Dental laboratories' plea - let's compete on a level playing field

Dental "rip-off alleged" and "Dentists 'overcharging' for mail-order dentures" screamed the newspaper headlines. The local laboratory industry was losing up to $40 million each year as dentists rushed to buy cheap, inferior quality dental prostheses from South East Asian laboratories.

And not only were dentists failing to tell patients that the work was being done offshore, they were refusing to pass on the substantial cost savings to their patients.

Allegations were also made that some dentists were involved in a tax scam made possible by overseas laboratories issuing dentists with two receipts - one for the offshore price and another for the (higher) Australian equivalent price.

The dentist paid the "Australian" price, the offshore lab took out its (much lower) fee and deposited the balance in an overseas account which the dentist then accessed during his or her next overseas jaunt.

These claims, which have been made by a variety of associations representing dental technicians, dental laboratory owners as well as prosthetists, have been vehemently denied by the Australian Dental Association, but what has been the effect on the public's confidence in dentists - and the government's?

The Australian Tax Office is expected to investigate, among many other things, whether or not dentists are fully disclosing all profits made as a result of using less expensive, imported prostheses, during a special audit of dentists in NSW and Victoria. However, it should be made clear that the audits were not called because of these allegations.

And, as a result of laboratory industry and consumer complaints, the Price Surveillance Authority is to look at the pricing of dentures, bridges and crowns in Australia.

Dental technicians and laboratory owners all point to what they see as a signficant increase in the number of Australian dentists sending work, in particular crowns and bridges, offshore.

Vice President of the Dental Technicians Association of Victoria, Craig McCracken says, "What was a steady trickle about 10 years ago has grown to a fairly regular flow. We are concerned that it might elevate itself to an epidemic."

Mr McCracken estimates that up to 25 per cent of Australian dental practices are engaging in these offshore deals."

President of the NSW Branch of the Dental Laboratories and Prosthetists Association, Stephen Niddrie, says he thinks the figure might be as high as 40 per cent as recession-hit dentists take advantage of bargain basement offers from laboratories in Hong Kong, Singapore and the Philippines.

Mr Niddrie said these labs have stepped up their marketing to Australian dentists in recent times and the result is that "Australian labs are missing out on work".

Mr Niddrie says he has been directly challenged by dentists to match offshore prices; when he couldn't they gave their business to overseas labs.

Says President of the Australian Commercial Dental Laboratories Association (NSW Branch) Fred Latham, "We just can't compete cost-wise with these imports."

Unlike many South East Asian dental laboratories, Australian labs must meet health and safety regulations and employ registered technicians at award wages, says Mr Latham.

Local labs, which have already been forced to offer discounts, would find it difficult to cut prices any further and remain in business he says. "I think it is a genuine problem and l think it will get worse."

Says Mr Niddrie, "We're not frightened of competition but we'd like to see it on a level playing field. Let's compete, but let's compete fairly".

National President of the ACDLA, Peter Burns, says that the overseas labs are targeting dental technicians, lab owners and prosthetists as well as dentists.

"There are few full service labs so some do take advantage of the opportunity to send some work overseas," he says.

In one recent month, Mr Burns says he received four mail-outs from Hong Kong laboratories. Other lab owners have reported receiving phone calls direct from Hong Kong touting for business.

However, a random survey of dentists on the east coast of Australia revealed no increase in the amount of marketing materials being received from South East Asian laboratories, nor any direct phone calls from overseas laboratories.

Mr Latham estimates that at least 100 Sydney dentists are each spending approximately $3000 per month on offshore lab bills. "That's $300,000 going out of the country each month from Sydney alone," he says.

Mr Niddrie says he knows of one local agent for a Hong Kong dental laboratory who has 400 Australian dentists on his books and an annual turnover of around $5 million.

The estimates of 40 million going offshore each year was based on client figures supplied by three Hong Kong laboratories, says Mr Niddrie.

President of the ADA (Victoria Branch), Dr David Houghton, says that this figure is "a gross distortion of what is going on."

President of the ADA (NSW Branch), Dr Peter Magnus agrees, adding, "There is certainly some work going overseas but there is no way to know absolutely how much."

Dental prostheses are imported as duty-free medical devices. This means that they do not need to be registered as a therapeutic medical device and that they do not have to undergo and health and safety checks.

