Dr. Dev Patel, CEO & Founder of Dental Beauty Partners joins the Group Dentistry Now show and discusses:
- U.K dental market overview
- Dental Beauty Partners unique model
- U.K. challenges in dentistry
- The future of dentistry
- Much more
To find out more about Dental Beauty Partners visit – https://dentalbeautypartners.co.uk/
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I’d like to welcome everyone to the Group Dentistry Now Show. I’m Bill Neumann and as always, we appreciate everybody listening in today. I think we’re up to about 120 plus podcasts and always have great guests, always learn a lot. But the reason I bring that up, is I don’t think we’ve ever had anyone on our podcast from outside of North America, so it’s mostly US DSOs.
We have had a couple Canadian DSOs and representatives from DSOs on, but I don’t think we’ve actually had anybody from the UK on, for sure. It’s an interesting story. I do want to first off, Dr. Dev Patel, the CEO and founder of Dental Beauty Partners is with us. Dev, thanks for being here today.
Dr. Dev Patel:
Thanks for having me, Bill.
Wanted to set the stage for this and how Dev agreed to be on the podcast. Chicago mid-winter meeting and Ivoclar Vivadent happened to have a really great 100th birthday party celebration. Right before that celebration in Chicago, they did a DSO panel discussion and Dev happened to be sitting next to me on the panel. We had a couple folk, we had somebody from Aspen and we had somebody from Heartland.
When Dev and I were talking and he shared some great information, although it was only a 30-minute panel discussion, so there wasn’t a lot of time to share. But he shared some great info and I said, “Hey, we’d love to have you on the podcast.” Within a week, he’s on the podcast, so I appreciate you turning this around so quickly.
Dr. Dev Patel:
No, it’s how everything works in my life, Bill.
That’s good. Good. I’m glad. Yeah, we didn’t want to delay anything. If you wouldn’t mind, could you tell the audience a little bit about yourself?
Dr. Dev Patel:
Sure. I’m a dentist by profession. I graduated from the University of Manchester in 2012. A bit of an entrepreneur, had three companies in the last 10 years since I graduated, all three of which I’ve exited at least once now. I’m a very passionate dentist about trying to improve the quality of care for patients in the UK.
A lot of the historical care has always been about quick in-and-out, National Health Service, government-based dentistry, and I’m trying to really raise the bar to offer them best-in-class, out-of-pocket service that could really change the patient experience and their outcomes. But I can go on for years talking about myself if I wanted to, so I’ll stop there for now and talk more later on in the podcast.
Well, before we move on to some other things, so you mentioned you started three companies, right?
Dr. Dev Patel:
Would you mind talking a little bit about those organizations?
Dr. Dev Patel:
Sure. First one was two years after I graduated called Dental Circle. Dental Circle actually is an online networking platform, a bit like Facebook and LinkedIn mashed together. We wanted to create a closed professional network where you could communicate between peers, share cases, before and after photographs, have a portfolio of your work.
Your clinical history of what courses you’ve been onto, go into new courses that’ve been run and conferences, events, and also recruitment, all in one platform. We built this literally on a whim after I graduated, and it became the biggest platform in the UK within two years. We have half the UK dentists in the network now. Yeah, it’s quite a large platform.
That’s great. Yeah, that’s exciting. We built something similar for the dental industry called Dental Sales Pro back in 2008.
Same concept and ended up selling that to a medical publisher. Thinking along the same lines in the dental industry, just different audiences.
Dr. Dev Patel:
Yes, exactly. Second company was called Brushlink, which is still in the US from what I understand. I created a small device you can put onto a toothbrush, any toothbrush, which is the most important thing. Because the ones from Philips and Oral-B, as you know, are very expensive and they only tailor, they can only do very minimal accuracy into the data and for how well you brush. We could put the brush device onto any toothbrush, manual or electric, and essentially links to an app.
