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MediEstates - Key Challenges and Emerging Trends in Dental Practice Acquisitions
Key Challenges and Emerging Trends in Dental Practice Acquisitions

Key Challenges and Emerging Trends in Dental Practice Acquisitions

 

Dental practice acquisitions have become increasingly complex and competitive in recent years, posing challenges for dental professionals looking to acquire new practices. In this article, we will explore the current key challenges faced by dental professionals in acquiring practices, examine the evolving trends in dental practice acquisitions, and discuss strategies to overcome financial hurdles. Additionally, we will highlight the impact of technology, changing patient expectations, and regulatory considerations on dental practice acquisitions. Lastly, we will explore emerging trends and opportunities that may alleviate or exacerbate the challenges faced by dental professionals in the year 2023.

 

 

Current Key Challenges

 

  • Inflation: Dental professionals looking to acquire new practices face the challenge of rising costs associated with running and funding a practice. Inflation impacts the cost of borrowing and increases the cost of running a business, thereby affecting the overall financial viability of a practice acquisition.

 

  • Rising Bank of England Base Rate: The recent increase in the Bank of England base rate has further amplified the financial challenges for dental professionals. The higher interest rates make borrowing more expensive, potentially increasing the cost of financing a practice acquisition and running the business.

 

  • NHS Performance and Recruitment: Dental professionals acquiring practices with NHS contracts face the challenge of NHS performance metrics, such as UDA targets. Additionally, the desire amongst dental Associates to work within the private sector, alongside changing lifestyle trends driving a preference for part-time working hours has affected the availability of dental resources, making recruitment more challenging for Principal’s looking to build their team.

 

 

Evolving Trends in Dental Practice Acquisitions

 

Over the past 15 years, the volume of dental practice acquisitions has increased significantly. There is now a better understanding of the value of dental businesses, attracting a larger number of buyers. One notable trend is the growth of the "small group" market, where individuals or a group of individuals own between 3 and 20 practices. This market is highly competitive, with various business models driving its growth.

 

 

Specific Challenges in Different Regions or Markets

 

Well-located, well-run, and established dental practices in the local community are always in high demand. However, practices in less favourable areas may face additional recruitment challenges which in turn impacts upon their saleability. In terms of group or corporate acquisitions, practices with three or more surgeries, a healthy profit margin, an established team, and a strong community presence are particularly sought after.

 

 

Impact of Demographic Shifts on Dental Practice Acquisitions

 

Shifting lifestyle trends, particularly among millennials and Gen Z, have affected dentistry as a whole. These generations are seeking a better work-life balance and often prefer a portfolio career split between different practices and roles. This has resulted in a shortage of dental hours, primarily affecting NHS practices. To retain dentists within the NHS, Practice Owners are encouraging associates to build their private portfolio of work whilst delivering a smaller number of UDAs.

 

 

Role of Technology in Dental Practice Acquisitions

 

Technology plays a crucial role in enhancing practice workflows and improving the overall image of a dental practice. Technologically advanced practices are more attractive to patients, staff, and potential acquirers. Investing in clinical technology, such as CBCT scanners, and practice management technology, like digital accounting software and practice management systems, helps practices stay competitive and appealing.

 

 

Regulatory and Legal Considerations

 

Dental practice acquisitions involve several regulatory and legal considerations. Two key steps that can cause significant delays are the Care Quality Commission (CQC) registration process and property/lease considerations. It is essential for dental professionals to thoroughly understand these processes to avoid potential setbacks during an acquisition.

 

 

Adapting to Changing Patient Expectations and Preferences

 

Post-COVID-19, patients initially had spare funds, leading to a mini "Zoom" boom in private dentistry. However, as the cost of living and borrowing increased, patient preferences shifted towards affordable care. With more patients having to seek out private dental treatments, due to the shortage of NHS dentists, affordability is a key concern. To meet patient expectations and thrive, dental practices must create opportunities for affordable care through plan conversions or pay-as-you-go options.

 

 

Strategies to Overcome Financial Hurdles

 

Planning the purchase and sourcing funding are common financial hurdles faced by dental professionals. Effective business planning, including creating a comprehensive business plan, is crucial before seeking funding. It is recommended to seek advice and support from reputable financial institutions and explore the whole market to find the best funding deals.

 

 

Emerging Trends and Opportunities in 2023

 

Several emerging trends and opportunities can alleviate or exacerbate the challenges faced by dental professionals in acquiring practices in 2023. These include the rise of new practice (squat) setups, divestment or consolidation of group practices and the ongoing impact of inflation and interest rate increases on businesses.

 

 

Conclusion

 

Acquiring dental practices presents both challenges and opportunities for dental professionals. Understanding the current key challenges, evolving trends, and regulatory considerations is essential for successful practice acquisitions. Adapting to changing patient expectations, leveraging technology, and developing effective financial strategies will help dental professionals navigate the complex landscape of acquiring dental practices in 2023 and beyond.

