Practice sales and ownership – general dentistry still a winner

In a recent conversation, Practice Plan Director, Nigel Jones, asked Managing Director of Christie & Co’s medical team, Paul Graham (pictured),  about the changes he’s seen in the practice sales landscape.

Paul: A trend emerging that has been very stable is the demand for general private dentistry. We’ve heard the suggestion from operators that, when it comes to the more elective private treatments, they're working twice as hard to maintain the income levels that they were seeing post-pandemic.

We know those trends began because of the ‘Zoom boom’ and people having extra savings as they couldn't go on holiday, and suddenly oral health was at the forefront of everyone's minds. With the high-end elective treatments, there’s probably more sensitivity. It's still very much in the public mind and a trend that the consumer is leaning towards, but it’s probably a little more sensitive in terms of timing and cost. But general private dentistry is very stable now.

With the practices that we're speaking to who perhaps are thinking about coming to the market in six months or 12 months’ time, the feedback coming through is that general dentistry Is  a very stable part of the business.

Nigel: This is music to my ears in one sense because that's what we at Practice Plan are good at: supporting practices to develop the private side of their business. I'm concerned about where NHS dentistry goes in the future and worry that there'll be people that get squeezed out of any kind of dental care. So, my personal hope is that we redirect limited NHS budgets towards the people most in need because what you've just been describing has been our sense too.

We've not seen any impact of a cost-of-living crisis on our patient cancellation rates, for example, which a lot of people might assume we would see. I’ve noticed no difference in this from any other time throughout my career in membership plans. Which shows that private dentistry is holding up.

I alluded to the benefits of an NHS contract in terms of a perceived certainty, but I'm getting a sense that because of difficulties meeting activity targets, that is not necessarily seen in such a positive light nowadays, and I wondered how that impacted practice valuations.

Paul: I would say there's more scrutiny on NHS performance and the contract in place than ever before. There's a sense that, depending on the location and demand, there's a consumer and a population that still very much want to lean towards the NHS, but the issue is the framework, the access, and the lack of dentists delivering NHS dentistry. That's having a knock-on effect on the performance of some businesses.

Whereas in the past you could almost look beyond ‘We've had an NHS dentist leave and there's a blip in the trading figures and we've replaced that NHS dentist and suddenly we can shape the pro forma profit and loss account to suggest that going forward, this is corrected.’ That's becoming more of a challenge. Now, finding good NHS dentists to deliver NHS dentistry is a major implication in the current marketplace that is having a negative effect on valuations.

Nigel: That’s interesting. Probably for the whole of my career, there's been cross-subsidy from private dentistry to NHS, but it feels like it's reaching its limits now, especially with some of the rising costs we know about. We've grown consistently over the last few years very strongly, and that shows no signs of abating.

That in itself is interesting because most dentists that go private want to see fewer patients but spend more time per patient. But if they're seeing fewer patients, that means more patients are trying to find another practice that will see them, which gives confidence to people to go private because they think, ‘if the waiting lists are so strong, then it's a good time’. I get this sense that there is a momentum building for people to move towards the private sector. I think that Labour has been given a period of grace, but they're not really coming up with anything that is grounds for significant optimism. I wonder if that's your take?

Paul: Absolutely. I think that the stats that both of our respective businesses see validate that point entirely. While the sentiment of NHS dentistry has a place in the current market, and there's no question that is the case, the framework needs to be fixed or vastly improved. I think the enhancements, if we can call them that, over the last two years aren’t going the lengths that they need to go to fix the NHS contract, that is something we need to see from the Labour government. Will we see that is the big question.

Nigel: Indeed. If people approach you to ask what they would need to do to maximise their exit from ownership, what would be the key things you'd say a practice owner should look at?

Paul: Early preparation is key. There are a lot of operators who might think they need to have made the decision to sell before they do anything about it. Some do and we can help in that regard, but the best examples that we've dealt with are where we've had a relationship with an operator for three, even five years, before the point of exit. That allows us to get under the skin of the business. The operator gets to know what our business is about and ultimately enhances the operation.

There can be examples where the business is absolutely purring with activity and so it's just a continuation of what they're currently doing. Equally, there are times where we see there's a lack of head office, a lack of staff costs, the lab and material costs are too high, which need addressing. We also see businesses with a small NHS contract and then a regular fee per item, so the ability to be able to convert that into plan income is going to enhance value. So, the earlier we can have all of these conversations, the better.

You can listen to a longer version of this conversation in our latest episode of ‘In the Loupe’, our latest podcast series. [Insert QR code]

This year, Practice Plan celebrates 30 years of welcoming practices into the family, helping them to grow profitable businesses through the introduction of practice-branded membership plans. So, if you’re looking to switch provider or are considering a full or partial move away from the NHS and would like a provider who will hold your hand through the process whilst moving at a pace that’s right for you, why not start the conversation with Practice Plan, on 01691 684165, or for more information visit the Practice Plan website: https://www.practiceplan.co.uk

About Nigel

Nigel Jones is a Director at Practice Plan. He has been working in the dental sector for around 35 years and has a special interest in the development and future of NHS dentistry in the UK.

His knowledge and passion for dentistry has led him to become a trusted voice, offering invaluable advice on how to strategically and successfully run a practice and a member of Dentistry’s Top 50.

About Paul

Paul Graham joined Christie & Co’s Corporate Medical team in 2014 and ascended to the position of Head of Dental in the UK by 2019. Leading the brokerage division of the Dental sector, he has overseen numerous significant transactions, including several landmark UK deals, platform opportunities to Private Equity, and more than 100 corporate divestments. Under his direction, the team has advised on, valued, or sold over 6,800 dental businesses, capturing more than 50% of the current market share. As of January 2024, Paul serves as the Managing Director of the medical team, guiding a growing, multi-disciplinary group of agents and advisors, covering critical sectors such as Dentistry, Pharmacy, General Practice, and Veterinary, offering comprehensive brokerage and valuation services.

Outside of his professional life, Paul enjoys spending quality time with his family, especially days out with his wife and three daughters. He also cherishes city breaks to his favourite country, Italy, which provide a perfect escape and rejuvenation.