The economy is also
having a negative
effect on the
dental industry

DOTmed Industry Sector Report: Dental Equipment Sales & Service

March 10, 2009
by Joan Trombetti, Writer
This report originally appeared in the February 2009 issue of DOTmed Business News

Countless doors are opened with a warm smile and the dental industry has been around for ages providing that key. Dentistry has come a long way from its roots (no pun intended). From the barbaric practices that would occur with tooth extraction in England barber shops to even worse horrors in earlier history including wooden planks and mallets to remove teeth to Chinese tooth-pullers using their fingers. The goal of dentistry - to maintain good oral health - has remained the same, but the ways that maintenance is met and the choices of procedures have evolved greatly. It's a good thing too - with an economic slowdown, if all a dentist offered was some strong fingers to yank a nagging tooth out, people might opt to do it themselves. Fortunately, dentistry has established itself as a necessity and people are willing to fore go other comforts before performing painful self-procedures. Still, procedures of just a cosmetic nature are likely to take a hit.

In a recent survey in Dental Products Report, more than a quarter of responders (25%) predicted an increase in their purchasing of both technology and equipment in the next 12 months. According to the survey, more than 45% planned to add hand pieces, while digital X-ray and computer hardware for the operatory ranked next at 25%.

3D Volume Illustration done
by the KODAK 9000 3D
(Image courtesy of Carestream)

This same survey, however, revealed that recent tough times have left just over 44% dentists indicating the economy has prevented them from purchasing specific products in the past 12 months. Two-thirds (65%) plan on making the same amount of purchases in 2009 for materials and 24% plan to increase purchases of things like impression materials, bonding agents and composites. More than a quarter are looking to increase their purchases in both the technology and equipment categories, but 20% are planning to cut back in those two categories as well.

DOTmed interviewed registered users; manufacturers and a dentist to offer some interesting feedback.

Scott Carson, founder of Med1Online reported that business was down in 2008 and thinks 2009 will be worse for dental equipment sales. Med1Online sells all types of new and used dental equipment as well as a wide selection of new and factory refurbished capital medical equipment (CME), medical devices and medical supplies through an online channel.

Carson feels that the dental device industry is taking a hit because people are putting off having most dental work done (only what's absolutely necessary) because most people don't have dental insurance (or have to supplement what they do have) and don't have the money to spend on major restoration or for aesthetic purposes. "A dentist is not going to spend money on equipment if the business doesn't have the clients to support the cost of that equipment," says Carson. He says that his company deals mostly with dentists who are setting up new practices and need turnkey items like chairs, X-ray machines, etc. "Digital X-ray machines and teeth whitening systems are hot right now," states Carson, "but because of the economy, sales for whitening systems have slowed down quite a bit."

Oraqix needle-free anesthesia
dispenser by Dentsply

President and CEO of EquipStat Medical Equipment, Inc., Michael Parnell, is very optimistic about business in 2009. He relates that 2008 was great and had many new customers looking for preowned/refurbished dental equipment. "Our plan for 2009 is to increase our dental equipment inventory, as well as all medical equipment, expand our Service Department and keep on growing," Parnell reports. He sees the biggest challenge for 2009 is catching up with the growth of his business and the technology "with equipment software changing yearly if not sooner." Parnell also realizes that one of the biggest challenges in any business is the financial cost of growth, and to help offset these costs, EquipStat offers both new and pre-owned dental equipment, including Power exam chairs, lights, autoclaves and sterilizers, patient monitors, pulse oximeters, stainless steel equipment, stools, X-ray and office equipment.

David Hedlund, President of Hedlund Dental Inc. says the economy is absolutely affecting how dentists purchase equipment. "In the past few years we've worked with dentists who wanted to purchase equipment as their practices grew, yet they were reluctant or unable to get financing as the economy soured," says Hedlund. "We're beginning to see a turn and "on hold" clients are starting to call to talk about equipment purchases."

Hedlund said that business in 2008 was good - up about 30% from 2007.

Perhaps business was up because on February 13, 2008, President Bush signed into law the "Economic Stimulus Act of 2008" allowing for substantial equipment write-offs. For example, most dental equipment qualified for a five-year depreciation write-off, whereas furniture and fixture (such as waiting room area) could be written off over a seven-year period. And, the updated IRS Code Section 179 for 2008 allowed expensing the first $250,000 of qualified dental equipment purchases in 2008. This accelerated the depreciation deduction in year one, thereby doing away with traditional depreciation methods over a five or seven-year period. IRS Code Section 179 property applied to new or used equipment.

The bad news is the new tax law extended the provision through 2008 only, after which the expensing amount reverted back to $125,000 in 2009, adjusted for inflation.

