What Materials Should You Stock up on Before the End of the Year?

As the end of 2021 approaches in a few days, dental practices have lots of year-end housekeeping issues, including year-end sales on dental supplies and materials. Many factors could affect dental supplies and materials availability and pricing in the coming year. So, what materials should dental practices stock up on before the end of 2021?

Inventory management is always a concern for dental practices. Having too much or too little of any given material on the shelves isn't great for your bottom line. The American Dental Association (ADA) recommends that dental practices tie up no more than five to six percent of collections in inventory costs for dental supplies.¹

However, global supply chain disruptions in the wake of the COVID-19 Pandemic have forced prices up on many dental supplies, making it more challenging than ever to maintain the ADA's recommended ratio. With the increased demand for personal protective equipment (PPE) and inflation caused by business supplies and labor shortages, many practices have invested eight to nine percent of collections instead. Industry experts predict that these increased costs will continue into 2022.²

With price increases and scarcity looming, it might make sense to ensure you have what you need now rather than later.

Tax Benefits That Could Help a Dental Practice

The tax year is also closing for dental practices, which means these are the last few days to take advantage of tax write-offs for 2021. Section 179 is part of the IRS tax code that allows up to a $1,050,000 tax deduction for new equipment, furniture, and technology put into service by December 31, 2021.³ However, unless the equipment is already in the dental practice, large equipment purchases will have to be next year's deduction. 

To avoid missing the Section 179 deadline next year, Don Copeland, Dental Consultant, VOCO America, Inc., recommends dental practices that start talking to their tax professional in late summer or early Fall 2022. Tax experts could provide a capital investment strategy that is the most beneficial for the practice. Also, the dealer reps will have time to assemble a team of specialists that can advise a dental practice on the comprehensive needs the new technology investment requires. If a dental practice waits until the last minute, it can mean buying something in inventory that isn't precisely what they want to make the tax deadline.

"That's going to cost them in their productivity down the road," Copeland says.

However, some smaller equipment purchases can still make the deadline later in the tax year. For example, purchases of computers, curing lights, and intraoral cameras could qualify for Section 179 (talk to your tax advisor to be sure). Copeland often explains to people less familiar with the tax code that you can write off "anything with a serial number on it." For example, VOCO has the Celalux^® 3 Curing Light for $1,800 that would be eligible. But it could also be something like a handpiece or an autoclave. However, significant price discounts are not always available on these items at that point in the year, which might negate the tax benefits from the purchase.

"The difference in the price could be higher than the tax benefit it produces, so it may or may not be a benefit to the dental practice," Copeland explains.

Supplies are a tax write-off, too, so dental practices should save their receipts and invoices. Tax experts recommend making a spreadsheet or using a software program to log and categorize your costs.⁴ Also, per WCG, Inc. Certified Public Accountants, all small business tax deductions for business expenses must meet the following four criteria:⁵

1. It is ordinary and necessary. In other words, the expense is typical amongst others in the profession.
2. It occurred in the current tax year. Dental practices can't bring in expenses from the previous year.
3. It was directly related to the business. So, you can't write off at 100 percent for personal expenses you share with the practice, e.g., a dentists' mobile phone expenses.
4. It is a reasonable expense. It should not be extravagant.

More Critical Considerations about Materials in 4th Quarter 2021

In addition to the tax benefits, there are other critical considerations about purchasing materials before the end of the year.

December and January are busy months in a dental practice. Bryan Fernandes, Regional Sales Manager, Western North America, Kuraray America, Inc., says many patients try to use their remaining dental insurance benefits in December and take advantage of renewed benefits in January. Therefore, it's good to have plenty of materials on hand to respond to the increased demand.

Universal materials streamline restorative dentistry procedures. Fernandes explains that with the difficulties dental practices have had with staffing, having a more effortless and faster chairside system can help keep things moving with fewer or newer hands.

"Sometimes, it's cost-saving as well because certain products get combined, and you get a 2-in-1 product," Fernandes says. "Streamlining has been a hot topic for the last couple of years."

Even though the equipment is hard to get, the supply chain issues might be delivering excellent 4th quarter promotions on supplies and materials. Fernandes says that equipment dealers and suppliers with inventory affected by the supply chain disruptions have shifted their focus to sundries and restorative products for the 4th quarter. Fernandes thinks this means there could be better promotions out there right now than in years past on dental supplies.

Copeland says that buying before the end of the year is excellent, but be aware of the expiration dates. He advises not buying more of anything with an expiration date than you can use in a year.