As you brush your teeth in real time, you can see where you’re brushing on the app and actually it can change your color from blue to white, as you’re brushing it off your teeth, the plaque. It gives you accurate data on how well you brushed, and that will give you clinical outcomes to improve your oral health. Then we link that up with some of the insurance companies and DSOs in the US, which is now from my understanding, still out there and launched. We integrated it with Dentrix and a few other softwares.
Yeah. It’s one of those products that I thought had a great passion for because in the UK globally, there’s still a lot of work being done to fix teeth, rather than just solving in the beginning just by brushing better. If you brush better and you remove all the plaque and chew off your teeth, that actually can solve a lot of issues before you even have to have one in the first place. Which is quite counterproductive when you’re a DSO because you’re trying to cut your own patient base off before or afterwards.
Yeah. It was one of the things I wanted to really launch and obviously, the US market being very bullish on IoT and technology, and employee healthcare, was it the right market to launch it in? We worked with companies like DentaQuest, Cigna and UHC, and a few others and seems to be going well. But we were acquired in 2020, and I’m no longer part of that company any more so moved on.
There you go.
Dr. Dev Patel:
The third company is my DSO. Yeah. Once again, tried to do something different in terms of the typical UK corporate model, which has always been about buy a business, own the whole thing 100%, and then get an investment on and keep growing it.
This is Dental Beauty Partners?
Dr. Dev Patel:
Okay. Well, I’ll pause there because I think we wanted to set the stage a little bit. Again, you’re in the UK, market’s a little bit different than it is in the US. So maybe give us a little bit of an overview of what’s going on in the UK, what is it like?
There’s government subsidies and then there’s out-of-pocket. Talk a little bit about that and then I’d love to find out about Dental Beauty Partners, because I think it’s really based on the way things exist now in the UK and maybe how to do things a bit better.
Dr. Dev Patel:
Sure, sure. The UK being a tiny, little island, we’ve got around 11,000 dental practices in the UK. A very small market versus the US, but still have around 11 billion pounds, which is whatever the exchange rate is these days in terms of actual market cap. It’s still a relatively decent sized market and is actually the largest out-of-pocket market in the UK for healthcare.
It’s still very much able to be driven by the out-of-pocket spending, which is very unique. Because almost every other part of the UK from optical, veterinary, obviously GP and hospital services is pretty much all government funded, and it’s almost all free of charge, all very heavily subsidized. It’s one of our big things in the UK, government’s got amazing health service called National Health Service.
If you pay taxes or even if you live in the UK, you get it free charge or very, very little cost. It’s a majority of the market where I say 80% of the market, patients come in to dentists under National Health Service as a patient. The very big portion versus I know Medicaid and other systems are much smaller portion of the market in the US. It’s there, it exists, it’s not fit for purpose in any way.
But it’s the culture that you pay taxes, you live in the UK, you go about NHS for anything. That’s caused a lot of issues over the last probably 10 to 15 years, because the contract changed from in 2006 where they used to pay you per item for each treatment. You did one filling, you got paid X amount of money for that filling. It wasn’t much, it was a small amount, but it was every single treatment.
What happened was, probably the same as the US, dentists took advantage of that and did loads of fillings for no reason, or loads of treatments for no reason. Then you got paid lots of money for that. They changed that to say we can have three bands now in 2006 onwards, up to say where each band you get paid a fixed amount for no matter how much you do per band. In Band 1, it’s cleans and exams, and diagnostics.
Band 2 is root canals, extractions and fillings, and Band 3 is anything through lab work. If I do 10 grounds, 10 onlays, dentures as well, it’s all the same cost and the same treatment. One payment, that’s it. You can imagine how much, we’re talking about 250 pounds for the top treatment for Band 3, 60 pounds for Band 2, and I think whatever 50 pounds for Band 1 now. The amount of money remuneration you get as the dentist, which is only I think 10 pounds for Band 1, 30 pounds at Band 2, 120 pounds at Band 3.
