CHAPTER 2 THE BUSINESS OF IMPLANT DENTISTRY
Implant dentistry has evolved from a small part of a few clinical practices into a global business with thousands of clinicians placing and restoring implants manufactured by more than 100 implant companies. For many specialists and some general dentists implant dentistry has become the major part of their practice. Sophisticated software, coupled with the availability of in-office computed tomography (CT) scan machines, has transformed treatment planning for complex cases, whereas computer-aided design has significantly altered the production of precise custom abutments. The percentage of general practitioners who view the restoration of dental implants as an integral part of their everyday therapy continues to grow.
Growth of the industry has attracted significant investment. Many of today’s implant manufacturing companies began as entrepreneurial start-ups, evolving during the past several decades into large-scale global businesses. These companies are using the latest technologies to create new implant designs, new surfaces, advanced aesthetic restorative options, and innovative new biological and grafting products.
For clinicians, laboratories, dental implant manufacturers, and investors the global business outlook for implant dentistry is one of increasing opportunity. Factors leading to this conclusion include:
The economic future for implant dentistry represents solid opportunity for clinicians, dental labs, implant manufacturers, and patients because the entire scope of care focuses on improved products, practice methods, and patient outcomes.
Crude attempts at implantation go back centuries, at least to the Incas and Egyptians who implanted carved jade, sapphire, and ivory teeth. Nineteenth-century efforts included implantation of human teeth—a clumsy tooth transplant.
The practice did not advance appreciably until the last quarter of the 20th century. As recently as 30-40 years ago, implant dentistry was performed by relatively few clinicians and only in the most severe clinical cases. Training availability was limited and, by necessity, professionals in the United States studied extensively abroad. But in the last two decades, research along with aggressive marketing and sales techniques have validated the success of implants as a viable alternative for fixed and/or removable prosthetics.
Dental implants were just one segment of a $92.8 billion global dental services market for 2007.1 Global sales of dental implants and abutments rose more than 15% in 2006 alone, reaching $2 billion (Figure 2-1). The growth was strongest in Europe, where sales peaked at $750 million, which was 42% of the global market.2
Volume for dental implants in the United States in 2008 was projected by Millennium Research Group to be 1.4 million procedures, for a treatment value of $2.3 billion. Projections show that by 2012 there will be 4.5 million implants and more than 2.8 million procedures annually in the United States.4
Dental implant companies, often started by entrepreneurs with limited outside capital, have increasingly caught the attention of venture capitalists and investment bankers, who view them as financially promising. Many medical and orthopedic company investors, attracted by the double-digit yearly growth of implant dentistry, have diversified their portfolios and in some cases shifted their focus to include dental implant companies.
Dental implant firms strive to distinguish their brands with variations in implant and thread design, including implants for special situations such as enhanced aesthetics, lack of ample bone, and smaller diameter “transitional implants,” as well as developing new high-tech and biological coatings and surfaces. These companies fetch high gross sales/net profit selling price multiples because of their established brand names and share of market.
The potential for the dental implant market in the United States is significant. Although studies show increased tooth retention among those aged 65 years and older, millions of Americans have lost some or all of their teeth.
Tooth loss is most pronounced among the elderly, and data show the population in developed countries is aging and will continue to do so. In the United States, the baby-boomer generation is the major purchaser of elective plastic surgery and antiaging remedies. Boomers are the most affluent older generation ever in the United States and they will inherit the largest inflation-adjusted transfer of wealth in history: $10 trillion.5 Their propensity for discretionary spending has fueled remarkable growth in implant dentistry during the last decade. This boomer generation will swell the 65-year-plus population in the United States at annual rates of 1.5% to 3% from 2010 through 2035. Those older than 65 will increase from 12.4% of the population in 2000 to 20.6% in 2050 (Figure 2-2).6
(From the United States Census Bureau.)
Boomer-related implant growth can be counted on for at least another decade (Figure 2-3). Currently, implant market penetration in the United States is only 2%, according to Dr. Michael Sonick of Connecticut, writing for Contemporary Esthetics and Restorative Practice in 2006. That translates to 3.5 implants per 1000 people.7
(From the United States Census Bureau.)
Worldwide, dental implant costs vary widely. As of 2008, implants in the United States averaged $1800 in addition to the cost of a crown, and the cost of full-mouth reconstructions with implants started at $12,000 per arch.8 In the United Kingdom the price of a single-tooth implant, including prosthetics, was generally $2,000. In Turkey, it was $800.
A 2005 Millennium Research Group study showed that the U.S. market accounted for $370 million in dental implant sales, with an annual placement of 800,000. The average patient had two implants placed. Based on an average implant fee of $1500, the total 2005 dental practice revenue stream from placing implants was $1.2 billion, with an additional $1.2 billion in restorative revenue for a total of $2.4 billion. In 2007 the total number of implants placed in the United States was 1.7 million.9
As the trend toward mainstream status for dental implants continues, more general dentists will include implants as a core offering, especially for single-tooth replacements. Increasingly, they will be prodded by patients who desire a wider range of services. A 2007 survey from The Wealthy Dentist showed that 53% of general dentists in the United States offered the restoration of implants to their patients.9a Many qualified their answer by adding that they accepted straightforward cases but referred their more difficult cases to specialists.
The number of general practitioners in the United States surgically placing implants has not increased at a rate to match the expansion of the implant industry. Some dental schools have responded by adding implant treatment to predoctoral programs. Estimates place the numbers of dentists worldwide who offer dental implants at 140,000 out of approximately 940,000, or 15%. That percentage is projected to climb gradually, to as high as 40% by 2040.10
There is also a trend toward consolidation into large group practices in some parts of the country. This can bring a built-in referral base for an implant practice within a larger group. Benefits to patients can include longer hours of operation, a more accessible office, and a larger number of specialists within the same practice.
Implant dentistry represents significant revenue opportunities, particularly on a dollar-per-hour basis. The use of sedation, intravenous and nonintravenous, presents a growing auxiliary income stream.
“One of the problems for the general practitioner,” says Dr. Charles Blair, a dental practice consultant in the Charlotte, NC area, “is that the crown/custom abutment and implant index for laboratory cost can be quite high.” 11 The patient cost of a complete single implant crown, including surgery, can easily be in the $3000 range.
The clinical overhead cost for dental implants continues to rise as a percentage of the total cases. Included in overhead are the cost of the dental implant itself, the abutments and the other laboratory and prosthetic components, and, if required, membranes and bone grafting materials. This is in addition to the cost of general overhead, instruments, and disposables, such as anesthetic and sutures. Overhead also increases with the additional cost of implementing new technologies such as cone beam x-ray technologies and new growth factor biological products intended to promote faster healing. However, the additional costs of these new technologies lead to an improved quality of overall care as well as outcome.
High-volume dental implant practices will gradually pay more attention to incremental overhead because the volume of materials they use is significant enough to affect their total overhead and profitability. They will increasingly take advantage of opportunities for volume discounts and buy-ins. Many clinicians have more than one implant system in their offices and, as implant systems become less differentiated, it is likely that implant companies will have to adjust their pricing to retain market share with their larger-volume customers.
Because of variables in the total cost of implant treatment, including skill level, training, and practice overhead, a reduction in the cost of the dental implant itself is unlikely to make a significant difference in reducing the cost of patient treatment. Actually, as treatments become more complicated and require more site preparation, diagnostic CT scans, and other x-rays, the internal cost of treatment is more likely to rise than to fall.