Inside Dental Technology
January 2011, Volume 2, Issue 1
Published by AEGIS Communications
Return on Investment
Calculating CAD/CAM Return
A guide to determining the return on investment for digital technology purchases.
By Steve Campbell
Today, one of your primary business decisions as a laboratory owner is how to position your laboratory to take full advantage of the expansion in CAD/CAM technology. Essentially, there are three general approaches:
1. Sending models to a CAD/CAM milling/printing partner.
2. Purchasing a scanner with CAD software to increase design control, quality, and cost benefits, then sending models to a CAM milling/printing partner (in-house CAD only).
3. Bringing the entire production in-house, including scan, design, and manufacture (complete in-house CAD/CAM system).
In determining the appropriate participation level, return on investment (ROI) must always be your focus financially.
With increased competition among manufacturers, CAD/CAM pricing has come down and some CAD/CAM systems offer more value, with a wider range of material choices and quality solutions. With these changes in pricing and applications, CAD/CAM systems have become much more accessible but can also raise complex questions when calculating ROI.
Create a Business Plan
To evaluate the potential ROI on a CAD/CAM system, establish a business plan first. Determine specifics, such as the expected number and type of restorations to be produced, and the cost of producing them. It is critical to determine the immediate need a CAD/CAM system will fill, and to calculate its impact on the bottom line. Start making your calculations by considering the number of restorations you currently outsource that you could bring in-house, such as zirconia copings and full-contour crowns. Next, calculate the number of restorations that would be produced in 6 months by converting most of the practice’s full-cast and 50% of its current PFM dentists to zirconia, monolithic ceramic, or titanium.
Survey dentists to better understand the potential ROI and gain insight into how a CAD/CAM purchase might affect the types of restorations your laboratory creates. A business plan should help you see the opportunity to respond to new market demands, decide the laboratory’s future, evolve product offerings, and influence a dentist’s choices.
These calculations will help you estimate a timeframe for realizing the ROI. The timeframe should generally be within 3 to 5 years, but will vary based on the nature and type of equipment purchased.
Your business plan should define what materials your laboratory plans to mill. Some laboratory owners purchase a system based on production of one material alone, while others invest in equipment that spans the entire spectrum of their product offerings. Because of the declining cost of zirconia milling materials, your current zirconia demand (substructures and/or full contour), along with converting clients away from PFM or other conventional materials, will justify the ROI in some cases. For those not as heavily involved with zirconia, equipment that allows a more diverse approach is a better choice, and can provide an ROI just as quickly. In either case, investing in a modular system that allows you to start with a specific material at a low entry cost and then upgrade later on, will provide a quick ROI and minimize the risk of your equipment becoming obsolete.
If you cannot convert clients to all-ceramic alternatives, a CAD/CAM production system capable of milling metals such as titanium would be a good choice. Titanium has been recognized by the ADA as a viable option to more traditional high noble, noble, and base metal alloys, and has been widely used in dental implant applications. As dentists and laboratories become more comfortable with the esthetics and bonding of titanium crowns, they too are added to the growing number of CAD/CAM generated solutions, and should be considered when calculating potential ROI.
CAD/CAM technology is changing the way dentists work and the products laboratories use. Regardless of the entry point you choose, CAD/CAM offers the opportunity to change workflow, improve efficiency, and build closer relationships with dentists while educating them about new restorative options. Aside from zirconia and titanium, current CAD/CAM systems can manufacture wax copings for casting, PMMA for casting and temporaries, ceramic materials, including full-contour crowns, CrCO, and more. It is becoming more apparent that CAD/CAM production will not be reserved for just a portion of the dental industry.
When trying to answer the questions associated with ROI, it is critical to understand the numbers behind the decision and how they relate specifically to your current and planned business activity. Carefully analyzing the number of units to be produced, the type of materials milled, and all costs associated with automated production (including materials, labor, and equipment financing) will help you make an informed business decision.
Whether you are investing in CAD scanning technology or a full system, assess outsourcing versus ownership, and then compare the costs and benefits of one system to another, looking at traditional labor fees versus labor savings with a digital approach. Be mindful that if this evaluation leads to a digital equipment purchase, you are buying more than just equipment and software. You are partnering with the people behind the product, and relying on their knowledge, support, and innovation. The software provider should be as committed to continuous improvement and additional applications for cutting-edge technology as you are to your investment.
Steve Campbell is general manager of B&D Dental Technologies.