened to me before. In fact, I just saw a new fee schedule for 2010 and some doctors are already afraid they will have to close their doors. Insurance companies plan on taking another $178 off of what they are reimbursing doctors for now." --Byron Mills, Precision Crown & Bridge, Inc., Harrison
- Maine "A lot of small businesses are dropping dental insurance for their employees because of the rising cost of health insurance. Dental care is expensive here. I pay about $125 for a cleaning and crowns cost anywhere from $900 to $1,200. "With winter heating bills here in the Northeast, people will live with that broken tooth another year and spend the money on heating oil instead of a crown. Even for those who have dental insurance, many plans have high deductibles."
- Pennsylvania "The dentists who take limited insurance or fee-for-service only have dropped production of PFM restorations. My busiest account accepts a lot of insurance and he is really busy."
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