June 14, 2026 • 29 mins
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Download your Goodwill Report here: https://dentalelite.co.uk/goodwill-report/
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Goodwill gets talked about like it’s a casino, but the numbers tell a steadier story, and that’s exactly why we recorded this. We sit down with Luke Moore, co-founder of Dental Elite, to unpack the key takeaways from the Dental Elite Goodwill Report and explain the real forces behind the headline valuation stats. If you’re planning on buying your first dental practice, selling, or simply trying to understand where the UK dental practice market is heading, this conversation gives you a grounded framework to think clearly.
We dig into the “goodwill bubble” claim and why a 10 year view of the FMT multiple looks far flatter than the fear-driven narrative suggests, aside from the unusual COVID spike. From there we explore why valuations can still push higher: more confidence around interest rates, a renewed appetite for ownership among younger dentists, and the simple fact that dental practices have stayed resilient while other asset classes have felt shakier. We also talk about the reality behind profitability, including how principal earnings have risen in cash terms, why associate pay has not kept pace, and how practices have used pricing power to navigate inflation, wage costs and overheads.
Then we get practical. Luke explains how bank lending for dentists is shifting, with more competitive margins, longer repayment terms and options like repayment holidays, all of which change affordability and buyer behaviour. We also cover the supply squeeze that’s creating faster sales and competitive bidding, plus the changing corporate dentistry landscape as tier one and tier two groups return with sharper deal structures, sometimes offering all cash on completion.
Finally, we tackle one of the most surprising signals: NHS practice valuations. With recent NHS dental contract changes such as fluoride applications delivered via skill mix and improved payments for unscheduled care, NHS multiples are rising and groups are paying close attention.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Dr James (01:15):
So we're starting up to the dental podcast today.
We're here to talk about thetakeaway from Dental Elite
Google Report 2526.
This podcast is going to betelling the why behind the stats
and the report.
If you would like to downloadthe report, feel free to look in
the description of thispodcast.
(01:35):
It's gonna be linked by that.
That will go into all thestats.
What we'll be covering today issome of the key takeaways and
things that can be used to themore practical extent for people
who are considering buying thenext time practice to post this
episode.
As ever, you can claim your CPDfor this episode within the
official Dentists Who InvestSmart Money Members Club.
Smart Money Members Club alsoincludes multiple mini courses
(01:58):
and webinar series on financefor dentists, including how to
become as tax-efficient aspossible, as well as
understanding investing.
All this content counts asverifiable CPD, and you can
download your certificates thereand then upon completion of
each lesson.
In addition to this, we alsoinclude a whopping 10% discount
on your dental indemnity and a5% discount on lab bills for
(02:19):
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members.
Please use the link in thedescription to claim your
verifiable CPD for this episode.
Luke, familiar face in DentalWho Invest podcast, welcome
back.
Luke is, of course, the owner,co-founder of Dental Elite and
(02:41):
the Elite group, because there'sa few other strings to Luke's
bow, of course, and themastermind behind the Goodwill
report that we're here to talkabout today.
So, Luke, we're a blank canvasover here.
Where do you think is the bestplace to start whenever it comes
to talking about this reportand what's come out?
Luke (02:58):
Well, as you just said in your intro, the full Goodwill
report is available in theLinkedIn's podcast or indeed on
the Dental Elite website.
So what I'm not proposing thatI do is gonna sit here and spout
off load of stats to you.
Um, because all of that isavailable online, yeah, for
somebody who's to read it anddigest it, um, frankly.
And also, let's honest, if I'mreading the stats off the top of
the my head, I might make theodd number that's wrong.
(03:19):
So read it, read the read thegoodwill report, and then if
you've got any questions, feelfree to talk um to drop me a
line.
But I guess kind of what Ireally wanted to focus on in
this particular uh episode is tolook at the reasons why we
think certain things arehappening and indeed what we
think will happen over the nextyear.
Because I think the next yearis going to be really
interesting in terms of what thegoodwill market does, because
(03:41):
of course there's loads of kindof counter-effects that are
going on, which are all largelykind of macroeconomic.
You know, you've got thewarning around and all that kind
of stuff.
But then also there's some realchanges in the dental space,
which are actually reallyimpacting what's going on in
terms of the attractiveness ofpractices as we speak at the
moment.
Um, so I guess the first thingto kind of outset at the moment
is the goodwill report isdivided into two sections.
So the first section looks atwhat the dental groups are
(04:04):
doing, um, and the lattersection kind of looks at what
the independent market is doing.
Now, um, we will touch on sortof what the groups are doing in
a minute because that essenceoften feeds through and filters
down into what the independentmarket does, because often the
independent market sort offollows what the group market's
doing.
They let the group market setthe trends.
But most people I think who arelistening to this podcast are
at a position where potentiallythey're looking to buy a
(04:26):
practice, in which case they'reprobably going to be part of
that 70% of um of the practicesthat we sell, which are still
goes to people buying theirfirst, second, or third um
dental practice.
Um, now I guess the the bigthing that's kind of in the
report this year is that welooked at it over a 10-year
overview because I think there'slots in the press and lots of
the dental business gurus andthat all will use the phrase,
(04:47):
you know, the goodwill bubble.
So the bubble that's gonna popat some point.
And if you own a practice andyou don't sell now, are you
gonna be left holding the baby?
Um, and if you buy a practicenow, are you gonna be paying
well over the odds?
And then in two years' time,you're gonna have an asset which
is worth a fraction of what youpotentially paid for it.
And uh, what I like to thinkthe Goodwill report sets out
this year is actually if youlook at it over a 10-year time
(05:09):
frame, what we've seen isbasically a steady increase, um,
but it is a steady increase.
We're not seeing, as I think,with some of the press would
have you believe, these kind ofbig surges in in goodwill.
Um, you know, for instance, ifI look at the multiple of FMT,
which um for those of you thatwant to understand the acronym,
which stands for firm, so fairand maintainable trade, fair and
(05:30):
maintainable trade being in theadjusted net profit if you're a
full-time principal and youwork in there eight to ten
sessions a week.
So what you would earn bothyour for your clinical work and
from the profit from thebusiness of the practice, is
that multiple back in 2017 was3.32.
The multiple in this year'sreport is 3.31.
So frustratingly for astatistician, if you look at
(05:50):
where we are 10 years ago towhere we are now, actually we've
moved 0.01 of a multiple.
And we've had a few little youknow ups and downs over the
time.
So if you look at the COVIDyear, particularly, you know,
coming out back of COVID in2020, that multiple shot right
up to 3.8.
And one of the reasons why itshot right up is because we had
loads of associates who weremissed off that they didn't feel
they were paid properly duringthe during the pandemic or
(06:14):
didn't have control over theirown destiny, and they came back
into the market at that pointand they bought a load of
smaller practices because theyhadn't necessarily in their mind
budgeted to buy uh a densepractice, and that that led to a
surge in the market.
But then as we had the interestrate crisis, um, is that that
then damping back down?
So the height was 2020, 3.8,but we're sitting back now at
(06:37):
3.31.