"If, for instance, they're going to buy a lot of composite material, they have a 2-year shelf life. By the time they get it, that could be an 18-month shelf life, or maybe a 15-month shelf life," Copeland explains. "If they don't go through those before they expire, it's not a good deal."

However, some manufacturers' materials have longer shelf lives. Most materials have a 2-year shelf life, Fernandes says. However, some manufacturers have 3- and, in one case, 4-year shelf lives. For example, Kuraray's PANAVIA^™ SA cement and CLEARFIL Universal Bond Quick have a 3-year shelf life, and CLEARFIL Majesty^™ ES-2 Universal composite has a 48-month shelf life. So, if you buy in bulk, he says dental practices can rest assured that there is plenty of time to use the materials up before the expiration date. 

Reasons a Materials Investment in December Can Benefit Your Bottom Line

If you are a dental practice with extra cash flow and storage room, buying materials in December can be a good investment for a few reasons. First, there is often a price increase in the new year. In 2022, these increases might be compounded even more than usual due to the raw materials shortages, inflation, and increased demand, Fernandes predicts.

"Prices are going up, and it makes sense to take advantage of year-end promotions on non-expiring items," Copeland agrees.

Material innovations can streamline inventory for the new year. For example, some dental restorative materials match all 16 of the VITA classical A1 – D4^® shade guide shades. 

For example, Tokuyama Dental America's OMNICHROMA composite and Kuraray's CLEARFIL Majesty ES-2 universal have one composite for all 16 shades. Kerr's Simplishade^™ has only 3 shades to match all teeth labeled light, medium, and dark. 3M^™ Filtek™ Universal Restorative has cut the inventory to 8 designer shades and 1 extra white shade. Fernandes says investing in a composite like CLEARFIL Majesty ES-2 can save time, money and simplify things chairside for the doctor. 

However, other updates also simplify inventory management and streamline restorative materials placement. For example, many universal bonding agents are both light- or self-curing. Fernandes says these materials allow dentists to reach for one bonding agent to use with whatever etching technique they want for the case. Universals are great for practices with multiple dentists of varying experience, too. Plus, the CLEARFIL Universal Bond Quick has no waiting time, which streamlines the composite placement process. Also, Fernandes says that PANAVIA^™ SA Cement Universal is the only resin cement with built-in silane, eliminating the need to perform a separate silanization step. As a result, it is their fastest-growing product this past year.

"If dental offices are still trying to spend some money at the end of the year and they can't get equipment, the next thing they may look to is stocking up on their sundries and restorative products," Fernandes says.

Copeland thinks that materials like diamond and carbide burrs and or VOCO's Dimanto^® diamond-interspersed polishing burrs are an excellent investment at year-end because these supplies don't expire. Moreover, for something like the burrs, dentists can get a "buy-get" deal at the end of the year. For example, if a practice buys 3 burs, they get 1 for free. 

However, Copeland says dentists don't have to settle for the first buy-get deal. Instead, buying smart often means buying more and getting a better deal. If practices buy enough of anything, the rep will almost always get the dentist a better deal, he says.

"At the end of the year, the manufacturers and the dealers are trying to get more business. So if you want to buy bulk, we're going to do better than a three plus one. We'll do a five-plus two or a ten-plus three," Copeland explains. "But you got to buy in bulk to get that deal." 

References

1. Dental Supplies-Inventory Control. Ada.org. Accessed December 10, 2021. https://www.ada.org/resources/practice/practice-management/dental-supplies-inventory-control. 
2. Spielmann B. Supply chain disruptions fueling higher supply costs for dental practices. Nysdental.org. Published 2021. Accessed December 10, 2021. https://www.nysdental.org/news-publications/news/2021/11/15/supply-chain-disruptions-fueling-higher-supply-costs-for-dental-practices. 
3. IRS Tax Code Section 179 2021 Equipment and Technology Credit. Dentalfinancial.henryschein.com. Published 2021. Accessed December 10, 2021. https://dentalfinancial.henryschein.com/services/section-179-tax-deduction-for-dental-practices/. 
4. Dental Accounting: Are You Getting All Your Tax Deductions? ADCPA.org. Published 2018. Accessed December 10, 2021. https://adcpa.org/dental-accounting-are-you-getting-all-your-tax-deductions/. 
5. Dentist Tax Deductions. WCG CPAs. Published 2020. Accessed December 10, 2021. https://wcginc.com/dentist-cpa/dentist-tax-deductions/.