Price Bailey, a UK based ‘Top 40’ accountancy firm, reveals that the key to increasing dental revenues and improving exit potential, is operating on a ‘Mixed Practice Model’, balancing NHS work with private practice offerings. Here are the details;
According to Price Bailey, corporate buyers are moving sale offers away from practices who operate solely on NHS services. Data by Christie & Co supports this, revealing that in 2023, more than half (57%) of sale offers were given to practice offering mostly NHS services, but by H1 2024 this had dropped dramatically to just 8%, with 92% of offers going to mixed private or fully private practice instead. On revenue, a 2024 benchmarking survey by DentalElite found that mixed practices generated an average revenue of £926,515 per year, whereas private practices had an average revenue of between £800,967 to £823,673, representing 12% – 15% gap in revenue potential.
Commenting, Holly Gibson, Partner and Dental Business expert at Price Bailey says: “The revenue potential for mixed practices is attractive – an NHS contract gives a practice stability and guaranteed revenue. Whereas private practice, which comes at a higher cost to the patient, is reliant on the patient demand and ability to acquire private services, which has somewhat declined in light of the cost-of-living crisis.
Holly continues: “Practice margins are being squeezed due to the increase in lab costs, light and heat and other overheads, not forgetting staff costs and a mixed practice can, to some extent, better absorb these costs. But it is important to note, that while the NHS contract is a known quantum, this does mean that prices cannot be increased to accommodate the increased costs. In private dentistry the practice has full autonomy on their prices and certainly the more specialist and complex dentistry disciplines, which will demand a higher price.
“For mixed Practices they have the ability to access ‘the best of both worlds’ and can manage their EBITDA effectively, translating into lucrative exit opportunities and the acquirer interest we are seeing.”
Joel Mannix, Head of Dental at Christie & Co, also comments: “While demand for a variety of dental practices remains strong, financial limitations placed on NHS-focused practices – such as not being able to benefit from the increased Employment Allowance, which helps reduce staff-related costs – buyers may be more selective when considering these types of acquisitions. As a result, we may see growing interest in practices with mixed income streams or a larger private patient base, which are well-positioned to thrive under the changes introduced in the 2024 Autumn Budget.”
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