Now, as we look at what'shappening at the moment and
where we predict it's going togo next year, we think that's
gonna go to 3.44, um, which isan increase from where we are
now.
Um, and I guess the questionfor that is is that that will
then be the second highest.
So that will be higher than anyother year that we've got to,
apart from the 2020 pandemic,which I think we can all pretty
(06:58):
much agree was a black swanevent and there was loads of
other stuff kind of impactingthat.
Um, and I guess the question iswhy is that?
Why we've suddenly paying moreprogress now than we were in
point over the last 10 years,say for that one year.
Um, and I think the truth ofthe matter is that there, even
though we've got all thesemacroeconomic factors kicking
off about inflation andpotentially what they're going
(07:18):
to do about interest rates, ismost people now take a
reasonable degree of comfortthat even if interest rates go
up a quarter return, we're notgoing to go up to the six or
seven percent that was perhapsonce feared in 2021, 2022.
So there's a there's a there'sa comfort over interest rates.
Secondly, I think what you'vegot is you've got a renewed
vigour in associates who want toown their own businesses.
(07:39):
So we went for a period of timewhere we had lots more kind of
career associates.
And actually, I think we'vealmost U-turned a little bit on
that now.
And we're speaking to dentistswho are younger, so two years
post-qualification, and actuallynow they're looking and go, I
really want to own my ownpractice.
And it's in truth why I don'treally know why we've had that
kind of U-turn.
I think some of that is becausewe do, or we are at the moment
(08:00):
graduating a moreentrepreneurial kind of dentist,
people like yourself, James,who are more interested in
fleecular platforms and reallylooking at what's going on with
their investments and what thewhat they should do and how they
can be more than a dentist umyou know for the rest of their
career.
And I think part of that aswell is that you've also had a
situation where people now areless interested in what the in
(08:23):
NHS dentistry.
So they're coming out ofuniversity and almost
immediately they want to doprivate dentistry um and they're
looking at how they can buildtheir Instagram profiles and how
they can build the kind ofdentistry they want to do, and
they want to do it on a moreflexible working time basis.
And of course, if you wantflexibility, the biggest thing
that goes with your flexibilityis being self-employed.
And whilst dentists in the mainare all self-employed, it's
(08:45):
kind of a weird nuance in thedentistry where they're kind of
not really self-employed, butthey just have that tax status.
Self-true self-employment iswhere basically you can dictate
when you turn up, what you turnup, and what you do.
And you only really kind of getthat if you're working, you
know, in your own practice.
Um, so I think part of that issome of the challenge as well.
(09:05):
Um, and then I think whatyou've got is you've also got
the ability when you look atother asset classes, is that
over the last few years, assetclasses are all over the place.
So you've got property, youknow, particularly now with you
know the sort of the Labourgovernment, you know, being a
landlord really isn't kind ofwhat you want to be because it
is almost like they've madelandlords the enemy.
And traditionally, I think alot of them would have invested
(09:26):
their money in propertyportfolios, and that's becoming
harder.
And if you look at commercialproperty portfolios, you've got
and you've really got to walkdown the high street, you know,
they're like ghost towns, tofind good commercial property
investments is really tough aswell.
So I think people look atdentry now and they go,
actually, do you know what?
Over the last 10 years, we'venever bad interest rates, we've
had inflation, we've got apandemic, and yet the biggest
(09:48):
thing that's been resilientacross that entire 10-year time
frame is dental practice.
Not a single point in that10-year says dental practice
gone.
Do you know what?
We're having a bit of a hardgame at the moment.
Or if we are, we're certainlynot having it as tough as anyone
else's.
Um, so I think that as well isgiving, you know, if you like, a
renewed confidence in dentalpractice.
And part of that is almostcompounded by the one of the
(10:08):
other findings in theindependent market in the
report, is it the from whilstthe goodwill report, multiple,
if you like, is pretty much likepretty much flat the other way
here or there, is that actuallyif you look at the average
revenue trend, or you look atthe average F and F F T, and I
don't mean FLT multiple, I meanthe average principal
profitability over the last 10years, those graphs are steady,
(10:30):
steady, steady, steady boom.
And they've all shot up,particularly in the last kind of
couple of years.
Now, some of that, of course,is because we've been in a more
inflationary environment.
So if you look at, and we'retalking numbers in cash terms
here as opposed to numbers inmultiples.
So some of that, if you'relooking at on a real terms
basis, yes, it's not quite asboom as may as maybe the graph
would make it look.
But I do think it is reflectiveof the fact that you've got
(10:53):
practices where actually theyhave been able to put up their
prices to meet inflation.
Um, you have had people who areprepared to pay it.
Some of that is because comingup for that improvement, people
have a lot of more money intheir pocket.
And then what that meant isthat actually they had a renewed
interest in how they look.
You know, we are part of theInstagram generation now.
So again, people are looking inthe cameras, looking in their
phones a lot more than theywere.
(11:14):
So generally, you know, theyounger sort of you know,
millennial or Gen Z, you know,are more interested in what
their teeth look like thanperhaps the couple of
generations before them.
Um, and so that has seen thatactually the average earnings of
a principal dentist um haveincreased um quite a lot over
that kind of 10-year time frame.
Dr James (11:31):
So specifically the principals, but not as much the
associates.
Luke (11:36):
Specifically the principals, and again, you've
kind of touched into where I wasgoing to go next, is that
actually if you look atassociate remuneration, whilst
associate remuneration has goneup a bit over the last sort of
few years because people havebeen able to demand more for UDA
because of some of therecruitment challenges.
Dr James (11:51):
In sorry the origin, but in real terms it's gone up a
bit?
Luke (11:55):
In real terms it's gone up slightly.
Um but if but if you look at itin terms of how it's gone up um
in relation to principles, it'snot gone up by anywhere near
the same amount.
And some of that is becausethere's some downward pressures
on associate remuneration aswell.
So whilst there's upwardpressures on NHS, some of some
of the practices now wherethey've had to spend more money
(12:16):
or marketing or bank fees arehigher, is that you used to have
the 50% standard private freearrangement for associates, and
that has moved more towards 45to sort of 42.5% for an
experienced private book.
And some of that, in my view,is justified because you've got
a private principal who's spentthousands over the years
building that book throughmarketing or from maybe they
(12:36):
built it themselves and thenpassed it on.
So an associate's coming in andthey're not necessarily having
to do the legwork to build thatbook, but either way, it doesn't
change the statistics thatactually that 50% arrangement
isn't there in the same that itwas quite a few years ago.
Dr James (12:50):
Makes sense.
And by the way, just to behyper clear, you know, when you
were talking about principalearnings going up and that being
a trend, and it seems to begoing exponential as of
recently, we're not includingthe profitable the practice
profits in that this isliterally just their take-home,
is that correct?
Or their drawings?
Luke (13:05):
I would include the practice profits, so that's the
FNT.
So that's what they earn as anindependent dentist.
Um that's what they earn to asan independent dentist, both
from the business of thepractice and from their their
clinical work.
Dr James (13:17):
Oh, well, then that makes complete freaking sense,
right?
Even more so, because obviouslyif associate splits are going
down, that kind of stacks up,right?
