The Great Restart
Laboratories are back in business with new realities as the COVID-19 pandemic roars on
Jason Mazda
The year 2020 can perhaps best be described as a roller coaster for dental laboratories in the United States. A spike in business at the beginning of the COVID-19 pandemic in China1 was abruptly cut short by our country's own shutdown, which was followed by a brief reprieve via the federal government's Paycheck Protection Program (PPP), a burst of business as the nation reopened, and now an anticipated dip as COVID cases soar to record levels in the winter. Fortunately, according to the National Association of Dental Laboratories (NADL), most US laboratories seem to have weathered the storm. With 2020 in their rearview mirrors, their next challenge is dealing with the new realities of 2021 and beyond.
Still Standing
Data from Yelp indicated that 97,966 businesses on that platform had permanently closed as of September. However, Yelp also reported that certain sectors, such as professional services, solo proprietors, and health-related businesses, had maintained rates of closures below 0.4%.2 The Bureau of Labor Statistics reported 5,522 laboratories still in business as of the end of June, just 179 fewer than in the end of December 2019, and NADL Chief Staff Executive Bennett Napier, CAE, cites several positive anecdotal indications:
• Most calls that were placed to the NADL regarding exit strategies were from owners of small laboratories (one to five employees) who were planning to retire in the next 3 to 5 years anyway.
• The volume of certificates ordered through the IdentAlloy and IdentCeram programs increased dramatically in the late summer and early fall.
• Members of the TEREC Group, a consortium of 14 independently owned and regionally located laboratories, were reporting record months within some of their operating departments in the summer.
"The questions we were getting in the spring were all about furloughs, layoffs, and tax relief packages," Napier says. "Now, it is more about managing workflow and communication methods. People learned a lot in the spring, and they are still concerned about what could come, but they are less concerned about whether they can survive. It is unlikely that things can get much worse than they were, and we now understand what is necessary to work through it."
Financial Recovery
Perhaps the most challenging part of working through the pandemic was the financial aspect. When states implemented mandatory quarantines and the ADA advised dentists to avoid non-emergency procedures last spring, dental laboratory work came to a halt.
"At our low point, we were down to 3% of our normal incoming units, and for that entire 3-month period, we averaged approximately 7%," says Jim Caruso, President of Illinois-based Ottawa Dental Laboratory, which had to furlough all but eight of its 223 employees at one point but is now back to full strength. "Financially, everybody took the hit. Receivables continued to grow, but cash flow went the opposite way. We needed to figure out how to boost our cash flow. Once the PPP loans started, we used the shutdown as a time to really go after our receivables. Like any laboratory, we had accounts that owed us significant amounts of money, and we knew that the PPP was now providing them with cash. We ended up in a better place than we were before COVID in that regard."
Laboratories also monitored their expenses as closely as ever. Most have limited their large capital investments to only absolute necessities, Napier says. Material inventories were closely monitored.
"We previously maintained a much larger stock of materials, but we are managing it very closely right now," says Barbara Wojdan, CDT, AAACD, President of Knight Dental Group in Oldsmar, Florida, and also of the NADL.
Reopening Safely
Once laboratories were able to secure their financial health and workforces returned to full strength, the physical health and safety of those employees became a central focus. Some laboratories felt the need to make more significant changes than others in that regard, as infection control has always been an area of emphasis.
"We have always had good infection control processes, so we were not worried about that," says Anita Cranford, Co-owner of Identical Dental Laboratory in Norman, Oklahoma. "Our laboratory is relatively small, so we are able to spread out while we work. Of course, we tell people to try their best to social distance, and to stay home if they are not feeling well. We also have applied disinfectant to the outsides of boxes to provide a little extra safety."
Ottawa Dental Laboratory focused on making as many parts of their facilities hands-free as possible. They implemented a keyless entry system for their buildings, and geo-fencing to allow people to clock in on their smartphones within a certain range of the facility. They instituted open-door policies and paperless online checking. Videoconferencing is being utilized for all first interviews for open positions as well as for training, consultations, and sales calls.
"We tried to find as many ways to eliminate passing information through touch as possible," Caruso says. "Our philosophy is to consider the people who worry the most, and make sure they are comfortable."
Along those lines, Wojdan has observed an acceleration of approximately 30% in digital scanning among Knight Dental Group's accounts.
"Patients are demanding a different experience from their dentists, with less touching and more technology," she says.
Killian Dental Ceramics in Irvine, California, has gone so far as to send out email newsletters promoting the benefits of intraoral scanning to dentists.
"This has generated multiple inquiries from clients and prospects asking for recommendations," says President Steve Killian, CDT, who estimates a 15% uptick in intraoral scanning among his clients since March.
Knight Dental Group also began utilizing three shifts in the laboratory in order to make social distancing more feasible. And while they did not change their infection control process for outgoing cases, they began including a note on their invoices detailing to dentists how the products have been disinfected.