Basically, half of those is very minimal, to the point where you can’t even make enough money as if you worked in a supermarket. You’d make more money working there than you would in dentistry these days. That’s how low pay you get.
Let me make sure I understand this because this is much different than the US. These different bands, these three bands, so was Band 2 crowns and restorations? No, no, that’s Band 3.
Dr. Dev Patel:
Anything lab work, crowns, dentures.
Was Band 3.
Dr. Dev Patel:
Band 3. Anything non-lab work, perio, fillings, extractions, root canal, Band 2.
Got it. Okay. At Band 3, and you’re saying that there’s a fixed payment that the dentist receives, the provider receives back, whether it’s one crown or five crowns. Okay, all right.
Dr. Dev Patel:
Yeah. To make it worse, just think about Band 2. You get paid the same amount of money, which is 56 pounds, whatever it is, or 30 pounds to the dentist’s pocket, for doing an extraction or a root canal. Imagine what options everyone thinks about. Let’s all, let’s just spend an hour and a half doing a root canal, or I’ll just spend two minutes to do an extraction. That’s why we’ve got a health crisis now in the UK, because essentially the system’s broken.
If you’ve got such low payments and you’re not increasing the payments by even higher than inflation each year, and you’re not offering new contracts for new amounts of work to be done because you’ve maxed out your spending in the government, what do you do? You end up just pushing patients away from the NHS because of access issues. The funding in the UK is only enough to fund half the population for one exam for the whole year.
Everyone decides to go, “Let’s all get exam twice a year.” We couldn’t fund it. It’s crazy if you think about it, an eighth of the population going for the NHS. It’s really broken, underfunded and it’s been pushed, pushed, pushed for the last 10 years to the point now where we’ve see an excess of dentists moving away from the NHS. Going fully private, out-of-pocket and saying, “I’ve had enough of this now, I just want to go there.” The good thing about NHS is that it’s guaranteed money.
Like everybody in contracts, it’ll never, ever run out. It’s fixed. You hit the target, you get paid, which is stable income. But now after COVID, increase in terms of interest rates in the UK and inflation costs, people are saying, “I get a 4% increase in my contract value each year versus 8% inflation, doesn’t add up anymore.” Actually, making loss by having that contract. Yeah, it’s been a big shift and that’s really critical.
Because actually 10 years ago, some of the biggest DSOs in the UK now, were going crazy on buying these practices and contracts because there weren’t no new ones being made available. My dentist and person on the big, corporate DSOs in the UK with 500, 600 practices 10 years ago, which was back then some of the biggest in the world, were just trying to acquire every single possible contract they can put their hands on. It was like frenzy.
They were paying eight, nine times EBITDA for these practices 10 years ago, just to get their hands on these contracts they thought were evergreen, fixed income, guaranteed money. You hit your target, you get paid, great for your other charge capital growth for you to do a three or four-year exit. That all went downhill when then to start saying, “Well, we don’t want to insure this. We don’t want to be doing this kind of dentistry anymore.”
“We don’t want to be making ourselves some sort of machine, by seeing 50 people a day for 10-minute appointments just so we can hit these targets.” They’re saying, “Let’s just do more out-of-pocket work and see eight for the day properly, one hour each, and do some top dentistry now.” It’s become a bit of a dirty word, the NHS in terms of doing that kind of dentistry. No one wants to be doing it, it’s not a cool thing to be doing. It’s not in the culture of young dentists these days to be doing that kind of work.
As a result of that, you have my dentist, for example, had 650 practices, I think, when I graduated 10 years ago. They saw about 150 of them off in two different batches of the last 10 years because they were empty, physically empty, no one wants to work there. They were bad locations outside suburbs, plus they were very heavy on NHS contracts, which is making you work crazy amount of hours. I’m talking about an average dentist in the UK would deliver 6,000 UDAs full-time. Now, a UDA is a unit of activity.