Refurbished equipment will save money

Still Hedlund feels that clients who had considered investing in new equipment are now looking to buy used equipment as an affordable alternative. Hedlund is optimistic about 2009. "It seems like customers who've been holding off to see what the economy does, are deciding to move forward with equipment purchases and, to date, January has been a strong month for sales."

Refurbished equipment is the logical answer to the high cost of furnishing a dental office. A dentist can save approximately 50-60% by buying refurbished equipment and it can look and function as well as new equipment. For example, Hedlund recently sold an entire five-operatory office of refurbished equipment for just over $50,000. The same new equipment would cost more than $100,000. Another example is a panoramic X-ray which averages around $30,000 new, but a refurbished model can be purchased for under $10,000. Hedlund Dental Inc. generally warranties products for six months to a year and offers installation and delivery for complete packages.

Dental panoramic X-rays
refurbished by Hedlund Dental

Randy Adams, President of A.T.S. Dental equipment says the dental industry has changed over the years and transformed from single operatories to multiple operatories with large staffs. "Practices are similar to production environments where changes go relatively unnoticed by the dental staff or patients," says Adams. He believes, based on these changes, there is a need to improve the way service is performed and the scope it covers. Adam's background is in the automotive industry, and he's worked in the technical/engineering field for ten years refining their processes, making equipment more efficient, cutting costs and increasing revenue. "I've applied my experience to make dental offices more efficient by implementing preventative maintenance programs custom tailored to each practice," says Adams. Using Adam's service methods, many dental practices have seen a positive affect on the bottom line.

Gregory Drinkwater, President of feels his company is at an advantage because as far as dental equipment goes, sterilizers are a basic necessity and that is all he sells. "All the other dental technology that is available, while beneficial - is a luxury,"states Drinkwater. "Dentists do not like spending money on a sterilizer, but they know that they have to."

When Drinkwater's company refurbishes or remanufactures a sterilizer, all parts are replaced in the core machine. The machine is then run through an extensive testing period and basically ends up offering the same value as new at half the price - or less. Drinkwater gave an example of a new Statim 2000 sterilizer costing over $6,000, while his remanufactured version runs about $1799. All of Drinkwater's sterilizers come with everything a new sterilizer would have, plus a year warranty.

New technology

On the international front, DOTmed user, Alessandro Boschi, Manager at Lambda Scientifica promotes laser dental technology. Laser technology is increasingly used in medical practice and can be successfully applied to children and odontophobic patients. Lasers can reduce the need for anesthetic, minimize post-operative swelling and discomfort and enhance patient recover. Boschi says that the technology is based on energy action and not mechanics. "With laser technology, there is no direct contact with the patient - giving great relief from pain," says Boschi. He admits that laser technology is here to stay, promising to create new waves in the future, "but, says Boschi - our systems are quite costly."

Paul Mulhauser, President of FactorsNY has merged the disciplines of applied human factors, engineering and industrial design to create products that have become standards for emerging medical, technical and consumer driven markets. Mulhauser believes that dentists are extremely cost-conscious and are always looking for ways to save money. "We are working on a new intraoral digital camera - enabling dentists to efficiently identify and patients to clearly visualize micro issues which can then be cost effectively treated before becoming more significant," says Mulhauser. FactorsNY has also designed Dentslpy's cost-saving reusable instrument for accurately dispensing local anesthetic gel without a needle into subgingival interstitial pockets of the gum.

John Sweeney, Director of Investor Relations at Sirona (leading global manufacturer of technologically advanced, high quality dental equipment) reported that Sirona fiscal year 2008 operating income, excluding amortization expense of $91.6 million, totaled $155.4 million, above guidance of $150 to $155 million. Sweeney sees favorable future trends that will positively affect the dental industry. They include the increasing level of global dental care, preventative care and a shift in the market place from film to digital imaging.

In a release announcing Sirona Fiscal 2008 Fourth Quarter and full year 2008 results, Chairman, President and CEO, Jost Fischer said that the weakened global economy has resulted in a challenging dental equipment environment and anticipates that in fiscal 2009, both revenues on a constant currency basis and operating income excluding amortization will be flat compared to fiscal 2008. He is confident in the long term prospects of the business because of continued investment in research and development, best-in-class product offerings and excellent relationships with dealer partners.

Sirona recently launched the CEREC® AC Digital Impression Unit - a completely new digital image acquisition center for its CAD/CAM-based all-ceramic restoration system. It replaces the existing CEREC 3 acquisition unit with immediate effect. The cornerstone of the new digital acquisition center is the CEREC Bluecam®, which boasts an automatic image capture system, an anti-shake function, as well as an extensive depth of field. It is capable of digitizing quadrants in less than one minute. "In combination with the CEREC MC XL milling center, the intuitive and user-friendly CEREC 3D software and CEREC Connect the new CEREC AC represents a major step forward in computerized dentistry," says Fischer.