Luke (13:26):
Yeah, and and whilst in this but whilst because we group
the report into groups andindependence, that won't include
practices that ultimately arebigger, but if then sold to the
dental groups, you'll see thatthere is the same trend in the
group practices as well.
Is even DAR over the last fiveyears has gone up from like 37
and a half percent in cashterms.
Um so there's been some bigsurges in practice profitability
(13:48):
in cash terms over the over thelast five years as well.
Dr James (13:51):
Interesting, because that seems to be uh against what
a lot of people uh you know,completely anecdotally, but so
many I always see so manyprinciples on social media being
like, man, it gets harder andit gets harder and harder.
Luke (14:05):
A lot of people are having to work harder for it because
we know we've had increases innational living wave, you've had
increases in employers'national insurance, there's been
inflation repression, materialsand outfits, there's been all
of that.
But the truth is that a lot ofprices have then been able to
alter their pricing structure tobetter navigate the way around
that.
And in a number of, well, youcould argue that in a number of
(14:26):
ways, those price increases havemore than offset those those
challenges.
If the anything is givenstoners good leverage for their
patients to be able to increasetheir prices because they've had
factors which are wider knownin the in the press.
So a patient goes, Oh, yeah, Iunderstand that I know now that
actually we're in a 6% or 7%inflationary environment.
So that's why I've got to pay10% more for my dentistry.
Dr James (14:49):
Fascinating.
Well, I didn't see that onecoming, but that's why we we
always measure the data beforewe draw our conclusions, right?
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Luke (16:46):
Yeah, so it's so that so that so that I think is quite
interesting.
And I think that that you dotell that with a market where
banks are more competitive thanthey ever have been.
Um and I don't necessarily meanthat in terms of you know what
people are paying, because don'tmean wrong, I've been doing
this a long time, and I canstill remember the days where
people paid 1% or 1.1% plus baseto borrow money to buy dental
(17:07):
practice, and we're not quite inthat territory, but probably
for the first time in sort ofquite a few years, we're now
talking interest rates that arejust below the two.
So we you know we are seeing1.8, 1.9% above base.
Um and equally we're seeinglending terms now on lots of
different features that can kindof that will work for different
people.
So some people are buyingpractices and then putting them
(17:28):
on a 12-month repayment holiday,which means they're just paying
interest for that 12-monthperiod, which gives them cash
flow back into the business ifthey want to invest in it or
get, you know, or put a newchair in and really grow that
business before they then justsay a cash flow here to repay
down that debt.
You've got some banks now whoare lending over a 20 to 25 year
term as opposed to a 10 to 15year term, which again elongates
(17:50):
out of that cash flow, soincreases the cash flow into the
business for people who've gotambitions to either take more
money out of the business orindeed to develop and grow their
business or buy a secondpractice um later down later
down the line.
Um, and as I said, you've gotinterest rates generally that
have kind of softened from thebusiness rate margin as well.
So for when you've got multiplebanks in the sector, which we
(18:10):
have at the moment, um, then inthat respect, that also puts a
you know a really big up apressure on what people are
prepared to pay for practicebecause it becomes a lot more
accessible for you to buy them.
Um and it doesn't necessarilymake as much of a hit on what
they might have earned as anassociate as they're stepping
into a practice if they've gotyou know 25 years to pay about
the money as opposed to 10.
Dr James (18:29):
Crazy.
There we go.
So this is why you know it'slook as interesting, right?
Because before you and I hitrecording this podcast today, uh
we were we were just talkingabout the market, weren't we?
And you said that actually it'sas bubbly as ever, even though
we would have thought that uhpost the April post-April the
(18:50):
6th, now that B A B A B A D Rwent up by 4%, you might have
thought I thought there wouldhave been a bit of a slump there
because people were trying toget in before that date.
Uh, but perhaps it's thesefactors that are contributing to
the market being buoyant.
Luke (19:03):
Yeah, I mean, and just anecdotally is the fact that in
terms of vulnerable practices wesee every year, we're selling
pretty much the same as what wesold the past four or five
years.
Um and in one respect, that'salmost head scratching because I
blame the ADR changes formaking us busy and all that kind
of stuff.
And I've given up trying towork out why we get so many
people now that call us up everyyear looking to sell our
practice.
(19:23):
Um, because every year there'sa different excuse.
But I think what is interestingis that if we had spoken 18
months ago and you'd said to me,how many practices we got on
the market, I would have saidsomewhere between 55 and 60.
Any given time we'd have thatmany practices on the market.
Now, as that sounds at themoment, and that has been the
case for the last six months orso, we have only somewhere
between 30 to 35 practices onthe market.
(19:44):
That's a massive drop.
That's that's 40% lesspractices on the market, but
we're not selling any less.
We're selling the same volumeof practices that we sold
before.
So, which um and which means isthat we're selling faster.
So practices are coming tomarket and lost the market
within sort of you know three,four weeks of coming to market,
as opposed to it being a 12-weekmarketing process.
(20:05):
So there's been that almostthat expertise, and that again
demonstrates that competitivetension um within the market
when people, when practice iscoming to market, and then you
know, being totally founded, isthat we've had situations,
there's two situations over thelast fortnight where we've had
explainful buyers because theyhaven't been able to view a
practice.
Because we've had situationslike we had a site in London
(20:25):
where he did 16 viewings all onthe first weekend, he got
something like eight askingprice offers and over-asker
price, and even though there wasanother you know, got like 10,
12 viewings but in, he said, Ican't be asked.
I don't want to do theviewings, I've got more than
what I thought for my practicealready.
Um, and I don't want to do theviewings.
So, of course, if you want tobuy that's going in week weekend
number two, you're like, Well,that's not fair.
(20:46):
And in reality, it's not fair,you know, it's it's ultimately,
but I can't make vendors doviewings, and then when you've
got a market that has got thatis that competitive, um, is
actually that that is what ishappening, is you know, speed is
of the essence sometimes.
Dr James (21:00):
Good time to sell if someone's thinking about it
then.
Luke (21:03):
So uh yeah, and I guess that's the other thing I was
going to talk about, is is isthat how the market is moving a
little bit on the group side.
Because on the group side, whatwe've seen is a resurgence, is
the tier threes and tier fours,which you know, for those who
haven't listened to me before,basically is people own
somewhere between three andtwenty dental practices, and
then we group them into tier oneand tier two.
There were people that own morethan 20 dental practices, with
(21:24):
tier one being the big five andtier two being anyone below
that.
Um, is that this year we've hada flipping, is that last year
tier three and tier four werethe busiest groups.
They it was all about the smallgroups, they were doing the
deals, they were out therebuying fluences, and the tier
ones and tier twos were reallystruggling because their private
experts or their investors weresaying, Well, you know, we want
(21:45):
you to buy practice on a 70%initial consideration and 30%
preferred basis.
And that's you know, that's howwe want to do it because then
we're hedging our risk when wewhen we bought a practice.
Now, what that meant a lot allof last year is that the tier
fours would come in and say,Well, I'll give you 90% off
front, or I'll give you all ofthe money on completion.