One UDA for Band 1, which is that exam, remember the diagnostics. You get three UDAs no matter how many you do for Band 2, which is your fillings and then your fillings, extractions and perio. You get 12 UDAs for Band 3, which is your crowns and lab work, dentures, et cetera. To keep it simple, the average, normal dentist would do about 6,000 three or four years ago, that was the norm. These DSOs were buying practices that had to do 10,000 per chair just to hit targets, maybe even 12,000 per chair.
Imagine you’re doing 25 patients a day normally, like if you’re a busy dentist, they’re doing 50 people a day in one-way, clinical sessions every day, six days a week just to hit their targets, which you’d burn out. As a result of that, those practices were sold for nothing, for free of charge, one pound just to get rid of them off those DSOs’ balance sheets, loss-making. As I said to you when I met you, it’s a crazy thought that at one point, we had one of the biggest DSOs in the world.
Because we were very mature, we actually got this consolidation much earlier than the US, did it much earlier than other countries in the world. Now, they’ve gone backwards from 650 to 500.
Some of those practices just probably weren’t sold at all, they just shut down completely and then others were pretty much given away?
Dr. Dev Patel:
Yeah. It’s hard to shut them down because of the contract with the government, you have to give away for one pound or free of charge basically. Yeah, you just give them away basically.
Got it. Yeah. Very, very interesting. Okay, so that’s a little bit about the UK market. Really different than what’s going on here in the states right now anyway.
Talk about Dental Beauty Partners now, and it sounds like Dental Beauty Partners came out of this interesting landscape that you have in the UK.
Dr. Dev Patel:
Yeah. I’ll just add a few more points in the market. One of the biggest issues, which is not just the UK I think globally, has been recruitment for the last probably six, seven years.
That was because of those, the model issue. How do you have a model that is actually relevant for what the people in the market want?
Dr. Dev Patel:
When I graduated and when I got my first practice on my own in 2015, a couple of years out of graduating, I was going to 10, 15, 20 viewings a year trying to find the right practice for me. Took me a year and a half to find it after a few that fell through. When I found it, I was up against Bupa, which was Oasis back then. It was a very large DSO and my dentist, who both offered 10 times EBITDA on the fact I’m going to buy. I’m an individual, young guy, come from nothing trying to buy my first practice thinking, “How am I putting in 10 times one practice?”
I’ve put an offer in about eight times. Luckily, then they thought, “You know what? I like you more than these corporates, I’ll sell it to you.” I got lucky, right? I bought my first practice there, a bit better and lower price than it was on the market. What I realized was every group out there was doing the same thing, the exact same model. You’d buy a practice either on the NHS that was heavily NHS-focused or heavily private-focused.
You did a five-year run out or three-year run out, two-year run out where you typically get the vendors staying for two or three years. You give them 20%, 30% of the enterprise value over the next three years paying targets, and that’s how the model works. It’s all 100% owned by the same entity. But when you are up to a certain size of 100, 200, 300, 400, 500 clinics, you have so many different layers of red tape to get a new chair fixed, or to get some new materials. Or you get told by an area manager, who works for Walmart.
I worked for Walmart, for 15 supermarkets, I know more about it than you do about [inaudible 00:18:20] blocks to use. You wonder why there’s a huge churn of just talent in those practices. As soon as that earn out finished, that three year, four year tie-in, the vendor left, the best dentist in the practice left, and you got excess of staff just leaving. Then you just saw the revenue and EBITDA just drop from that eight, nine times you’re paying for, it went down by a number of 20%, 30%. You’re paying probably 14 times EBITDA for one practice and debt levels are never that good.
It was never like getting 14 times debt levels, it’s always like five or six maximum so there was a huge overleverage issue. What I realized from those four things, was you need to make a model where you’ve got local leadership, where you don’t have to have 10 different layers of democracy to get anything done. Secondly, you need to have complete clinical autonomy, which everyone says they do, but actually how do you do that and you identify some clinic on the ground? It’s impossible. The next one that was quite critical was location.