PracticeWorks, Inc. is part of Carestream Health Inc.'s dental systems group. PracticeWorks is the maker of KODAK Dental Systems, which help dental professionals streamline workflow and enhance patient care by enabling them to capture, share and use images and information easily and effectively.

The new KODAK 9000C 3D Extraoral Imaging System enables orthodontic professionals to obtain low-dose, high-resolution, three-dimensional (3D) images, as well as panoramic and cephalometric images, at an affordable price. "One-shot" cephalometric technology maximizes productivity and image quality with image acquisition taking less than one second, and panoramic image quality is optimized for the jaw morphology of the patient with the new variable focal trough feature.

Historically, 3D imaging has been complex, expensive to implement and often relegated to "high-end" procedures performed by specialists. "All that changes with the introduction of the KODAK 9000 3D System," says Rich Hirschland, President of the Worldwide Dental Business for Carestream Health. "While the system can meet the stringent requirements of specialists, it's also ideal for general practitioners who are increasingly performing more complex procedures as part of their daily practices."

3-dimensional picture

Dr. William E. Harrell, Jr., Alexander City, Alabama was the first in his state to use the ConeBeam (iCAT by Imaging Sciences). Dr. Harrell is a recognized orthodontist with more than 31 years in practice. He believes that orthodontics is distinguished by a commitment to precision and accuracy similar in concept to physical engineering. "Both fields work in a 3-dimensional world - the engineer designing and modeling physical products, and the orthodontist diagnosing and treating patients," explains Harrell.

Orthodontists have traditionally based their diagnosis and treatment planning on various 2D radiographs and traditional photographs because conventional 3D input devices for capturing living, breathing human subjects have been prohibitively expensive and complex to use - often subjecting a patient to potentially harmful emissions. "Technology advances in the past five years have eroded these barriers to safely make 3D human data input as precise and easy to obtain as 3D physical object input," states Harrell. "Moreover, to further streamline practice workflow, some practice management and imaging management software applications are being reengineered to efficiently handle and analyze these highly precise 3D data formats."

Dr. Harrell finds problems that he was not expecting using 3D imaging, and he says he finds them almost every time he images a patient. "I've found broken necks, fractured cervical vertebrae, airway obstructions and more. All of these can have bearing on my orthodontic treatment plan." Harrell also uses his advanced imaging systems to help keep kids safe and find those children who have gone missing. He provides 3D facial scans of children whose parents enroll them in a national safety program called Kid I.D. Harrell says, "The advantages of 3D imaging are difficult to overstate."

Future growth

In the past several years, the demand for dental services has risen substantially and many markets experienced growth rates well above average. The trend is expected to continue requiring that dentists will need to increase their investments in high-tech equipment.

Baby boomers will play a key role in this growth with an increasing number more likely to require dental procedures, thus expanding the need for equipment - particularly those items that require relatively frequent replacement like hand instruments and tools used with hand pieces. As Sweeney says, "another favorable trend for the dental industry is 'the aging of America,' and the need for preventative and ongoing dental care."

When all is said and done, there will always be economic swings and cycles. That's just the way it is. During a recession, business for dentist and dental equipment providers will slow, patients will be reluctant to get certain procedures; whiten their teeth, get veneers, orthodontic work or any other elective service an office has to offer. But adjustments can be made and life will go on - especially for the dentists and equipment providers who take practice management in the dental industry seriously, and for clients - who like it or not, will require the services of a dentist and will demand the most up-to-date equipment available.

Now is the
time for all
good men to
come to the aid
of their country

DOTmed Registered Dental Equipment Sales & Service Companies
Names in boldface are Premium Listings.

Robin Grant, Government Liquidation LCC, AZ
Scott Carson, Med1Online, CO
David Hedlund, Hedlund Dental, Inc., FL
Michael Parnell, EquipStat Medical Equipment, FL
DOTmed Certified/100
Randy Adams, A.T.S. Dental Equipment Services, KY
Scott Collins, Collins Dental Equipment Co., Inc., KY
Dotmed Certified
Jim Annabel, Diversified Dental Service, NC
Gregory Drinkwater, NY
Paul Mulhauser, FactorsNY, NY
Gary Bischoff, Electronic Control Concepts, NY
Robert Weston, Weston Centre for Dental Health, PA
Idelette Shunia, MD, Shunia Medical, TX
Cole Potts, BuyDentalEquipment.Com, TX

Alex Boschi, Italy
Raul Zamora, Ing. Medica Especializada SA , Mexico
Dorai Carparu, Medimex , Romania