"The dental laboratory profession already did such a great job with infection control that we did not need to change much," Wojdan says.
For those laboratories that want to ensure they are doing everything necessary on that front, help is available. The Foundation for Dental Laboratory Technology launched a grant in the fall to cover some of the ancillary costs involved with bringing in OSHA safety trainers to help improve processes.
"Besides wearing masks, if people were doing what the regulations already required, they were ahead of the game," Napier says.
When COVID Hits
Of course, one new challenge has been dealing with actual COVID exposures and infections to employees. Both Ottawa Dental Laboratory and Knight Dental Group have had employees test positive, but none resulted in an outbreak at the laboratory. Napier says he is not aware of many NADL members who have had more than one or two cases in their laboratories.
"We stress that our employees should not come to work if they have any type of symptoms," Caruso says. "We pay them 100% if the absence is related to COVID, so people are not afraid to tell us. We have partnered with local hospitals and services that allow us to get rapid tests, so when someone tests positive, we have anybody in close contact immediately leave the building, and they cannot return until they have a negative test. We do not reveal names, but we communicate on our community boards which building has had a positive test. We talk to anybody who was in close contact with the person, while respecting HIPAA regulations. We have had more than 100 tests and paid more than 400 days for people to not work for precautionary reasons. We are committed to avoiding any outbreaks, because losing someone for 10 days is challenging, but losing 30 people for 10 days would be much worse."
Even losing just one person can be crippling for smaller laboratories, though. Recognizing that, Identical Dental Laboratory has engaged in more cross-training.
"Thankfully, we have not had any employees come down with COVID," Cranford says, "but we need to be prepared so that if someone does need to be out, then it will not stop our processes."
In an effort to help with these somewhat unfamiliar situations, the NADL offers a hotline for phone consultation with a human resources firm.
"They have helped a lot of laboratories with processes such as contact tracing and protocols for communication among the workforce," Napier says. "Discretion must be balanced with the workplace culture and ensuring that employees feel safe."
Strategies Moving Forward
Many of the new strategies and initiatives, both financial and safety-related, will remain in place long after the pandemic ends.
"I hope we can eventually eliminate the need for masks to control the virus," Wojdan says, "because our technicians find them uncomfortable and restrictive. But, while this has been a difficult time, we have learned a lot as a company after going through something like this, including how to best take care of our people and how to best communicate with our teams. Certainly, we will keep closer track of our material costs, turnaround times, shipping costs, etc. So many changes that we implemented have helped us become a leaner, stronger company. Once you learn that lesson, you do not want to take that risk again. A lot of companies have gotten a whole lot stronger and smarter in how they are managing their businesses."
Ottawa Dental Laboratory also plans to keep most of its new protocols in place, including no longer allowing receivables to reach previous levels of delinquency.
"We got partially bailed out on this one by the government, but that cannot happen all the time," Caruso says. "We are making sure we increase our cash flow; it does not necessarily need to stay in the business, but it needs to be accessible. We have committed to much stricter rules on how far out we will let an account be before we make them COD or completely cut them off. We are considering requiring credit cards on file that can automatically be charged at certain times each month. We all learned quickly that a big account that owes you a lot of money is actually a bad account; it might look good on paper, but it puts you in a really bad situation when something like this happens."
Napier expects most laboratories to wait until the latter half of 2021 to resume a normal volume of capital investments, due to the uncertainty that remains with the pandemic.
"We are hopeful, but everybody is budgeting conservatively with the anticipation of a dip," he says.
For that same reason, laboratories were reluctant to hire too much additional staff to handle the spike in the fall.
"We just worked more—weekends, nights, whatever it took to get everything done," says Elise Holasek, Cranford's twin sister and co-owner of Identical Dental Laboratory. "We considered hiring more people, but now we are glad we did not, because we have slowed down slightly. We are just trying to do more with less to get through this."
Some laboratories have utilized outsourcing options. Napier says domestic outsourcing has been a major topic of conversation at recent virtual events hosted by the NADL.
"Domestic outsourcing allowed laboratories to control costs and meet those ebbs and flows without bringing on staff that will eventually need to be laid off, which can damage the workplace culture," Napier says.
Lasting Impact
There will come a time when those ebbs and flows become less dramatic as the economy—and the nation—adjust to a post-COVID world. Still, 2020 is not likely to be forgotten any time soon. Preparing for difficult financial times and maintaining a sterile, safe work environment have taken on entirely new meanings.
"These things will just be part of the expectations of running a business," Napier says.
References
1. Mazda J. Special Report: Coronavirus. Inside Dental Technology. 2019(4):20-25.
2. Yelp: Local Economic Impact Report. Yelp Economic Average website. https://www.yelpeconomicaverage.com/business-closures-update-sep-2020.html. Posted September 2020. Access November 10, 2020.