Do not buy that’s not in a good location where people want to be. I mean dentists, your staff, they’re not want to live there and they’re young, there you want a place to be. You can’t buy in a coastline or in the village in the middle of England. You’ve got to buy in an area where people will actually want to work and live, and they have no issues having downtime in six months of empty chair space. Then the fourth thing was how do you incentivize people to actually be part of a bigger thing?
Hundreds of ownership is all good for the PE guys or for the guys who own the business as a whole, but when you hit 5, 6, 10 practices, you’re not there anymore. You can’t influence business because you’re not physically in the practice anymore. Actually, you can’t be that 100 people with 200 practices or 500 practices in the future. Actually, all those things led to us thinking, “Let’s change the whole model and create the first of a DPO in the UK. Actually create a model, whereby if you’ve got a partner in the practice who’s young, entrepreneurial, ambitious.”
“Needs mentorship and help from some back-office side of things, finance, HR, marketing, et cetera, et cetera, together the partnership, you can really grow a business really well.” If you buy the right business in the UK, which is the majority of them, underutilized, not branded, no marketing, no specialties in-house, no patient journey. When you come to the UK and I hope one day you can come, Bill. But you look at a practice, it’s like a semi-detached house, that looks like it shouldn’t even be a medical building but it is, it’s the practice.
They have a surgery in a lounge and they use that as a practice. They say this is our practice because they’ve got a contract from the government, there’s no need to do any marketing because you’ve got guaranteed patients forever coming in that front door, because there’s a huge under supply of these contracts. You don’t have to do any marketing, no investment in the business, and no need to reinvest to grow it, or to make it more modern or anything. It’ll look very dingy and old, and that’s a norm in the UK and people think it’s normal.
Once you also add one more facet to that, it’s the fifth thing, which is actually make most modern, up-to-date, beautiful practice you can make in the UK, so actually you can attract new patients that people want to come and spend out-of-pocket for. Those are the five reasons why we did what we did, and then we created the first EPA where we would acquire a practice from an old vendor, who is probably not doing too much in terms of revenue or care, or numbered days in the business. It’s very much driven by a contract from the NHS.
It’s almost guaranteed money, but very, very small, two chairs, maybe 1, 2, 3 chairs running at any point. We then say, “All right. That’s got three or four empty rooms in that same building. Let’s add four more surgeries in that same building, opportunities as you call it.” Add four more, say it’s a six or seven, we’ll put a partner in now. We’ll come in, we’ll bring a new partner in, who’s been trained up by one of our team centrally or works across already as an associate, bring him in there as a partner with equity.
It’s a 51 full-asset model, and they’ll actually be our partner in the business and run it two, three days a week clinically and one day management, but actually be the heart of the business. By doing that, you have your same in the US model, your backend services, we call it shared service center in the UK. Below that, you have all your individual companies with partners at each one, running it and growing it from three to six chairs. We go from the eight times multiple to four times within the first probably 12 to 18 months.
Well, that’s great and I would assume that the younger dentists are looking for something like this. You touched on the recruitment, because we have issues here in the states especially. It was probably pre-COVID, but when COVID hit all of a sudden, we couldn’t find dental assistants, hygienists and dentists in some cases. It was just really a challenge. You talked about it from a recruitment standpoint.
Sounds like your model is what younger clinicians would want. I guess that’s where the name came from, Dental Beauty Partners. The practice is beautiful, it’s in a location that the dentist wants to practice as well, which is great. Talk about the issues with recruitment and retention of clinicians, and I guess you have dental nurses there as well, right?
Dr. Dev Patel:
Yeah. I’m still, well, consider myself a young dentist and just turned 33 so I’m still young.
Dr. Dev Patel:
I’m in that age group. I know what dentists in my age group, my friends, my network, what they want, okay? Actually, it’s not just about having a beautiful practice in a nice location, it’s the priceless piece of mentorship that you just can’t put a price on. That’s what they want because unfortunately in the UK, forget about the US, but you can’t have university in the UK.
