The dental industry in the UK has faced some challenges recently, with inflation and rising interest rates creating difficult economic conditions. However, a new report by Christie & Co titled Dental Market Review 2023 indicates that long-term confidence in the dental market remains strong.
While the first half of 2023 saw lower deal volumes due to the increased interest rates, demand is still high for quality private and mixed dental practices across the UK. This demand stems from an increased awareness of oral health and a patient base that prioritises dental care now more than ever before.
The Changing Dental Landscape
According to the report, the changing economic landscape coupled with ongoing workforce challenges has led some large corporate dental groups to re-evaluate their portfolios. Strategies have included mergers, acquisitions, and disposals to consolidate and strengthen market positions during this period of higher costs and uncertainty.
For example, major deals in 2022 included the merger between the Rodericks and Dental Partners portfolios, as well as the Portman Dental and Dentex merger completion. The four largest corporate groups – Bupa Dental Care, Mydentist, Portman/Dentex, and Rodericks/Dental Partners – now own 13% of dental practices in the UK.
However, most of the market remains independent, with private groups and working principals owning a high proportion of practices. The opportunities for new buyers to enter this robust market, especially for lower-priced practices, are plentiful.
Recruitment and Retention Challenges
Like many industries, recruiting and retaining staff remains one of the key challenges facing dental practices. The costs of hiring and retaining dentists and other skilled team members have increased. However, dental professionals report a cautious sense of optimism that the supply of dentists in the UK is gradually increasing. This could ease hiring pressures over time.
While economic instability could potentially reduce consumer spending and access to dental care, patient demand currently remains high. Both corporate and independent dental practice owners confirm that patients continue seeking dental services due to increased awareness of oral health. Preventative and cosmetic treatments are priorities for many patients today.
Sale Prices and Transaction Volumes
According to the Dental Market Review 2023, the average dental practice sale price increased 2.2% from 2021 to 2022. This is a smaller increase than the jump from 2020 to 2021, reflecting a stabilisation in prices after the volatility of the pandemic years.
Transaction volumes were particularly high in the first half of 2022. Significant group deals and acquisitions of large individual practices occurred during this busy M&A period. The latter half of 2022 also saw robust activity as major groups competed for larger private and mixed practices.
Overall, Christie & Co estimates approximately 430 dental practices were sold in the UK during 2022, excluding large corporate merger deals. While corporate transactions have declined compared to previous years, independent practices like martinacollins.com continue transacting at a healthy pace.
Key Factors Driving Continued Growth
Several factors indicate that opportunities exist for private dental practices in the UK to sustain growth despite the challenging economy:
- The ageing population requires more specialised dental treatments, creating demand.
- Advancements in technology are attracting new patients who value modern solutions.
- Preventative dental care is increasingly prioritised by health-conscious consumers.
- Regulations continue evolving to improve dental access and care quality.
- Strong patient demand is driving revenue for responsive, patient-focused practices.
- New buyers and investors are entering the market, expanding capacity.
By monitoring trends and proactively adapting to changes, private dental practices can overcome recruitment and economic challenges to capture growth in this resilient sector. Providing high-quality care, utilising technology, and focusing on prevention and patient needs will be key strategies for success.
While cost inflation and rising interest rates have created short-term uncertainty, private dentistry in the UK still shows promise and room for expansion. Demand remains strong for preventative and cosmetic treatments due to increased consumer focus on oral health. Dental groups continue evolving through mergers and acquisitions to build scale and efficiency.