Savings Opportunities Within Growing Dental Supply Market

The TDSC offers its members savings averaging 20 percent on more than 25,000 products.

The dental supply industry is huge, and growing. Estimates place the U.S. dental product and material industry at $10.7 billion in 2017, expected to grow to $12.7 billion by 2019.

Henry Schein Dental and Patterson Dental dominate that market, but there are some new kids on the block who are affording dental practices cost-saving options.

In February 2017, the California Dental Association began beta testing The Dentists Service Company (TDSC), an e-commerce site that offers association members significant savings on dental supply purchasing. An aggressive marketing launch began in late 2017, and according to Bob Spinelli, TDSC’s chief executive officer, member response has been tremendous.

“The growth and adoption rate, as we’ve ramped up the marketing, has been exponential from month to month,” Spinelli says. “But the most important piece is that the members who have utilized the service are thrilled. So from a customer service, or member service standpoint, it has been wonderful.”

KEY BENEFITS

The TDSC offers its members savings averaging 20 percent on more than 25,000 products. That’s particularly important for the sole practitioners who otherwise lack the negotiating power to obtain the type of discounts provided by TDSC. That’s one benefit, Spinelli says, but the other is likely a sense of more control.

“Because we are part of the dental association, we are governed by dentists,” Spinelli explains. “Everything we do is member focused.”

That being said, TDSC is a viable, for-profit entity that needs to be able to reinvest monies back into the company. But its profit margins are less than if it had to answer back to shareholders.

“The more savings we can pass on to our members, the greater value their membership is to them,” he says.

That benefit hasn’t been lost on members.

MEMBER AWARENESS

James Stephens, DDS, is a Palo Alto, California-based dentist who began using TDSC as part of the beta testing in early 2017. He used to use a large supply house for his dental supply purchases and still does on a much smaller scale, but he says of late, it has become increasingly important to manage dental practices efficiently.

“It used to be you could figure on 4 to 7 percent cost in your supplies, with seven being the high, but four the target,” Stephens says. “Now cost has gone up 2 to 3 percent, so most practices are running at 7 percent or higher. What it comes down to is there are places you can be more efficient, and [TDSC] is one of the opportunities.”

Stephens estimates his practice has saved approximately $14,000 in the first 12 months he’s been purchasing through TDSC — keeping in mind, he emphasizes, that he started out just dipping his toe in the water. Today, about 80 percent of the practices purchases come from TDSC.

And the benefits, Stephens adds, are more than just monetary.

“When you have a private practice and fending for yourself, when you get out of dental school with almost no business training, this was a chance to feel like I’m not just subjected to being manipulated by the market,” he says. “A company that is thinking about me first, and profit second, I like that.”

Stephens also likes how the added savings will enable him to invest in his practice, such as improvements in technology and creating a better interface with patients. He also wants to take care of staff.

“My practice is in the Bay Area and housing costs are crazy,” he says. “I’m hoping I can take some of that savings and use it to help and retain staff.”

GROWTH OPPORTUNITIES

Spinelli says that TDSC is now in a position to expand to other states, making it available to tripartite members. For example, if a dental practice is a member of a state dental association, whether that’s California, Oregon or Colorado, it also belongs to its local, regionalized component, as well as the larger, all-encompassing American Dental Association. So when a practice joins one association, it essentially joins all three.

“We’re going to work with the other states to provide this in the same type of value proposition we have with the California Dental Association,” he says.

Plans call for beginning that migration in the near term.

“We’re looking at moving out to other associations during the second quarter of this year, and then on into 2019. But we’ll do that on a step-wise basis, making sure the complexities that come along with moving into other states are aligned appropriately.”

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