You get experience of maybe doing one or two crowns, one or two root canals and maybe you’re lucky to do a few abstractions, and that is it in five years. That’s all you get training for. You come out completely blind to how the world works and everything in the world of dentistry. Only after the first year of training year, you do 10 times more, 100 times more than that from university, but you’re still not that great at doing actually the up-to-date, latest techniques, and all the best clinical treatments.
You have to do a lot of courses. I did 1,000 hours of CPD, which is continuum development within three years after I graduated, which is a lot. That’s like every weekend, every single week evening just doing courses, and masters diplomas in implants, although cosmetic treatments, all of it. I spent over 200,000 pounds on courses and I was like, “This doesn’t make any sense. I went to the university to spend five years, I learned nothing.”
Had to come out to spend all this money to do it myself and now I’ve just learned everything on my own. I had a mentor as well. Whereas now with our model, we’ve given some of the best dentists an option to buy a first practice, but also mentor dentists below them in their practice to become like them as well. That works so well because as a young dentist, yes, I live in London, a big city. Yes, I’ve got a nice practice to work with all the technology and the gadgets.
But more importantly I get teaching, I get mentorship on actually all those treatments I want to do courses on. I come back and do my first implant, or my first onlay, or my first Invisalign case, and I get to do it with my mentor holding my hand for the first five or six cases. The partner’s incentivized to do it because he’s like, “Well, actually for me, I’m not making his business grow by me grossing lots of money. I’m making it grow by everyone else grossing money for me.”
He’s incentivized to get them to grow more for business growth as well. It really works beautifully in terms of that whole what they want. But the two most important things were location and making sure you’ve got that private, out-of-pocket opportunity. If you’ve got lots of UDAs to deliver and you say, “You can come work for us, we will do 9,000 UDAs. They say, “No way.” It actually got worse after COVID. It went from 3,000 average in chair of what people wanted, to like 1,000 per chair now.
That’s like just doing emergencies and exams, that’s it. It’s really changing in the market all the time. We have to keep constantly changing our model about what we’re acquiring, what we’re looking at as a M&A point of view. Buying the right things of what dentists want, rather than buying what we thinks best and then realizing that no one wants to work there. Our model’s already driven by recruitment, if that makes any sense.
Yeah, it sure does. What year was Dental Beauty Partners formed?
Dr. Dev Patel:
- As we stand today, as it stands today, how many locations and you mentioned London, but where are those locations?
Dr. Dev Patel:
We’ve got 44 clinics right now and they’re in London, Manchester and Birmingham, so actually the three biggest cities. We recently did two platform acquisitions, small ones, with four clinics each last year in Manchester and Birmingham. They’re very much Denovo models, but we’ve obviously partnered with that mini group to then obviously grow out and take over the whole of that city in Manchester and Birmingham as well.
We are very much doing a strategic approach to the three biggest cities in the whole of the UK, maximizing those ones first. Then literally just circle around all those three towns, get a map, put a circle around it, we’re based all around those, and then the same with Manchester and the same with Birmingham.
Okay. You mentioned that pretty much all specialties are in-house, so you’re doing pretty much everything?
Dr. Dev Patel:
Yes, yes. Once again, we worked backwards, what do patients want now? We worked out what about recruitment, that’s great. Now you’ve got that, you’ve got all your chairs recruited for, you’ve got all your surgeries in the right places. Now how do you make it for patients? Patients want excellent, long hours after work or weekends. They want to have all of their dentistry in-house, not traveling an hour to see a perio specialist, an hour to see an implant guy.
They want to have state-of-the-art equipment and services; in terms of the way it looks and feels in the practice and that whole patient journey. They also want to have really good communication and education about what’s wrong with their teeth, and what option they’ve got and have everything available to them. Even though we have a contract with government, we give them all the options. We give normally a one hour to a 40-minute appointment for all new patients.