 

For further information and expert guidance on dental practice acquisitions, contact MediEstates today. Our team of professionals is equipped with the knowledge and experience to support you throughout the entire acquisition process.

 

 

Posted by: Maja Thompson on

General Buyer Terms 

This agreement is in relation to MediEstates Limited whose registered office is at 1st Floor, Pacific House, Stanier Way, Wyvern Business Park, Derby, DE21 6BF acting for and on behalf of our clients ("the Vendors"); and yourself (Buyer's Name) in relation for an introduction to a prospective sale of a business as a going concern. By registering through this agreement I agree to all terms set out below:

  1. Definitions
    In this Agreement the following terms and phrases shall have the following meaning unless the context otherwise requires:

    Business
    Dental Practice business providing dental care. This business is under the MediEstates Ltd sale terms.
    Confidential Information
    Means the actual Vendors identity and all confidential information in respect of the Business, including, but not limited to, any ideas, business methods, prices, accounts, finance, marketing, research, development, manpower plans, processes, market opportunities, intentions, design rights, product information, customer lists or details, employees’ details, trade secrets, computer systems and software, and other matters connected with the products or services manufactured, marketed, provided or obtained by the Vendor, and information concerning the Vendor’s relationships with actual or potential clients or customers and the needs and requirements of such clients’ or customers’ operations.
  2. Obligation of Confidentiality
    The Prospective Purchaser agrees to treat as confidential, information supplied by or on behalf of the Vendor in connection with the sale of the Business.
  3. Exclusions
    The obligation of confidentiality set out in clause 2 does not apply to:
    1. any information received from a third party who was legally free at the time of disclosure to disclose it;
    2. any information which was already lawfully in the Prospective Purchaser’s possession prior to receiving it from MediEstates Ltd on behalf of the Vendor; and
    3. any information which is in its entirety already in the public domain.
  4. Duties of Prospective Purchaser
    1. The Prospective Purchaser shall take such a reasonable security measures to protect the Confidential Information and trade secrets.
    2. The Prospective Purchaser shall not, without the prior written consent of the Vendor, permit any of the Confidential Information:
      1. to be disclosed, other than in confidence to its legal or professional advisors;
      2. to be copied or reproduced;
      3. to be commercially exploited in any way;
      4. to be used for any purpose other than in connection with the prospective purchase of the Business;
      5. MediEstates is registered under the Data Protection Act 2018. Upon Signing this agreement you agree to follow the legal obligations of this act to protect the details of the information supplied to you, with it no to be passed outside of the control of you the prospective purchaser.
    3. The Prospective Purchaser agrees to keep a record of Confidential Information received.
    4. The Prospective Purchaser will return to MediEstates or the Vendor all documents containing Confidential Information and all copies of those documents on demand at any time which are in its possession or under its control, and for this purpose the term “documents” includes computer discs and all other materials capable of storing data and information. The Prospective Purchaser agrees that such documents remain the property of the MediEstates on behalf of the Vendor.
    5. The Prospective Purchaser must not jeopardise or re-direct the sale under any circumstances.
    6. The Prospective Purchaser must not contact the Local Area Team or CCG regarding any practice sale, by any means of media unless written permission is granted from the Vendor.
    7. To carry out own due diligence on practice purchases and accepts that any information MediEstates has supplied is information provided by the vendor and is not responsible for its accuracy or completeness.
  5. This Agreement
    The existence of this Agreement and its terms are confidential and neither MediEstates nor the Purchaser may disclose anything about this Agreement or its subject matter or implementation to any person other than in confidence to their legal or professional advisers.
  6. Duties of Prospective Purchaser
    When buying Dental practices, finance is normally needed. Our organisation operated over more than one of the MediHoldings brand, by completing this from you agree that the information can be shared to our other organisations to avoid the need to register independently and provide the best possible service.

    MediEstates will refer you to the specialist dental lending team and MediFinancial who will contact the necessary banks, whom have preferential healthcare lending rates in some cases, to ascertain which funding is available to you.
    By signing this agreement you do not have to use any of the banks MediFinancial contact, it is just another service which we provide.
  7. Deposit for Dental Practice
    If you are interested in putting forward a formal offer in for a practice, once the offer is accepted there will be a deposit required to secure the practice sale which is dependant of the practice size. This deposit is held in a client account and will be returned to the buyer on completion of the practice sale. You the buyer, will be required to sign a deposit schedule which will cover the buyer and the seller in the event that the practice sale does not proceed.
  8. Changes to this Agreement
    Any changes made to this agreement must be authorised and signed by one of MediEstates Ltd Directors.
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