Let’s look at the market in 1997 - the value of General Dentistry was estimated to be just over £2bn[1], with £1.495bn the value of NHS (combined patient and government spending) and just over £0.5bn from self pay and capitation in the private market. Coming right up to date in 2006 we have an estimated total value of £5.7bn[2] with £2.3bn from NHS and £3.4bn privately from self pay and capitation. The Private spend shows almost a 700% increase in provision over the past ten years, the majority of this through self pay method. The growth in this market, with a broadening range of treatment modalities, is way beyond anticipated growth and offers excellent opportunities both now and for the future.

So many things have changed over the ten years of GDP UK. In 1997 I imagine a 28.8k modem was the typical way of accessing emails and the internet – 56k if you were lucky, and then ISDN if you were in private practice. All this looks extremely slow compared with DSL, ADSL and Broadband. I possess a BlackBerry and find it invaluable with my work – the technology is incredible but it just gets taken for granted.

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Materials in dentistry have also moved on – I’ve lost track of which generation of bonding agent one should be using. Cerec 3 seems to be really improving - the number of implant companies at this years IDS in Cologne was literally in the hundreds. For those that have never been the IDS is well worth a visit. Quite motivational – you come back believing you are part of a most exciting growing industry. See you there in 2009?

Most practices now have websites and when you look at services they offer you almost have to check you are still on a dental site. Botox and dermal fillers, smile makeovers, whitening by the bucket load - how things have changed over the last ten years - what an exiting time we live in.

1997 seems to be the year when Corporate dentistry really started to ‘take off’ – in that year 62 practices were acquired or classed as new development by corporates. This is exactly the same number as the total for the previous seven years. 1997 was also the year when James Hull bought the corporate body Benedent Practices Ltd. and also in that year Oasis Dental Care Ltd. bought Dental Care (Northern). It’s hard to believe it only had just a handful of practices by the end of the 90’s. IDH had started much earlier as Petrie Tucker and Partners in about 1990 but with little activity until 1996, when with the purchase of PWS Dental laboratory and several other practices, Integrated Dental Holdings was formed. As we know rapid expansion has followed.

In 1997 Whitecross, started by the entrepreneurial Paul Mendlesohn in 1989 (now of CODE and a member of the group) was growing steadily – I believe it was also the first corporate body to be floated (in 1996). This was later acquired by IDH. 1996 had also seen the start of Dencare Management Ltd. with just three practices whilst not forgetting ADP Ltd which had started with one practice in Dorking in 1995.

In 1997 you would not have heard of Boots Dentalcare, Ora Dental (our 2000th member, Julian Perry, was heavily involved with this particular one) not even Specsavers or the Health Clinic – all these have come and gone in the last ten years. Boots business was acquired by Matland Ltd (owned by Optical Express who also acquired the Health Clinic) in 2005. Ora (with its 10 practices) was bought by Oasis in 2002. In 2003 Oasis then acquired Dencare Management and another 36 practices.

Specsavers very quickly called it a day when they realised their preferred business model of franchisees was not workable under the then present legislation. (However it would be now). Following a management buy out of Specsavers Dental, CDC Ltd. was formed, a small corporate in the South West, which earlier this year was sold to ADP.

Until recently though the larger corporates did not look that attractive. For many years the question has been asked “How do you make yourself a small fortune out of corporate dentistry?” – the answer was simple - “Start with a large fortune”!. High set up and running costs for high street locations combined with an additional management layer ate away at the bottom line. The economy of scale that so many talked about was not all that evident. The high costs of associates meant a major part of revenue was lost immediately. I am sure all have noticed that things though have been changing.

It is well documented that the days of the 50% associate are numbered. With 40% and even less becoming more the norm, this additional 10% drops straight to the bottom line making the dentistry business a lot more attractive.

Now you have Legal and General Venture investing over £100m (allegedly) in IDH in 2006 and now looking to sell their share valuing the 190 practices at £300m, Hutton Collins acquiring 40% of James Hull and Associates, ADP is now supported by the Icelandic Kaupthing Bank and finally, with lots of messages regarding this on GDP UK, Duke Street Capital have completed their purchase of Oasis – with over 90% of the share ownership accepting their increased offer they compulsorily acquired the remaining shares and finally de-registered the company from AIM taking it private again.

They have paid £135m[3] for the company – this appears a massive value for the total business, with a turnover of about £90m and assets ignoring goodwill previously estimated at just over £20m[4]. In effect, one could argue that’s over £115m for goodwill – making it about 125% - where’s that thread that said goodwill was worthless? Now before someone writes in I know this is not the way businesses are valued – investors look at multiples of EBITDA but I have just shown this example to help to put things in perspective. Well done to CEO Stephen Lambert and the rest of his management team.

Where is all this likely to lead. If you compare dentistry with the Optics market – in the 80’s it was mainly independents but now there are four or five high street brands, Dolland and Aitchison, Boots, Vision Express and of course Specsavers that are now dominating the market. Will it be the same in Dentistry – well it’s still a long way off, in fact it has only just started, but started is has. One thing I know, the investors will be looking for further growth and increased value – they must already believe they can achieve this - stripping out bad costs will be the first place they start.

No one really knows who is about to enter the market. With the sort of values being banded about this segment of the healthcare market will be attractive to many. The changes in the Dentist act allowing more than the 28 dental body corporates in July 2006 also brought with it the end of the previous register and as yet no new one (rumoured to be later this year) is available. So yes we have Genix Healthcare, Primecare, and also Superdrug have announced their three site pilot (with Smile Store) but who else is out there, who else is about to launch? Who has heard of Swiss Smile, launched in September with their first practice in London, just off Oxford Street? I look forward to reading the list when it is released – there will be some well known names I am sure.

Should individuals worry – for the majority I would say no. All the activity I have described has and will continue to grow the market. Evolve as dentistry evolves and not only will you survive you are likely to derive more pleasure from your work and more financial rewards, which certainly helps with the work:life balance thing.

Will there be casualties – absolutely. The uncertainty of 2009 and what that brings will be a factor. Also Corporate dentistry is not a licence to print money – under funded or poorly planned and managed projects will still fail. However there will be further winners in dentistry over the exciting coming years – I wish you all well and hope you are one of them. So, here’s to the next ten years Tony!