Even our existing patients we take over, it’s a really long time spent in total with them. We’ve got a 60-inch TV screen in all the practices, they can see their photographs of their teeth and SLR cameras about what’s wrong, along with iTero scanners or TRIOS scanners to show them before and after images. As well as taking with Pearl and x-rays, show them what you can do in terms of second opinion with Pearl. We have all these different options all within that one-hour appointment, that gives them an experience that they’ve never seen before.
Now remember, this is comparing to a normal NHS practice, which gives you 10 minutes, it’s a five-minute appointment. You come in, sit down, LA, filling, amalgam, out the door, done. That’s what normally happens. They don’t talk to you. No, don’t say, “Hi, Bill.” Just go in the mouth, open, out, in, five-minute appointment, that’s what you get. This is a whole new thing for them. They’re like, “Wow, this doesn’t exist even.” We’re offering it in locations where it’s close to them, not like having to travel two hours out of town.
They’re around really good locations around the London, Manchester, Birmingham area. Yeah. We’ve just created an in-house, multispecialty, multidisciplinary approach to dentistry that’s given the both high-end in New York [inaudible 00:29:33]. I don’t know whatever you’re talking about these days in America, but those top dentistry thing in America, we give you all the specialties in-house. We give that to all our practices all within a two-mile radius at least. The partners, because they obviously are incentivized to work together, they also refer between each other within our group as well.
There’s one CBCT for example, in a two-mile radius. They’ll do a hub and spoke model and refer to each other as well. It works really well, and it ticks the boxes of the patients.
Yeah, that sounds great. Tell me a little bit about what you see as the future for Dental Beauty Partners.
Dr. Dev Patel:
Yeah. Look, I think I met up with MB2 when I was out in Chicago, and I think it’s something similar to that from the sounds of it. We can keep growing as much as we can and keep going because we’re in a very unique position right now. No one’s doing what we’re doing in UK or in Europe. We’re the only ones doing it and I was amazed that MB2 was doing it well. I was really happy that someone else is doing it in the world, but doing that actual partnership model and growing it the way we’re doing it.
As a dentist coming out of university now working, you’ve got two options. You bite yourself or you bite of us, that is it. There’s no other options out there. The fact that only that option’s there and we’ve got a huge network of our current partners telling their friends and friends, we’ve got a lot of room to grow. We feel we can get to 100 sites in two years and keep flying it more and more above that. I think the only thing stopping us right now, is just the multiples in UK are getting even crazier than before.
With interest rates increasing and leverage multiples decreasing, they’re still keeping the multiples at nine times, which is obscene. But that’s for a solo, individual side, not even a group, a solo side. It just becomes that right now we’re thinking about doing more Denovo’s and focusing on that now. As I mentioned last time, that’s something that we really focus on this year. Try and do 10 of those this year, and see if that works. If that works, it could be a new way forward.
Yeah. That’s interesting the multiples are that high. Yeah. Denovo, and we’ve heard that here even in the states, that there are some groups that were traditionally acquisition based, which have started to do more Denovo’s just because of the cost of the acquisition. If you get good at it and it does take some practice, and you have a provider that you can put in that practice, then you’re in good shape.
But your model already seems like it makes sense. You have the right model from a recruitment perspective. Okay, so I asked you about the future of Dental Beauty Partners. What about the future of dentistry? I know that’s a giant topic but maybe in five minutes, what does that look like, at least in your eyes?
Dr. Dev Patel:
Yeah. I think it’s really exciting to be honest with you, because there’s so many new technologies coming out now, that I think are going to really change the way that we deliver dentistry and the way that we think about dentistry. I think it’s not that there’s so much data-driven dentistry out there now, in terms of the softwares that we’re giving. It’s making everything more standardized. I think from last 20 years ago, it was all much feel with your hands.
