The last supper

Last night I enjoyed my third (in as many months) delightful supper discussing the opportunity for a Private Equity investor looking at UK dentistry.

It happens largely as a result of my self-generated profile across social media. The flattering perception that I know people and things.

The same organisations and individuals haven’t focused their research to the extent that they have read my content, in which I anticipate the departure of the self-same investors from dentistry.

As recently as three weeks ago I spoke at The Dentistry Show and predicted that Private Equity would move on from dentistry and take it’s “flip, flog, float” mentality to other fertile business sectors (cue audiology and GP practices IMHO).

So why are they still sniffing around?

The answer emerges when you ask a few simple questions:

1. how do you think the current spate of Fitness to Practice investigations is affecting the confidence of the general practitioner and specialist?

2. when graduating, what % of young dentists are now actively seeking a career in ownership?

3. why are the corporates finding it so hard to recruit or develop productive associates?

4. what impact is Direct Access actually having?

5. given that Private Equity usually buy, aggregate and then rationalise variable costs to force improved profitability, how do you expect to achieve that in a market slowly dominated by global manufacturers and suppliers?

6. how are you going to avoid patient drift when a previously private owned practice is acquired and the long-term patient-dentist relationship is broken and replaced by a transient population of clinicians?

7. how do you think the impact of digital dentistry will affect the sector?

8. in a world of increasing patient awareness and litigation, how will you maintain standards?

9. to what extent do you plan to provide long-term care for your patients and long-term career pathways for your support teams and clinicians?

10. how will post-graduate education and research function in your business?

By and large, the answer from Private Equity to these questions is:

1. eh?

That’s because they have a much narrower frame of reference – I imagine their thought process goes something like this:

1. spot other Private Equity firms in the sector

2. research UK dentistry growth projections

3. buy practices at 4-6 times EBITDA

4. cut expenses

5. centralise admin and eliminate people

6. force clinician pay downwards

7. employ compliance team to make sure we don’t go to jail

8. build group

9. flip, flog or float in 4 years

10. get out of Dodge before it all goes to crap

Oh – and:

1. take a look at who the KOL’s are and take them out for supper

The problem with the last of these is that the Private Equity people arrive at that supper with an unfalsifiable hypothesis:

“we are all going to make a quick killing – look at what Duke Street, Bridgepoint, Carlyle have done – would you like to help us?”

…..and when people like me ask questions like those above, I can see their eyes glaze over as I wax lyrical about my last 23 years and the challenges that the profession faces:

1. This bloke is cynical – we took the wrong KOL for dinner

I don’t want to offend any of my supper hosts – they have been truly delightful people and the quality of the conversation has been high.

The whole experience has been confirmation, if it were needed, that UK dentistry in the last 15 years has been almost fatally wounded by the voracious appetite of short-term capitalism.

I remain hopeful that the Private Equity feeding frenzy will come to an end and I will see out the last 25 years of my career as a mentor to those who are in it for the longer term, for healthcare and for people.

It won’t make me wealthy but it will keep me happy – and occasionally very well fed.