DENTISTRY – PREPARE FOR “UNLOCK”

If, as seems to now be the case, the UK has reached the “first peak”, it would appear likely when SAGE reports to the Government, that the recommendation will be for a “phased return” to normal life after 7th May 2020. How will this gradual exit from hibernation that the economy has suffered impact on the healthcare professions and in particular, on dentistry and what will be the financial implications as a result? It is clear that having a coordinated plan in place will be essential for your practice. You will need to put some time aside to consider how you are going to market your practice, rebuild the value of your business and attempt to do so as efficiently as possible. Until central Government along with SAGE, the CDO, BDA and NHS England reach any decisions, it is hard to predict exactly which of the following scenarios we will see :-

a) Urgent Dental Care only • Social distancing to remain in place; • A reduction in the numbers of patients visiting practices due to the need for regular infection controls; • A requirement that proper PPE is available at all times; • A reduction in NHS funding – the current levels will not endure ad-infintum; • A revaluation of the NHS contract, given the inability to achieve UDA targets; • A consequent reduction in the value of dental practices

b) Short – medium term urgent dental care • Social distancing for longer than 3 months • A reduction in the numbers of patients visiting practices; • A requirement that proper PPE is available at all times;• A reduction in NHS funding – the current levels will not endure ad-infintum; • A revaluation of the NHS contract, given the inability to achieve UDA targets; • A consequent reduction in the value of dental practices in the short – medium term only

c) A gradual return to normal practice • Limited social distancing; • A requirement that proper PPE is available at all times; • All routine services will be available; • Practice valuations will recover in the medium term

d) Practices open for normal trading • End to social distancing; • All dental services will resume; • Performance levels will ramp up quickly; • Practice valuations return strongly

The most likely and pragmatic outcome, given the current line of thinking is a phased return. We will have a “new” type of dental profession, not seen before with very different approaches to PPE and business generally. We may also see practice values remain deflated for a period, but returning between 1-2 years after the reopening of practice. The demands placed on NHS and private practice will be somewhat different.

The following table illustrates this. NHS Private Guaranteed income Bank support will be required UDA terms may be altered Investment will be needed Patient safety will “trump” contract performance Safety will be paramount. Prices for treatment may change Top grade PPE will be essential PPE required as per NHS

Conclusion

Those dentists who have recently acquired practices will attempt to justify the price paid and those looking to retire, will seek to justify the price being asked. Contrary to that, associates looking to buy will use the state of the economy and the impact on EBITDA to reduce the offers made and the banks, private equity houses and venture capitalists will require a greater financial input from the borrower than before and will have stricter lending criteria. Dependent upon how we emerge from the current situation, the market will experience a period when the priority will be for practices to “get back on their feet”. After that, there is no reason for the transactional market not to return. Our view like many others, is that we are on a learning curve which is a new experience for us all.

We are here to help and have experienced specialists on hand to advise you. Please contact Jonathan Jacobs on [email protected] or 0161 667 3686. www.prosperitylaw.com