Um, and if you were sat as avendor, you'd go, Well, of
(22:06):
course, I'm going to take thetier four offer because they are
burning hands as well as tunabush.
For those of you intoinvestment, the net present
value of 90% of your hand is alot better.
Probably it's a 90% of theincome of money in your hand is
a lot better than probablyhaving 70% and then a slightly
higher 30% later down the line.
Um, by the time you've kind ofworked it all out.
Um, and and generally there'sthat whole idea of just it feels
(22:29):
better because you've got themoney, you feel safer.
Um, so a lot of those prats aresold to tier fours, um, even at
a slightly lower price, becauseactually that was what the
principal wanted.
Now, that meant tier one andtier two really struggled last
year to kind of get off theground in terms of making
acquisitions because they wereuncompetitive and they weren't
uncompetitive on price, theywere often uncompetitive on deal
(22:51):
structure more so.
So they have to go back totheir investors over the last
year and say, look, we can'tmake acquisitions on this basis,
we just can't do it.
We're being outbid by the localoperators.
And now you've got all of asudden a tier one and tier two
coming back into the market andoffering competitive on price,
but also now offering reallycompetitive on deal terms.
And you know, they are thenable to make those gains because
(23:13):
some people have.
Prefer to sell to Tier One orTier Two because they've taken
the view that they think they'remore likely to get the money,
or they don't then have a bankinvolved, so they're happier
with that and pull thatinfrastructure because they're
able to move a bit faster.
Um, and so we've had a lot ofthat.
I mean, I didn't think I'd eversee a day where I'd see a tier
one, which is one of the bigfive dental corporates, you
know, do multiple offers withall of the money on completion.
(23:35):
And we've had that on four orfive opportunities recently
where they have given no thirdconsideration whatsoever.
It's like, here you go, here'sseven million quid, I'll give it
to you on the day ofcompletion, and you can walk
around six months later.
We just did not see those dealsthree years ago.
Dr James (23:50):
There we go.
Okay, interesting.
Well, uh, just like I wassaying earlier, this is the the
beauty of having data uh rightin front of us so we can we can
we can observe these trends.
Uh so yeah, it is just worthshouting out one more time for
the listeners of the podcastthat if we do want to download
the full report, it is going tobe in the podcast description.
Luke, have we done a good jobof summarising all the the
(24:12):
headlines, I guess, from it, oris there more to it?
Luke (24:14):
I think so.
Yeah, the one other kind ofcrystal ballgazing point that we
think is really interesting uhis what's going on with NHS
multiples.
Is that NHS has kind of beenyou know the poor pauper, if you
like, for the last three orfour years.
Everyone's kind of wantedprivate practice.
And now, of course, we've hadthese adjustments to the NHS
contracts, which you know willallow them to nurses to provide
fluoride application, you know,at you know, half the UDA.
(24:36):
And a lot of producers aren'tpaying the nurses any extra, or
if they are, they're paying themmaybe a pound an hour, two
pounds an hour.
And say if they do floor, fourfluoride applications at a bit
of time twist up, four fluorideapplications in an hour.
Dr James (24:48):
Yeah, so yeah, okay, there you go.
You get that out of these.
Luke (24:52):
Uh that's two UDAs.
So arguably, if you're notpaying a dentist to do those two
UDAs, the price is £28 to thegood.
If you're paying your associate£14 the UDA, yet if you pay the
nurse a pound an hour extra todo them, you've saved yourself
in that spent £27 in that extraprofit.
Um, we think quite a lot of thegroups uh for this reason have
(25:13):
really caught on to this, andthat's the way they're going to
go, is they're going to push alot more work into therapists
and nurses, which is oftenthey're going to cheaper
delivery.
And so the NHS modules at themoment, because of course these
kind of challenges aren'tbudgeted into the evident dog
because people haven't beendoing it, is that so far NHS
module for this year is up to7.7 times, which exceeds NHS and
(25:34):
mixed and private practice byquite some margin.
Dr James (25:37):
And look, can I just highlight one thing?
Just highlight one thing forthe benefit of the listeners.
How you define NHS is 80% ofthe turnover or above being from
initial resources, right?
I remember you saying thatbefore, just for clarity to the
audience, because sometimes,because until we say that out
loud, people are like, Yeah, but100% NHS practices do they even
exist?
80% and above.
Luke (25:57):
80% 80% and above is an NHS practice.
So that multiple there that Ijust said around 7.7 times or
7.68 to be precise, is up from7.15 just in the last year.
And that's a that's a massiveswing.
Um and what we're seeing iswe've done one example in the
Midlands at the moment, oneexample in the South East, where
big NHS practices have gone tomarket and they have had seven
(26:17):
or eight, all of the big groupsall crawling over them, all
offering them well above askingprice to kind of get the you
know to secure the practice.
Um, and then even when anoffer's been accepted, is then
they come back and they counteragain.
It's that's the whole biddingprocess reopens again because
they have to they keepcountering.
Um because I think theyrecognize that actually the the
potentially the dar on thesenational health practices is
(26:39):
going to increase significantlynow.
We've had these slightalterations to the NHS contract.
Dr James (26:44):
That is really flipping fascinating.
I didn't actually know thatabout the NHS contract as well.
And that is that seems verysmall.
0.5 of UDA to apply fluoride.
I mean, that stacks.
That stacks a lot, particularlyif you're leveraging and
getting your team to do that.
Interestingly, any othercontract changes?
I didn't actually know that.
I'm curious.
Luke (27:03):
Yeah, there's a couple other contract changes.
The other big one is to doemergency dental care.
So you now get 80 pounds nowfor unscheduled care.
Um, and of course, a lot ofassociates used to be paid 1.2
UDAs for that unscheduled care.
So, again, if you were paid 14quid, you know, to make mass
easy, you'd be paying what, 15pounds 14 um for that delivery.
Um, and City Rass was getting1.2 UDAs for it.
(27:23):
So, you know, let's say they'vebeen getting £40 if you average
speaking for that.
They're now getting £80.
Um, and whilst some groups arepassing on some of that to their
associates, they're not passingall of it on.
So again, unscheduled care,which they now have to deliver
uh £8, was it £8.50.
Um a certain percentage of thecontract is unscheduled care,
which I should know that's in mymind.
(27:44):
Um, then that will needsubstantially increased
profitability um going forwardum on some of these practices
where they can meet theunscheduled care target.
Dr James (27:52):
Did not know that because I remember back in the
day pulling a tooth for 1.2UDAs.
No friggin' way, no way.
That's so much um uh how can Isay this potential for you to
cut cause yourself liability forfor a paltry 1.2 UDAs, you know
what I mean?
I uh that something needed tobe done there.
Any other ones?
I'm really curious now.
Luke (28:12):
Uh well they are they were meant to bring a new pathway, a
clinical pathway in thebeginning of June, but basically
they it's all gonna be pingtong and they weren't and the
NHS weren't ready for it, sothat's not been brought in.
But there is going to be analteration to um the pathway um
of some kind of complex tare,um, which will probably come in
now, I think later in the year.
Dr James (28:29):
There we go.
Luke, let's shout out that uhgoodwill report in the podcast
description one more time.