As a result, there are no official records of the number of dental prostheses coming into the country.

Dr Magnus maintains that any downturn in business that local labs may be experiencing is not as a result of work being sent offshore, rather, it is the result of "a general downturn in dentistry".

"The main thing that technicians are forgetting is that patients aren't buying crowns. I know that my practice is down on crown and bridge work by a significant percentage."

He adds, however, that with dentists losing business and patients wanting reduced fees, the offer of an overseas-made crown at one third of the local cost makes sound business sense. If the crown is of a standard acceptable to the dentist, then the dentist is within his rights to choose the cheaper option.

"It all gets back to the standard the individual dentist has," he says.

According to Dr Houghton, "There's nothing illegal in doing it and there's no reason why they (dentists) shouldn't do it. I would rather see our local technicians supported, but if dentists want to get their work done oversears, they are quite entitled to do it."

President of the NSW Association of Dental Prosthetists and the Dental Technicians Association of NSW, Reg Scott, has publicly denounced dentists who fail to tell patients that work is being done in an offshore lab, possibly under unregulated conditions by unregistered technicians.

Says Dr Houghton, "a dentist doesn't have an 'ethical requirement' to inform patients if prostheses are being made offshore."

Peter Burns, says that the ACDLA is also concerned about the quality of the offshore work.

"I have had feedback from dentists that some of the work sent back is rubbish," says Mr Burns.

Mr McCracken says, "Some of the offshore work is of a quality that is suitable. A large proportion is an inferior quality.

"Patients are paying Rolls Royce prices for offshore billycart prices."

Allegations of dentists "overcharging" patients by not reducing fees in line with savings made by using overseas-made prostheses have gained the greatest coverage in both the print and electronic media.

Dr Magnus challenges the claim that a dentist would actually make any huge savings by using offshore labs.

He knows of one dentist, however, who addresses the problem by giving patients the choice of a locally made crown or a cheaper, overseas-made crown.

Regarding the quality of offshore work, Dr Magnus says that of the Hong Kong work he has seen, "it has been of very poor quality and would not be of a standard I would use in my practice."

But views on the quality of the work vary greatly. One Sydney dentist who tried a Hong Kong lab several years ago decided to continue using it because "the work fitted beautifully; it was high quality work."

He now sends about half of his lab work overseas, chiefly crown and bridge work, and says that while the price is "a little bit cheaper", the main motivation is the quality of the work he receives.

Dr Houghon dismisses allegations that dentists would accept substandard work.

"Dentists' are accountable for what they put into a patient's mouth," he says. And in addition to ethical considerations, he says, "there is a financial disincentive" to placing poor quality work in a patient's mouth as the work only has to be replaced or fixed which costs the dentist more and may erode the patient's confidence.

Laboratory Owner David Race says that he fears for the future of the dental laboratory and dental supply industries. "Every penny that leaves this country has an effect on the dental trade," he says.

"If more of our work is being done overseas, local labs won't need to buy as many materials".

President of the Australian Dental Industry Association, Axel Buchner, says, however, that he has seen no evidence that suppliers are losing business from local labs.

Says Mr Burns," Most labs are small with maybe a dozen clients. If they lose a couple of dentists to overseas labs, their viability might be open to debate".

Mr Race admits that there are other factors threatening the viability of local labs. He says there are too many labs at present and too many "backyard" operators; dental technicians who do cut price work at night or on weekends from home.

"If I charge, say, $155 for a crown, a local backyard operator charges $100 and the overseas lab charges $45, what chance have I got of getting the job," he asks.

Nonetheless, says Mr Race, "The majority of dentists do support local laboratories and if you give them good services, they will look after you".

In the past year, there has been a lot of "bad press" in Victoria. Dr Houghton says that this is due to a lobby group trying convince the state government to allow the introduction of advanced dental technicians by undermining public confidence in dentists.

Rather than pointing an accusing finger at dentists, labs should be looking in their own backyard, he suggests: "I know there are a number of big laboratories sending their work offshore".

There is little doubt that the majority of dentists are using the services of local laboratories and that the standard of work and level of service provided often equals the best available anywhere in the world.

What is open to debate is just how many dentists are now choosing to send all or some of their work overseas, whether or not the numbers are growing and whether this will have significant impact on the viability of the local lab industry.