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Stop Giving Gold Back to Patients鈥擸ou re - DDS Refining

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					Stop Giving Gold Back to Patients…
You're Not Doing Them Any Favors                                                                                           by Kevin McKay
                                                                                                                                 Vice President
                                                                                                          DDS Refining, a division of Medidenta




I
     'm sure all of you have given a gold crown back to a           and what I came up with is surprisingly simple and
     patient at some point in your career, and it is becoming       advantageous for all parties. But first let me recount an
     increasingly common for patients to ask for their gold         experiment I carried out to test how the current marketplace
back. Some dentists don't even wait to be asked---they just         operates for the general public. This should reassure you that
give it to them. I understand the rationale behind the gesture:     just handing over the gold to your patients is doing them
you want to do what you think is fair. Also, you don't want a       no favor.
gold crown to come between you and a patient. That is
completely understandable. Initially, I thought the same thing.     The first thing I did was take a full-cast gold crown supplied
But if you stop to think about what your patients may be doing      from a lab that is a customer of ours. In this way, I knew the
with that gold, you might reconsider. I'd like to suggest an        alloy breakdown, so I was able to determine its value. The
alternative course of action.                                       crown weighed 3 grams and was worth roughly $70 in a $1700
                                                                    gold market. It is important to note that the lab must have
When I first got into the precious-metal refining business, gold      gotten it from a dentist they work with because there was
was trading for less than $300 an ounce, and generally              tooth structure and cement attached to the crown.
speaking most patients were not overly concerned about the
possible value of gold in their old crowns or inlays. Today,         Clearly, whatever your patients have been led to believe by the
however, with gold on a steady climb to over $1700 an ounce;         "We'll buy your gold!" ads that bombard them, they are at a distinct
it's a much different story. Spurred on by the "Cash for Gold"       disadvantage in that marketplace.
stores popping up all over the place, your patients may be
hoping for a windfall from their dental scrap, not realizing that   The next step was to decide how to fairly reproduce the
those stores make their profits by taking advantage of the           experience most patients have when they try to get value for
public's ignorance of what their gold is really worth. In fact,     their dental gold. It seems everyone is offering to buy gold
the original "Cash 4 Gold" operation was exposed for paying         nowadays, so there was no shortage of places to go. I decided
as little as 12% of the value of the gold their hapless customers   to visit two cash-for-gold stores, two pawnshops, and two
brought in. That's right – 12 cents on the dollar.                  jewelers. This test was done in the greater Chicagoland area.
                                                                    I am not going to name names, but I will give some details
In this new economic environment, I started to hear more and        about the transactions just to give you a glimpse into what
more that my customers were just giving the gold they               your patient may encounter.
removed to their patients. I was concerned about who was
really profiting from this practice. We had a short-lived
program whereby we would give envelopes to dentists to pass
on to their patients, who could then send their gold to us. To
be perfectly frank, it was a logistical and accounting
nightmare. For example, instead of paying one dentist for 6
months worth of scrap, we might be making separate
payments for single crowns to 50 or 60 individual patients.
Multiply that by hundreds of dentists and you will see the
added work involved. In addition, we are used to smelting and
assaying every scrap lot individually to determine the exact
value content, so this approach just didn't fit our company
policy.

I thought there had to be a better way that would make
everyone happy (except for the "Cash for Gold" rip-off artists),
Cash-for-gold store #1: The woman made it clear that I should          example, an inlay might be worth $15, whereas a full-cast
be prepared to sell it now or come back when I was ready. This         crown might be worth $50.) Also by making an offer in the
was before she had even quoted me anything. Her initial offer          $50 range you are implementing a buffer to make sure you
was $15, but since I was a really nice guy, she would go up to         aren’t overpaying but still paying more than elsewhere.
$18 (their standard 20% bonus for "niceness").
                                                                       By making such an offer of a credit of $50, you are doing two
Cash-for-gold store #2: Their approach was similar in that they        things: First, you are offering your patients more than double
were eager to buy the crown right away. After performing a             what they will likely get on the open market. Second, you are
"scratch test" (commonly used for jewelry to test karat strength),     providing them with an instant and safe solution, rather than
they "determined" that the crown was worth about $20.                  sending them out to fend for themselves in a hostile market
                                                                       environment. The average person would rather handle such a
Pawnshop #1: Just by looking at it the buyer "knew" that the           transaction quickly and, more importantly, with someone they
tooth would account for about two thirds of the total weight           already know and trust. I am confident that your patients will
(I would disagree) and that the metal might be worth $10 to $15.       appreciate such an offer.

Pawnshop #2: They were not very interested in buying the
crown at first, but then they surprisingly made the highest
offer so far at $25. I was told that this was a great deal, which
I should take on the spot.

Jewelry store #1: (I had to go to several stores to get two quotes):
I was told that it would be treated as 10 karat (41.66% gold
content) and that they could pay me $26. This person didn't
seem as interested in buying it as the other locations were.

Jewelry store #2: The woman wanted to let me know how much
she knew about "this kind of metal" as she had been doing this
kind of transaction for a long time. She assured me that no one
pays for any of the other precious metals in this type of sample       If you are just giving the crowns back to your patients now,
and that they buy more of this than anyone in the city. Her            then obviously you are not looking at scrap as an income
quote was $24.                                                         stream or a bonus. However, when you send six months' or a
                                                                       year's worth of crowns in, you will more than recover the
What I took away from this experiment is that it is common             amount represented by the credits you have offered your
practice to offer only 15% to 35% of a specimen's value and to         patients. If you don't want to make any profit from such scrap,
pressure customers to make quick decisions. This didn't                simply donate the surplus to your favorite charity or allow us,
surprise me because the overwhelming majority of these                 on your behalf, to contribute to a great cause like Operation
businesses are set up to take advantage of people who don't            Smile, which helps dentists around the world to immensely
have a good understanding of what they have. Clearly,                  improve the quality of children's lives. You might mention to
whatever your patients have been led to believe by the "We'll          your patients that this is what you and other dentists are doing.
buy your gold!" ads that bombard them, they are at a distinct
disadvantage in that marketplace.                                      Some of your patients will still want you to give them their
                                                                       crowns. By all means, do so. But I think you will be surprised
 The average person would rather handle such a transaction quickly     and pleased by how many of them will appreciate your gesture
 and, more importantly, with someone they already know and trust.      and will take you up on it.

Allow me to offer a solution. Before you give the crown back           Feel free to contact us with any questions regarding how to
to your patient, ask if he or she would like a credit off the bill.    fairly credit your patients based on current market values.
Just for purposes of illustration, I am going to use the dollar
amount of $50 based on the quotes received in my experiment.
(Obviously, with hundreds of different dental alloys on the
market and with the range of sizes of specimens that are
possible, a range of credit values would be appropriate. For                                          www.ddsrefining.com

				
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