Feel free uh if you'relistening to this podcast to
download that, uh, everythingthat we talked about in today's
podcast and more in there, allthe juicy details, all the stuff
that we didn't have time tocover.
Luke, I think we've done anabsolutely resounding job.
Well, I shouldn't say me, we, Ishould say you actually,
(28:50):
because a lot of those factsthat were recounted came from
your side, of course.
So thank you as ever forappearing on the Dentist Invest
podcast.
If anybody wants to reach outto Luke personally, they can do
so via your what your website,Luke, which is Dental Elites on
URL.
Dental UK.
There we go.
Or you can of course find Lukeon the Dennis Invest Facebook
(29:12):
group.
Just go ahead and search LukeMurray.
In the meantime, Luke, I hopeyou have a smash and thoroughly
and we'll see each other againvery soon.
Luke (29:18):
Yeah,
So we're starting up to the dental podcast today.
We're here to talk about thetakeaway from Dental Elite
Google Report 2526.
This podcast is going to betelling the why behind the stats
and the report.
If you would like to downloadthe report, feel free to look in
the description of thispodcast.
(01:35):
It's gonna be linked by that.
That will go into all thestats.
What we'll be covering today issome of the key takeaways and
things that can be used to themore practical extent for people
who are considering buying thenext time practice to post this
episode.
As ever, you can claim your CPDfor this episode within the
official Dentists Who InvestSmart Money Members Club.
Smart Money Members Club alsoincludes multiple mini courses
(01:58):
and webinar series on financefor dentists, including how to
become as tax-efficient aspossible, as well as
understanding investing.
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download your certificates thereand then upon completion of
each lesson.
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on your dental indemnity and a5% discount on lab bills for
(02:19):
dental principals, amongst otherperks and discounts for
members.
Please use the link in thedescription to claim your
verifiable CPD for this episode.
Luke, familiar face in DentalWho Invest podcast, welcome
back.
Luke is, of course, the owner,co-founder of Dental Elite and
(02:41):
the Elite group, because there'sa few other strings to Luke's
bow, of course, and themastermind behind the Goodwill
report that we're here to talkabout today.
So, Luke, we're a blank canvasover here.
Where do you think is the bestplace to start whenever it comes
to talking about this reportand what's come out?
Luke (02:58):
Well, as you just said in your intro, the full Goodwill
report is available in theLinkedIn's podcast or indeed on
the Dental Elite website.
So what I'm not proposing thatI do is gonna sit here and spout
off load of stats to you.
Um, because all of that isavailable online, yeah, for
somebody who's to read it anddigest it, um, frankly.
And also, let's honest, if I'mreading the stats off the top of
the my head, I might make theodd number that's wrong.
(03:19):
So read it, read the read thegoodwill report, and then if
you've got any questions, feelfree to talk um to drop me a
line.
But I guess kind of what Ireally wanted to focus on in
this particular uh episode is tolook at the reasons why we
think certain things arehappening and indeed what we
think will happen over the nextyear.
Because I think the next yearis going to be really
interesting in terms of what thegoodwill market does, because
(03:41):
of course there's loads of kindof counter-effects that are
going on, which are all largelykind of macroeconomic.
You know, you've got thewarning around and all that kind
of stuff.
But then also there's some realchanges in the dental space,
which are actually reallyimpacting what's going on in
terms of the attractiveness ofpractices as we speak at the
moment.
Um, so I guess the first thingto kind of outset at the moment
is the goodwill report isdivided into two sections.
So the first section looks atwhat the dental groups are
(04:04):
doing, um, and the lattersection kind of looks at what
the independent market is doing.
Now, um, we will touch on sortof what the groups are doing in
a minute because that essenceoften feeds through and filters
down into what the independentmarket does, because often the
independent market sort offollows what the group market's
doing.
They let the group market setthe trends.
But most people I think who arelistening to this podcast are
at a position where potentiallythey're looking to buy a
(04:26):
practice, in which case they'reprobably going to be part of
that 70% of um of the practicesthat we sell, which are still
goes to people buying theirfirst, second, or third um
dental practice.
Um, now I guess the the bigthing that's kind of in the
report this year is that welooked at it over a 10-year
overview because I think there'slots in the press and lots of
the dental business gurus andthat all will use the phrase,
(04:47):
you know, the goodwill bubble.
So the bubble that's gonna popat some point.
And if you own a practice andyou don't sell now, are you
gonna be left holding the baby?
Um, and if you buy a practicenow, are you gonna be paying
well over the odds?
And then in two years' time,you're gonna have an asset which
is worth a fraction of what youpotentially paid for it.
And uh, what I like to thinkthe Goodwill report sets out
this year is actually if youlook at it over a 10-year time
(05:09):
frame, what we've seen isbasically a steady increase, um,
but it is a steady increase.
We're not seeing, as I think,with some of the press would
have you believe, these kind ofbig surges in in goodwill.
Um, you know, for instance, ifI look at the multiple of FMT,
which um for those of you thatwant to understand the acronym,
which stands for firm, so fairand maintainable trade, fair and
(05:30):
maintainable trade being in theadjusted net profit if you're a
full-time principal and youwork in there eight to ten
sessions a week.
So what you would earn bothyour for your clinical work and
from the profit from thebusiness of the practice, is
that multiple back in 2017 was3.32.
The multiple in this year'sreport is 3.31.
So frustratingly for astatistician, if you look at
(05:50):
where we are 10 years ago towhere we are now, actually we've
moved 0.01 of a multiple.
And we've had a few little youknow ups and downs over the
time.
So if you look at the COVIDyear, particularly, you know,
coming out back of COVID in2020, that multiple shot right
up to 3.8.
And one of the reasons why itshot right up is because we had
loads of associates who weremissed off that they didn't feel
they were paid properly duringthe during the pandemic or
(06:14):
didn't have control over theirown destiny, and they came back
into the market at that pointand they bought a load of
smaller practices because theyhadn't necessarily in their mind
budgeted to buy uh a densepractice, and that that led to a
surge in the market.
But then as we had the interestrate crisis, um, is that that
then damping back down?
So the height was 2020, 3.8,but we're sitting back now at
(06:37):
3.31.
Now, as we look at what'shappening at the moment and
where we predict it's going togo next year, we think that's
gonna go to 3.44, um, which isan increase from where we are
now.
Um, and I guess the questionfor that is is that that will
then be the second highest.
So that will be higher than anyother year that we've got to,
apart from the 2020 pandemic,which I think we can all pretty
(06:58):
much agree was a black swanevent and there was loads of
other stuff kind of impactingthat.
Um, and I guess the question iswhy is that?
Why we've suddenly paying moreprogress now than we were in
point over the last 10 years,say for that one year.
Um, and I think the truth ofthe matter is that there, even
though we've got all thesemacroeconomic factors kicking
off about inflation andpotentially what they're going
(07:18):
to do about interest rates, ismost people now take a
reasonable degree of comfortthat even if interest rates go
up a quarter return, we're notgoing to go up to the six or
seven percent that was perhapsonce feared in 2021, 2022.
