New NHS Contracts, the impact on valuations

2017 Feb 24

New NHS Contracts, the impact on valuations

arun | Samera News

Changes in the NHS

It is becoming more of a prospect that change is going to come in dentistry, possibly in 2-3 years and in a way of new NHS contracts.

Principals who own NHS dental practices are currently facing uncertainty as to what the future Contracts will look like in terms of remuneration, with a proposed way of capitation and UDAs, however out of all the prototypes from Type A and Type B, it is obvious that there is going to be a greater importance given to oral health assessment and patient care. Clearly a positive change or improvement for patients in certain areas, but what does this mean in relation to valuations and dental market activity?

Dental Market Activity

In terms of dental market activity, we don’t see how the contract reform could have an impact as there are approximately 700 practices for sale per year and there are in excess of 3,000 active buyers.

We at Samera have 3,476 active registered buyers, so demand is still outstripping supply by a considerable amount and dentistry will always be a necessity.

What changes can possibly impact the valuation or attractiveness of dental practices?

Impacts on Valuations

The obvious detrimental change would be if open ended contract’s (GDS) were to become time limited (PDS). This factor could be a deterrent for some investors or buyers. There is also some discussion around averaging the value of UDAs to the national average of £25, so UDAs value of £28, £29 etc would be penalised.

We are as we explained, possibly still a couple of years away from any reform, however any principals planning to sell or retire should consider doing so now to avoid potential uncertainty.

Contact us for a free and non-committal valuation report.

Further information on new NHS contracts

For more information on new NHS contracts, contact us today to speak to our expert team.

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About arun

Arun Mehra FCA is a world leading expert on Dental Business and CEO of Samera. He has extensive expertise on financing, deal structuring and tax issues arising in Dental Businesses.

Outside of Dentistry, you can probably find him with a backpack travelling around the world.