Lenders upbeat on dental funding in 2021—report
LONDON, UK: More than one-third of UK practice owners report that private revenue is higher now than it was before the pandemic, according to an insider view on corporate and independent dental operators by London-based Christie & Co. The specialist property advisor says that, although banks are now taking a more cautious approach, they remain positive about lending to dentists and dental groups in 2021.
Christie & Co interviewed a cross section of independent and corporate dentists located across the UK about the performance of their businesses in 2020 and about their business outlook for this year. It found that many private operators were pleased with the speed of recovery that the dental market had shown in 2020. Some 35% of practice owners said that private revenue had increased to above pre-pandemic levels, and the trend of NHS patients electing to have private treatment owing to lengthy waiting times and difficulties getting dental appointments was reported.
More than 80% of respondents said that income from dental hygiene treatment was less than 50% of pre-pandemic levels, which the review said was indicative of the ongoing challenges related to restrictions concerning patient volumes. Around 85% of owners believed that revenue at their practice will have fully recovered by the end of the second quarter of this year, the review found.
Bank loans for dentists and clinic acquisitions in the pandemic
SARS-CoV-2-related disruptions to business activities in 2020 led to sales and purchases of dental clinics being postponed, and corporate operators therefore began 2021 by dealing with a backlog of new acquisitions. Despite the market upheaval, sales prices and demand for dental clinics had remained buoyant in 2020 and had returned to pre-pandemic levels this year, the review found.
“It’s encouraging that sentiment is so positive, and dentistry has weathered the COVID-19 storm so well to date”
– Paul Graham, Christie & Co
Lenders had revised their policies in 2020 and were now exercising greater caution when reviewing funding proposals from dentists, Christie & Co found. It explained that this caution included asking questions, for example about how trade at a dental practice or group of practices had been affected by the pandemic or whether a practice had returned to roughly pre-pandemic levels of trade. In addition, a higher cash deposit was often now required by lenders; however, most banks operating in the sector were continuing to finance dental loans, the review stated.
Christie & Co expect that demand for general private and mixed dental practices will remain strong this year, increasing competition from corporate and group buyers. The demand for specialist dental clinics is also expected to remain high, but buyers may show increased concerns related to the susceptibility of these practices to the effects of an economic downturn.
David Ward, senior director and head of medical at Christie Finance, commented in a press release: “Funding for dentists during the COVID-19 period has been challenging, but manageable. Lenders have tweaked their policies, but we are still very positive about dental funding in 2021.”
Paul Graham, head of dental at Christie & Co, added: “It’s encouraging that sentiment is so positive, and dentistry has weathered the COVID-19 storm so well to date.”
Christie & Co’s Dental Market Review 2020/21 can be accessed here.