So there's a there's a there'sa comfort over interest rates.
Secondly, I think what you'vegot is you've got a renewed
vigour in associates who want toown their own businesses.
(07:39):
So we went for a period of timewhere we had lots more kind of
career associates.
And actually, I think we'vealmost U-turned a little bit on
that now.
And we're speaking to dentistswho are younger, so two years
post-qualification, and actuallynow they're looking and go, I
really want to own my ownpractice.
And it's in truth why I don'treally know why we've had that
kind of U-turn.
I think some of that is becausewe do, or we are at the moment
(08:00):
graduating a moreentrepreneurial kind of dentist,
people like yourself, James,who are more interested in
fleecular platforms and reallylooking at what's going on with
their investments and what thewhat they should do and how they
can be more than a dentist umyou know for the rest of their
career.
And I think part of that aswell is that you've also had a
situation where people now areless interested in what the in
(08:23):
NHS dentistry.
So they're coming out ofuniversity and almost
immediately they want to doprivate dentistry um and they're
looking at how they can buildtheir Instagram profiles and how
they can build the kind ofdentistry they want to do, and
they want to do it on a moreflexible working time basis.
And of course, if you wantflexibility, the biggest thing
that goes with your flexibilityis being self-employed.
And whilst dentists in the mainare all self-employed, it's
(08:45):
kind of a weird nuance in thedentistry where they're kind of
not really self-employed, butthey just have that tax status.
Self-true self-employment iswhere basically you can dictate
when you turn up, what you turnup, and what you do.
And you only really kind of getthat if you're working, you
know, in your own practice.
Um, so I think part of that issome of the challenge as well.
(09:05):
Um, and then I think whatyou've got is you've also got
the ability when you look atother asset classes, is that
over the last few years, assetclasses are all over the place.
So you've got property, youknow, particularly now with you
know the sort of the Labourgovernment, you know, being a
landlord really isn't kind ofwhat you want to be because it
is almost like they've madelandlords the enemy.
And traditionally, I think alot of them would have invested
(09:26):
their money in propertyportfolios, and that's becoming
harder.
And if you look at commercialproperty portfolios, you've got
and you've really got to walkdown the high street, you know,
they're like ghost towns, tofind good commercial property
investments is really tough aswell.
So I think people look atdentry now and they go,
actually, do you know what?
Over the last 10 years, we'venever bad interest rates, we've
had inflation, we've got apandemic, and yet the biggest
(09:48):
thing that's been resilientacross that entire 10-year time
frame is dental practice.
Not a single point in that10-year says dental practice
gone.
Do you know what?
We're having a bit of a hardgame at the moment.
Or if we are, we're certainlynot having it as tough as anyone
else's.
Um, so I think that as well isgiving, you know, if you like, a
renewed confidence in dentalpractice.
And part of that is almostcompounded by the one of the
(10:08):
other findings in theindependent market in the
report, is it the from whilstthe goodwill report, multiple,
if you like, is pretty much likepretty much flat the other way
here or there, is that actuallyif you look at the average
revenue trend, or you look atthe average F and F F T, and I
don't mean FLT multiple, I meanthe average principal
profitability over the last 10years, those graphs are steady,
(10:30):
steady, steady, steady boom.
And they've all shot up,particularly in the last kind of
couple of years.
Now, some of that, of course,is because we've been in a more
inflationary environment.
So if you look at, and we'retalking numbers in cash terms
here as opposed to numbers inmultiples.
So some of that, if you'relooking at on a real terms
basis, yes, it's not quite asboom as may as maybe the graph
would make it look.
But I do think it is reflectiveof the fact that you've got
(10:53):
practices where actually theyhave been able to put up their
prices to meet inflation.
Um, you have had people who areprepared to pay it.
Some of that is because comingup for that improvement, people
have a lot of more money intheir pocket.
And then what that meant isthat actually they had a renewed
interest in how they look.
You know, we are part of theInstagram generation now.
So again, people are looking inthe cameras, looking in their
phones a lot more than theywere.
(11:14):
So generally, you know, theyounger sort of you know,
millennial or Gen Z, you know,are more interested in what
their teeth look like thanperhaps the couple of
generations before them.
Um, and so that has seen thatactually the average earnings of
a principal dentist um haveincreased um quite a lot over
that kind of 10-year time frame.
Dr James (11:31):
So specifically the principals, but not as much the
associates.
Luke (11:36):
Specifically the principals, and again, you've
kind of touched into where I wasgoing to go next, is that
actually if you look atassociate remuneration, whilst
associate remuneration has goneup a bit over the last sort of
few years because people havebeen able to demand more for UDA
because of some of therecruitment challenges.
Dr James (11:51):
In sorry the origin, but in real terms it's gone up a
bit?
Luke (11:55):
In real terms it's gone up slightly.
Um but if but if you look at itin terms of how it's gone up um
in relation to principles, it'snot gone up by anywhere near
the same amount.
And some of that is becausethere's some downward pressures
on associate remuneration aswell.
So whilst there's upwardpressures on NHS, some of some
of the practices now wherethey've had to spend more money
(12:16):
or marketing or bank fees arehigher, is that you used to have
the 50% standard private freearrangement for associates, and
that has moved more towards 45to sort of 42.5% for an
experienced private book.
And some of that, in my view,is justified because you've got
a private principal who's spentthousands over the years
building that book throughmarketing or from maybe they
(12:36):
built it themselves and thenpassed it on.
So an associate's coming in andthey're not necessarily having
to do the legwork to build thatbook, but either way, it doesn't
change the statistics thatactually that 50% arrangement
isn't there in the same that itwas quite a few years ago.
Dr James (12:50):
Makes sense.
And by the way, just to behyper clear, you know, when you
were talking about principalearnings going up and that being
a trend, and it seems to begoing exponential as of
recently, we're not includingthe profitable the practice
profits in that this isliterally just their take-home,
is that correct?
Or their drawings?
Luke (13:05):
I would include the practice profits, so that's the
FNT.
So that's what they earn as anindependent dentist.
Um that's what they earn to asan independent dentist, both
from the business of thepractice and from their their
clinical work.
Dr James (13:17):
Oh, well, then that makes complete freaking sense,
right?
Even more so, because obviouslyif associate splits are going
down, that kind of stacks up,right?
Luke (13:26):
Yeah, and and whilst in this but whilst because we group
the report into groups andindependence, that won't include
practices that ultimately arebigger, but if then sold to the
dental groups, you'll see thatthere is the same trend in the
group practices as well.
Is even DAR over the last fiveyears has gone up from like 37
and a half percent in cashterms.
Um so there's been some bigsurges in practice profitability
(13:48):
in cash terms over the over thelast five years as well.
Dr James (13:51):
Interesting, because that seems to be uh against what
a lot of people uh you know,completely anecdotally, but so
many I always see so manyprinciples on social media being
like, man, it gets harder andit gets harder and harder.
Luke (14:05):
A lot of people are having to work harder for it because
we know we've had increases innational living wave, you've had
increases in employers'national insurance, there's been
inflation repression, materialsand outfits, there's been all
of that.
