Dominating the national media headlines of late has been the now free delivery of NHS dental to all young people aged between 18 and 25 in Scotland. This means that 600,000 individuals will now benefit from free dentistry, encouraging attendance by young adults and laying the groundwork for a healthier future population. But this isn’t the only impact it will have. The newly expanded access to care will also affect dental practices from a business perspective, offering new opportunities to grow their patient base and secure a stable future for themselves.
Attracting new patients
The most important consequence of free dental care for young people will always be the improvement in oral health of the nation. Removing potential barriers to care for young patients and motivating them to establish good habits with frequent dental visits and support from early adulthood is a good way of protecting their health and wellbeing as they age. As young people tend to be more money-conscious – especially as they take steps towards financial independence – eliminating cost concerns can be hugely advantageous for getting them in the dental chair. They will be more likely to attend regular check-ups, maintain their oral hygiene and better appreciate the importance of their dental and general health.
From a business point of view, this opens the door to a new pool of patients to attract to the practice. It enables clinics to reach out specifically to young people in their communities and expand their patient base. This not only helps to grow the practice, but also affords greater diversity and job satisfaction for the dental team.
Building on the basics
Of course, the potential benefits go far beyond the initial growth in patients. If dental teams can connect with young people as they transition into adulthood, establish strong relationships with them, build rapport and trust, they are creating long-term stability for the business as well. Young people will come to value the support and service they receive from a professional team they know, encouraging their loyalty to the practice even once they are no longer eligible for free dental care.
Being able to attract young people to the practice for basic dental care also provides a new audience who may be interested in additional treatments such as cosmetic dentistry and anterior orthodontics. Individuals in this age bracket tend to place high importance on aesthetics and so are the perfect candidates for minimally invasive solutions such as tooth whitening or composite edge bonding. If they are attending the practice for routine care, they are well positioned to find out about these elective treatments or others and are more likely proceed with a team they already trust.
All of this will increase income for the practice and therefore its value as a business. It offers security that the practice has a stable patient base and ongoing earning potential. Should a principal decide to sell, both these factors will have an impact on practice price.
Firstly, higher turnover means higher profits, leading to a higher valuation. Secondly, the stability of NHS dental income creates a higher EBDITA (Earnings Before Depreciation, Interest, Tax and Amortisation) multiple – perhaps a multiple of 6x or 7x would be applied compared to 5x or 6x for a solely private practice in the same area. Given that EBITDA multiples are generally increasing across the board, this is a great way to maximise the potential of the practice when going to market.
As there is no restriction on the amount of NHS contract values in Scotland, the sky’s the limit as far as potential growth and value are concerned – the more patients you can attract and retain, the more the business will be worth. This is one of the greatest differences between practice valuations in Scotland and England, where the profitability of NHS practices is largely dictated by UDA rates and the total contract value.
Opportunities for associates
By the same logic, there is equally as much opportunity for associates to boost their earning potential as there is for principals to grow the business. As they typically receive 50% of the value of NHS dental care they deliver – opposed to a flat UDA rate in England and Wales – Scottish dentists can grow their income as they treat more patients. The focus on younger patients may also appeal to professionals who prioritise prevention and oral health education, with the chance to better engage with a new audience.
Healthier population, healthier business
Ultimately, the announcement of free dental care to young people in Scotland is a very positive message. It paves the way for healthier future generations and offers new opportunities for business growth and long-term stability. If you are looking to sell in the next few years, consider how you could help young people in your community while securing the future of your business for a successful transaction and highly attractive offering. Call Dental Elite for a free practice health check or for bespoke advice on how else you could boost the value of your business. Even the smallest changes you make now could have a massive impact on your bottom line in the years to come.