Christie & Co predicts further consolidation within the dental sector
Demand remains strong across the value range and for all practice types throughout the dental sector, according to the latest annual report by specialist business property adviser, Christie & Co.
The report, ‘Business Outlook 2019: Navigate, Innovate, Accelerate,’ reflects on the themes, activity and challenges of the previous year and forecasts what 2019 might bring across the industries in which Christie & Co operates, including the dental sector.
The company reports that its dental sector performed well in 2018 and movement in average prices continued on an upward trajectory, albeit at a significantly lower rate than previous years, at 5.2%. The lack of supply of quality dental practices underpinned prices, particularly in the higher price ranges, and the market is predicted to become increasingly quality driven in 2019.
With an estimated 12% of practices in corporate ownership, the report predicts further market consolidation, particularly in the mid-market, as private equity backed groups and mini corporates compete for larger practices in order to grow their portfolios.
Despite fewer ‘marquee’ transactions in 2018 compared to 2017, which was inevitable given that four of the six largest corporate dental companies have been sold in the last 24 months, the report notes that banks continue to demonstrate good appetite for dentistry and the sector enjoys huge interest from private equity investors.
A notable shift in demand towards private dental practices characterised the sector in 2018, as the recruitment and retention of specialist skilled workers proved increasingly challenging for NHS operators.
Continued growth of the private pay market and the subsequent lack of associates will continue to place upward pressure on pay scales. The report identifies urbanicity, workforce trends, gross income and UDA contract performance as key factors influencing recruitment and retention issues.
Identifying Brexit as inextricably linked to the issues affecting the dental workforce, as the number of EEA and overseas qualified dentists continues to decline, the report suggests the Government should aim to welcome skilled dentists and immigration barriers should be reduced for dentists who qualified outside of the EEA to attract more dentists to the UK workforce.
Simon Hughes (above) Managing Director, Medical, at Christie & Co said: “2018 was another strong year in the transactional market, although price increases were more moderate than in previous years. We expect 2019 to be equally good with a better supply of dental practices coming onto the market.”
The full Business Outlook 2019 report is available on the Christie & Co website, click HERE.