But the truth is that a lot ofprices have then been able to
alter their pricing structure tobetter navigate the way around
that.
And in a number of, well, youcould argue that in a number of
(14:26):
ways, those price increases havemore than offset those those
challenges.
If the anything is givenstoners good leverage for their
patients to be able to increasetheir prices because they've had
factors which are wider knownin the in the press.
So a patient goes, Oh, yeah, Iunderstand that I know now that
actually we're in a 6% or 7%inflationary environment.
So that's why I've got to pay10% more for my dentistry.
Dr James (14:49):
Fascinating.
Well, I didn't see that onecoming, but that's why we we
always measure the data beforewe draw our conclusions, right?
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Luke (16:46):
Yeah, so it's so that so that so that I think is quite
interesting.
And I think that that you dotell that with a market where
banks are more competitive thanthey ever have been.
Um and I don't necessarily meanthat in terms of you know what
people are paying, because don'tmean wrong, I've been doing
this a long time, and I canstill remember the days where
people paid 1% or 1.1% plus baseto borrow money to buy dental
(17:07):
practice, and we're not quite inthat territory, but probably
for the first time in sort ofquite a few years, we're now
talking interest rates that arejust below the two.
So we you know we are seeing1.8, 1.9% above base.
Um and equally we're seeinglending terms now on lots of
different features that can kindof that will work for different
people.
So some people are buyingpractices and then putting them
(17:28):
on a 12-month repayment holiday,which means they're just paying
interest for that 12-monthperiod, which gives them cash
flow back into the business ifthey want to invest in it or
get, you know, or put a newchair in and really grow that
business before they then justsay a cash flow here to repay
down that debt.
You've got some banks now whoare lending over a 20 to 25 year
term as opposed to a 10 to 15year term, which again elongates
(17:50):
out of that cash flow, soincreases the cash flow into the
business for people who've gotambitions to either take more
money out of the business orindeed to develop and grow their
business or buy a secondpractice um later down later
down the line.
Um, and as I said, you've gotinterest rates generally that
have kind of softened from thebusiness rate margin as well.
So for when you've got multiplebanks in the sector, which we
(18:10):
have at the moment, um, then inthat respect, that also puts a
you know a really big up apressure on what people are
prepared to pay for practicebecause it becomes a lot more
accessible for you to buy them.
Um and it doesn't necessarilymake as much of a hit on what
they might have earned as anassociate as they're stepping
into a practice if they've gotyou know 25 years to pay about
the money as opposed to 10.
Dr James (18:29):
Crazy.
There we go.
So this is why you know it'slook as interesting, right?
Because before you and I hitrecording this podcast today, uh
we were we were just talkingabout the market, weren't we?
And you said that actually it'sas bubbly as ever, even though
we would have thought that uhpost the April post-April the
(18:50):
6th, now that B A B A B A D Rwent up by 4%, you might have
thought I thought there wouldhave been a bit of a slump there
because people were trying toget in before that date.
Uh, but perhaps it's thesefactors that are contributing to
the market being buoyant.
Luke (19:03):
Yeah, I mean, and just anecdotally is the fact that in
terms of vulnerable practices wesee every year, we're selling
pretty much the same as what wesold the past four or five
years.
Um and in one respect, that'salmost head scratching because I
blame the ADR changes formaking us busy and all that kind
of stuff.
And I've given up trying towork out why we get so many
people now that call us up everyyear looking to sell our
practice.
(19:23):
Um, because every year there'sa different excuse.
But I think what is interestingis that if we had spoken 18
months ago and you'd said to me,how many practices we got on
the market, I would have saidsomewhere between 55 and 60.
Any given time we'd have thatmany practices on the market.
Now, as that sounds at themoment, and that has been the
case for the last six months orso, we have only somewhere
between 30 to 35 practices onthe market.
(19:44):
That's a massive drop.
That's that's 40% lesspractices on the market, but
we're not selling any less.
We're selling the same volumeof practices that we sold
before.
So, which um and which means isthat we're selling faster.
So practices are coming tomarket and lost the market
within sort of you know three,four weeks of coming to market,
as opposed to it being a 12-weekmarketing process.
(20:05):
So there's been that almostthat expertise, and that again
demonstrates that competitivetension um within the market
when people, when practice iscoming to market, and then you
know, being totally founded, isthat we've had situations,
there's two situations over thelast fortnight where we've had
explainful buyers because theyhaven't been able to view a
practice.
Because we've had situationslike we had a site in London
(20:25):
where he did 16 viewings all onthe first weekend, he got
something like eight askingprice offers and over-asker
price, and even though there wasanother you know, got like 10,
12 viewings but in, he said, Ican't be asked.
I don't want to do theviewings, I've got more than
what I thought for my practicealready.
Um, and I don't want to do theviewings.
So, of course, if you want tobuy that's going in week weekend
number two, you're like, Well,that's not fair.
(20:46):
And in reality, it's not fair,you know, it's it's ultimately,
but I can't make vendors doviewings, and then when you've
got a market that has got thatis that competitive, um, is
actually that that is what ishappening, is you know, speed is
of the essence sometimes.
Dr James (21:00):
Good time to sell if someone's thinking about it
then.
Luke (21:03):
So uh yeah, and I guess that's the other thing I was
going to talk about, is is isthat how the market is moving a
little bit on the group side.
Because on the group side, whatwe've seen is a resurgence, is
the tier threes and tier fours,which you know, for those who
haven't listened to me before,basically is people own
somewhere between three andtwenty dental practices, and
then we group them into tier oneand tier two.
There were people that own morethan 20 dental practices, with
(21:24):
tier one being the big five andtier two being anyone below
that.
Um, is that this year we've hada flipping, is that last year
tier three and tier four werethe busiest groups.
They it was all about the smallgroups, they were doing the
deals, they were out therebuying fluences, and the tier
ones and tier twos were reallystruggling because their private
experts or their investors weresaying, Well, you know, we want
(21:45):
you to buy practice on a 70%initial consideration and 30%
preferred basis.
And that's you know, that's howwe want to do it because then
we're hedging our risk when wewhen we bought a practice.
Now, what that meant a lot allof last year is that the tier
fours would come in and say,Well, I'll give you 90% off
front, or I'll give you all ofthe money on completion.
Um, and if you were sat as avendor, you'd go, Well, of
(22:06):
course, I'm going to take thetier four offer because they are
burning hands as well as tunabush.
For those of you intoinvestment, the net present
value of 90% of your hand is alot better.
Probably it's a 90% of theincome of money in your hand is
a lot better than probablyhaving 70% and then a slightly
higher 30% later down the line.
Um, by the time you've kind ofworked it all out.
Um, and and generally there'sthat whole idea of just it feels
(22:29):
better because you've got themoney, you feel safer.
Um, so a lot of those prats aresold to tier fours, um, even at
a slightly lower price, becauseactually that was what the
principal wanted.
Now, that meant tier one andtier two really struggled last
year to kind of get off theground in terms of making
acquisitions because they wereuncompetitive and they weren't
uncompetitive on price, theywere often uncompetitive on deal
(22:51):
structure more so.
