The Private Dentistry Industry Boom
The private dentistry market is enjoying increasing demand. But what’s driving this demand, who’s buying and what exactly are they demanding?
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There is a steady shift in demand for private dentistry. All the forecasts from the market analysts have been pointing to an increase between 2017 and 2020 of 10% in private general dental services, and 15% for private cosmetic work.
This compares to a forecast of 1.5% growth in expenditure on NHS dentistry. In its latest Dentistry UK market report, Laingbuisson suggests that the dentistry market was worth £7.1 billion in 2017/18. Being able to offer cosmetic procedures not available on the NHS is lucrative, and will mean additional profits as well as more professional satisfaction for the practitioners involved.
The NHS simply cannot cope with the demand. The NHS spend amounted to some £3.5 billion – while the private sector dentistry accounted for £3.6 billion.
This comes at a time when the NHS is facing increasing problems in funding and in retaining skilled people. Not only are UK-trained dentists becoming frustrated with the rewards, conditions, pressures and restrictions of the NHS, with Brexit worries are causing many practitioners who are EU nationals to return to their home countries.
What drives demand for private dentistry?
There are both pull and push factors at work.
The push is from an NHS which has problems with its scarce resources. With constant pressure to get more done with less, it is impossible to deliver the standards of care patients increasingly demand. NHS patients are increasingly turning to private treatment simply to get the basic care that they need. Patient care may suffer when there is a pressure of time and money on practitioners. Long waiting times compound dissatisfaction.
The pull factors may be an increasing awareness of cosmetic density and the possibility of being able to have the perfect Hollywood smile - and a willingness to invest in dental treatment as the key to creating the perfect image. Despite current economic concerns, there seems to be plenty of scope for private dentistry - indeed, going private may be the only way to deal with the pent-up demand for dental treatment.
Who is answering this demand?
Individual dentists are turning to private practice as a means to avoid the restrictions, frustrations and pressures of the NHS. Buying into existing partnerships and setting up squat practices may both be on the increase.
But it is not just individual dentists who are seeing the financial advantages of private practice. Eroding NHS margins mean that many multiple operators are turning to fully private dentistry – and the privatisation process is not restricted to the upmarket postcodes that might be the obvious candidates. Everyone needs the services of a dentist; increasingly, it seems, everyone is prepared to pay for that dentist’s services privately.
Who is buying private dentistry practices?
Corporates account for around 15% of the dental market and the large players are looking at expansion and consolidation. However, independent partnerships, multiple practice owners and even some independents are playing a crucial role in fuelling activity in the mid-market.
Wholly private dentists can earn £140,000 or more once they develop their practice and client list, meaning that many individuals are looking at the rewards of private practice, and the possibility of acquiring smaller practices.
Obviously, the high costs involved in buying a successful private practice may favour the corporate buyer, but new practices such as deferring part of the consideration and linking this deferred consideration to the retained principal’s tie-in period can make it easier for smaller participants to remain in the market.
The crucial factor seems to be finding the necessary funding.
Becoming a private dentist
The good news is that there may be funding solutions available at every level.
Of course, if you are currently a practice owner with an NHS contract you can simply start to introduce private patients to treat alongside your existing lists. You may even be able to persuade existing patients to make the leap to fee-paying if you are able to offer new services such as laser whitening, which the NHS will simply not fund.
You may need to invest in new equipment and in marketing your new business
If you are not a private practice owner you may want to buy into private practice as a partner. Partner Buy-ins are common with larger dental practices, while a Buyout may allow you to acquire the entire practice. The costs will reflect the turnover, and obviously, a new partner joining as a junior would pay considerably less than someone taking over an entire practice.
You will need to raise substantial funding: a solution such as a loan collateralised by the projected earnings from the business may be the most cost-effective.
Another solution can be to set up a new ‘squat’ practice. Paying for dental equipment, staff wages, taxes and other running costs while your new business establishes itself will still all add up - even if you buy used equipment, you are likely to need to budget more than £75,000 for everything you need to set up in practice.
Buying a large practice - or even a practice group - will require funding in the £1million plus level. This can be a challenge - but, at Rangewell, we can work with you to develop a dental finance package which could help you with your acquisition plans
Creating financial solutions for dental professionals
Because of your professional status, if you are setting up on your own, buying into established practice or acquiring a practice or group, many lenders will be happy to lend to you.
You represent a good lending risk, and lenders may even compete for your business.
At Rangewell, we can use that lender enthusiasm to negotiate the kind of rates and terms that you would be unable to negotiate yourself. Because we know all the lenders in the market, we know those to approach and the factors that will influence their decisions.
So as a dental professional, the first step to finding the most appropriate solution for your needs is simply to call us to see the kind of funding that can be available, and the deals you need to put it to work for you.
If you are ready to make the most of the private practice boom - from refinancing for dentists, goodwill loans for dentists jigsaw finance for dentists, or even finance for a squat dental practice. Contact us today to start your loan application.