What do you thinks is right? Is that the right thing to do or wrong thing to do? Just because you’ve got good experience with your hands, now it’s very much about data, software, AI. Can we actually prove that that’s the right thing by doing it on a much bigger scale? Because no matter what happens, DSOs will become the future. It’s just the way the world works. Like any healthcare industry in the UK, veterinary, pharmacy, optical, they’ve all happened.
Same thing, 80% consolidated now, all owned by two or three big players, that’s it. That’ll happen in dentistry in the next five, 10 years in the UK, for sure. We’re already 35% owned by corporate. As amount of time, I think they’re saying five years it will be owned by 80%, so it’ll be DSO owned. When it’s DSO owned, how do you then scale up the quality of dentistry, and improve technologies and efficiencies? That comes from technology, simple as that.
It has to be technology led. I think we’ll start seeing more and more of these technologies becoming more normal practice of business as usual versus, “That AI was so cool two years ago, it was like the thing that might happen in five years.” There could be robots in five years doing implants from at this rate. I think technology is just going to change industry, and I think it’ll become a lot less inefficient. Right now, you think about a dentist and what they do for day-to-day work.
Only 10% of the work they do now, actually has to be done by a dentist. It could be done by a therapist or hygienist, or someone else or a machine even. A lot of it is basic stuff, but actually the bit you need to do is the crown preps and fillings, and some of that, extractions. I think you can become a lot more efficient and maybe make your streamline dentistry in terms of the way you work DSOs and take over. I also think that there’s going to be a lot more focus on competition.
Because when you do get these bigger DSOs, apart from the locations of where you are and who’s closer, I think that quality of service is going to become the deciding factor between that one or that one. I think if your quality of service and patient journey is right, you’ll win.
Let me make sure I got this right. Right now, the market in the UK is about 35% consolidated, and you’re thinking in the next five to 10 years it’s pretty much going to be dominated by group practices and DSOs.
Dr. Dev Patel:
Yeah, yeah. 20% of that is large corporates, 50% of that is mini corporates. The mini corporates are up less than 10 practices, who are all buying two or three more each right now anyway. I think five years maximum is probably what it’s going to be be before it gets to the point where it’s 70%. That tipping point where you start getting to two or three big players.
This year alone, the top 10 DSOs have all been eaten up by some of the top four five. You’ve had four or five big consolidation mergers already this year that led to two or three big groups only now. Yeah, it’s happening. It’s happening now, let alone in five years time, but it’s going to happen more and more for sure.
Yeah. That’s really what we’re seeing here as well. That really follows pretty closely as far as that 35%, that’s the number that I hear. Again, it depends on what qualifies as a DSO in somebody’s mind.
But I think that really in the five to 10-year outlook, we’ve heard 75% to 80% of the US will be consolidated by then, so very, very similar to what you’re seeing in the UK. Okay, Dev, this has been great. If people want to find out more about Dental Beauty Partners, how do they do that?
Dr. Dev Patel:
We’ve got a website, just dentalbeautypartners.co.uk, so check out the website. I’m on LinkedIn, you can always DM me directly. But happy to connect with anyone or talk a bit more about what we do.
We’ll drop Dev’s LinkedIn info in the show notes. It’s just in case you didn’t understand Dev with his UK British accent there, because he does speak a little quickly and we speak quickly here, it’s dentalbeautypartners.co.uk. It’s not.com, it’s dentalbeautypartners.co.uk.
Dr. Dev Patel:
But yeah, great stuff. It was a pleasure actually being on that panel discussion with you and it worked out really well. Thanks for taking the time out of your day to spend with the Group Dentistry Now audience.
Some great insights into what’s going on over there and we’ll keep our eyes on Dental Beauty Partners and how you grow in the next couple of years.
Dr. Dev Patel:
Thank you so much, Bill, for having me.
Yep. Thank you. Dr. Dev Patel, CEO and founder of Dental Beauty Partners. Again, all contact information will be in the show notes.
Thanks everybody for listening in today. This has been the Group Dentistry Now Show. Until next time, I’m Bill Neumann. Thanks for listening.