David Block, CEO of Aesthetic Porcelain Studios in Los Angeles, spoke with Becker's on Nov. 15 to discuss consolidation in the dental laboratory and DSO space.
Editor's note: These responses were edited lightly for clarity and brevity.
Question: How is dental consolidation evolving in your market?
David Block: There is a lot of consolidation going on. A lot of my competitors have been bought up by larger conglomerates that own multiple dental laboratories across the country. Being an individual that is very quality oriented, there's a lot of things about it that kind of disgruntles me. When they buy all these laboratories, a lot of these smaller types of laboratories are being affected. Because ultimately, what happens is that with this consolidation, a lot of the laboratory work is being sent overseas to Vietnam or China. There's no way that I can compete with that type of a market.
[Dentists] who are also being bought out by a lot of these DSOs are selling for a lot of reasons. Maybe they're at a point in their career where they just want to walk away, make a couple bucks and call it a day. But to me, it's all about quality and unfortunately, I'm not seeing that. I've seen a lot of doctors that have sold practices to DSOs and what happens is they outproduce. If they're not producing, their earnout or buyout might not materialize, because usually, they have a contract that is with a DSO for three years, maybe sometimes a little bit more. So they need to produce and if they're not producing, I don't think they're going to get the financial rewards that they were envisioning getting right from the beginning.
Consolidation has some pros and cons to it. It all boils down to which direction you want to go with. That can be easily applied to a doctor's office or even to a laboratory.