So they have to go back totheir investors over the last
year and say, look, we can'tmake acquisitions on this basis,
we just can't do it.
We're being outbid by the localoperators.
And now you've got all of asudden a tier one and tier two
coming back into the market andoffering competitive on price,
but also now offering reallycompetitive on deal terms.
And you know, they are thenable to make those gains because
(23:13):
some people have.
Prefer to sell to Tier One orTier Two because they've taken
the view that they think they'remore likely to get the money,
or they don't then have a bankinvolved, so they're happier
with that and pull thatinfrastructure because they're
able to move a bit faster.
Um, and so we've had a lot ofthat.
I mean, I didn't think I'd eversee a day where I'd see a tier
one, which is one of the bigfive dental corporates, you
know, do multiple offers withall of the money on completion.
(23:35):
And we've had that on four orfive opportunities recently
where they have given no thirdconsideration whatsoever.
It's like, here you go, here'sseven million quid, I'll give it
to you on the day ofcompletion, and you can walk
around six months later.
We just did not see those dealsthree years ago.
Dr James (23:50):
There we go.
Okay, interesting.
Well, uh, just like I wassaying earlier, this is the the
beauty of having data uh rightin front of us so we can we can
we can observe these trends.
Uh so yeah, it is just worthshouting out one more time for
the listeners of the podcastthat if we do want to download
the full report, it is going tobe in the podcast description.
Luke, have we done a good jobof summarising all the the
(24:12):
headlines, I guess, from it, oris there more to it?
Luke (24:14):
I think so.
Yeah, the one other kind ofcrystal ballgazing point that we
think is really interesting uhis what's going on with NHS
multiples.
Is that NHS has kind of beenyou know the poor pauper, if you
like, for the last three orfour years.
Everyone's kind of wantedprivate practice.
And now, of course, we've hadthese adjustments to the NHS
contracts, which you know willallow them to nurses to provide
fluoride application, you know,at you know, half the UDA.
(24:36):
And a lot of producers aren'tpaying the nurses any extra, or
if they are, they're paying themmaybe a pound an hour, two
pounds an hour.
And say if they do floor, fourfluoride applications at a bit
of time twist up, four fluorideapplications in an hour.
Dr James (24:48):
Yeah, so yeah, okay, there you go.
You get that out of these.
Luke (24:52):
Uh that's two UDAs.
So arguably, if you're notpaying a dentist to do those two
UDAs, the price is £28 to thegood.
If you're paying your associate£14 the UDA, yet if you pay the
nurse a pound an hour extra todo them, you've saved yourself
in that spent £27 in that extraprofit.
Um, we think quite a lot of thegroups uh for this reason have
(25:13):
really caught on to this, andthat's the way they're going to
go, is they're going to push alot more work into therapists
and nurses, which is oftenthey're going to cheaper
delivery.
And so the NHS modules at themoment, because of course these
kind of challenges aren'tbudgeted into the evident dog
because people haven't beendoing it, is that so far NHS
module for this year is up to7.7 times, which exceeds NHS and
(25:34):
mixed and private practice byquite some margin.
Dr James (25:37):
And look, can I just highlight one thing?
Just highlight one thing forthe benefit of the listeners.
How you define NHS is 80% ofthe turnover or above being from
initial resources, right?
I remember you saying thatbefore, just for clarity to the
audience, because sometimes,because until we say that out
loud, people are like, Yeah, but100% NHS practices do they even
exist?
80% and above.
Luke (25:57):
80% 80% and above is an NHS practice.
So that multiple there that Ijust said around 7.7 times or
7.68 to be precise, is up from7.15 just in the last year.
And that's a that's a massiveswing.
Um and what we're seeing iswe've done one example in the
Midlands at the moment, oneexample in the South East, where
big NHS practices have gone tomarket and they have had seven
(26:17):
or eight, all of the big groupsall crawling over them, all
offering them well above askingprice to kind of get the you
know to secure the practice.
Um, and then even when anoffer's been accepted, is then
they come back and they counteragain.
It's that's the whole biddingprocess reopens again because
they have to they keepcountering.
Um because I think theyrecognize that actually the the
potentially the dar on thesenational health practices is
(26:39):
going to increase significantlynow.
We've had these slightalterations to the NHS contract.
Dr James (26:44):
That is really flipping fascinating.
I didn't actually know thatabout the NHS contract as well.
And that is that seems verysmall.
0.5 of UDA to apply fluoride.
I mean, that stacks.
That stacks a lot, particularlyif you're leveraging and
getting your team to do that.
Interestingly, any othercontract changes?
I didn't actually know that.
I'm curious.
Luke (27:03):
Yeah, there's a couple other contract changes.
The other big one is to doemergency dental care.
So you now get 80 pounds nowfor unscheduled care.
Um, and of course, a lot ofassociates used to be paid 1.2
UDAs for that unscheduled care.
So, again, if you were paid 14quid, you know, to make mass
easy, you'd be paying what, 15pounds 14 um for that delivery.
Um, and City Rass was getting1.2 UDAs for it.
(27:23):
So, you know, let's say they'vebeen getting £40 if you average
speaking for that.
They're now getting £80.
Um, and whilst some groups arepassing on some of that to their
associates, they're not passingall of it on.
So again, unscheduled care,which they now have to deliver
uh £8, was it £8.50.
Um a certain percentage of thecontract is unscheduled care,
which I should know that's in mymind.
(27:44):
Um, then that will needsubstantially increased
profitability um going forwardum on some of these practices
where they can meet theunscheduled care target.
Dr James (27:52):
Did not know that because I remember back in the
day pulling a tooth for 1.2UDAs.
No friggin' way, no way.
That's so much um uh how can Isay this potential for you to
cut cause yourself liability forfor a paltry 1.2 UDAs, you know
what I mean?
I uh that something needed tobe done there.
Any other ones?
I'm really curious now.
Luke (28:12):
Uh well they are they were meant to bring a new pathway, a
clinical pathway in thebeginning of June, but basically
they it's all gonna be pingtong and they weren't and the
NHS weren't ready for it, sothat's not been brought in.
But there is going to be analteration to um the pathway um
of some kind of complex tare,um, which will probably come in
now, I think later in the year.
Dr James (28:29):
There we go.
Luke, let's shout out that uhgoodwill report in the podcast
description one more time.
Feel free uh if you'relistening to this podcast to
download that, uh, everythingthat we talked about in today's
podcast and more in there, allthe juicy details, all the stuff
that we didn't have time tocover.
Luke, I think we've done anabsolutely resounding job.
Well, I shouldn't say me, we, Ishould say you actually,
(28:50):
because a lot of those factsthat were recounted came from
your side, of course.
So thank you as ever forappearing on the Dentist Invest
podcast.
If anybody wants to reach outto Luke personally, they can do
so via your what your website,Luke, which is Dental Elites on
URL.
Dental UK.
There we go.
Or you can of course find Lukeon the Dennis Invest Facebook
(29:12):
group.
Just go ahead and search LukeMurray.
In the meantime, Luke, I hopeyou have a smash and thoroughly
and we'll see each other againvery soon.
Luke (29:18):
Yeah,
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