Market dynamics

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Dentist Explaining Tooth X Rays To A Patient

The ‘access crisis’

The ‘access crisis’ reflects a structural change in the UK dental market, whereby, a higher proportion of patients are electing for private dental care to access treatment. Following the pandemic, the NHS dental sector has struggled to cope with high levels of pent-up demand caused by a backlog of dental treatments, particularly non-emergency treatments including oral examinations, routine cleaning, radiographs, cosmetic procedures, and orthodontics. The British Dental Association (BDA) estimates the figure at 40 million appointments.⁸

Concurrently, from 2021 to 2022, the proportion of residents in England who tried to get an NHS dental appointment in the prior 12 months increased from 36% to 42%.⁹ This reflects an increase in demand from individuals that have not seen a dentist since before the pandemic, apace with rising societal awareness of oral health.

Despite an increase in the number of patients successfully obtaining an NHS appointment in 2022 (79% versus 74% in 2021), this figure remains significantly below the pre-pandemic level of 95%.⁹ Additionally, BBC research in August 2022 found that 90% of practices in England were unable to take on new adult NHS patients,¹⁰ with a lower success rate reported among younger adults and ethnic minorities. A regional breakdown of the proportion of dental practices not taking on new NHS patients is provided in Figure 5.

Figure 5 Proportion of dental practices contacted by the BBC

Furthermore, the 2022 GP patient survey highlighted the increasing discontent patients experience when receiving NHS dental treatment from their current practice. This is exacerbated when analysing a patient cohort that have experienced a new NHS dental practice for the first time. Figure 6, shows that from 2019 to 2022, the proportion of patients who rated their experience as “very good” halved from 34% to 17%, whilst the proportion that rated “very poor”, nearly tripled from 11% to 31% across the same period.⁹

Figure 6 Overall experience of NHS Dental Services with a dental practice

Additionally, when analysing the patient cohort who did not try to get an NHS appointment, 28% responded stating that they “prefer to go to a private dentist”, see Figure 7. Although this statistic cannot be compared to prior years due to a change in question methodology, the reasons provided support the notion that there remains a core group of UK patients that opt for private dental care in a market characterised by poor access and worsening NHS patient experience.

Figure 7 Of patients who did not try to get an NHS dental appointment

On the supply side, over 1,000 dentists quit their NHS contracts in England and Wales in the 2021/22 financial year, attributable to mounting workload pressures in their current roles.⁷ With many private practices experiencing excess demand, associates are often not required to build patient lists of their own and risk a reduction in earnings in the short-term, which incentivises ‘leakage’ into the private sector.

The shortage of NHS dentists has been compounded by Brexit, which has reduced the supply of dentists, particularly from Eastern Europe.

15 of NHS dentists are carrying out just one course of NHS treatment per month

Data produced by the BDA has shown that up to January 2023, Units of Dental Activity (UDAs) stood at just three- quarters of pre-COVID levels. Similarly, around 15% of NHS dentists are carrying out just one course of NHS treatment per month.⁸ Consequently, activity is becoming increasingly focussed on the most common and emergency treatment providing favourable conditions for private sector provision, particularly in non-essential dental treatments, such as cosmetics, and regions of low NHS dental accessibility.

Inflationary pressures

With the Consumer Price Index (CPI) up 10.1% in the 12 months to March 2023,¹ and the BDA estimating a ’dental inflation’ rate of 11% for 2022,⁸ dental practices across the UK have experienced mounting costs of delivering dental care. Rising utilities costs, which represent 2.5% of practice costs, contributed the greatest proportional increase, with nearly 20% of dentists facing a 50% increase in their utility bills.

Figure 8 Cost increases for NHS dental practices

Lab costs increased by 15%, as the providers of lab services sought to pass on their own cost increases to dental practices. However, as dental practices in the UK are heavily labour intensive, wages constitute the greatest cost base for practices (68.1%), representing the most material nominal cost increase. Both clinical and non-clinical wage demands increased, including nursing pay, which was granted a 4.75% increase, with a further 14% demanded by nursing and health unions for 2023/24.

Where employee earnings are aligned to a percentage of revenue, as is often the case for associates and hygienists, there was less pressure on wages, however in NHS practices where these employees receive a fixed income per UDA, there was increasing cost pressure in practices with low UDA rates and those in areas of low population density.² In response, private practices have been able to operate more flexible pricing and pass a proportion of this cost increase onto the end consumer. Concurrently, the NHS was forced to increase the band fees by 8.5% in April 2023.


Figure 9 Cost base for dental practices

The cosmetic dental segment in the UK is fast growing and highly competitive, with a number of established market players offering cosmetic treatments; popular procedures include whitening, veneers, crowns and bridges, dental implants and orthodontic treatment.

As the NHS does not provide funding for non-essential treatment, the private cosmetic market is largely driven by social media, which encourages and normalises aesthetically pleasing smiles. In the UK, more than half (53%) of under 35s have undergone cosmetic treatment, however this falls to less than one in ten (9%) for adults over 35.¹¹ There is an opportunity here for private providers to continue to invest in the growing cosmetic market and capture the patient demand for more complex procedures which is driving an increase in average spend per patient.

Attractive demographics

The UK has an aging population requiring an ever-increasing level of dental work. Currently, 47% of the UK population are over 45, forecast to be 50%+ by 2050. As individuals are able to retain their natural teeth longer into old age, the underlying shift increases dental spend per capita among older demographics which experience an increased incidence of dental diseases, making the segment a key target market for the industry.

Dental laboratories market

The dental laboratories market plays a crucial role in supporting dental practices in the UK through the production of custom-made dental appliances, prosthetics, and restorations based on dentists’ prescriptions and patient specifications, including crowns, bridges, dentures, orthodontic appliances, and dental implants. The total number of dental laboratories in the UK is 2,540, with the greatest regional concentration in London (24%), Cambridgeshire (5%) and Manchester (4%).¹³

The dental laboratories segment has witnessed steady growth over the past 12 months, driven by factors including an aging population, increased awareness of oral health, and the rising demand for cosmetic dentistry and restorative treatments. In addition, significant technological advancements, such as computer-aided design and computer- aided manufacturing (CAD/CAM) systems, 3D printing, and digital imaging, have improved efficiency and accuracy in the production of dental prosthetics.

Private equity interest

The majority of the top-10 corporate dental groups in the UK by number of practices, as shown in Figure 10 opposite, remain under private equity sponsorship.

Figure 10 Corporate dental groups ranked by number of practices

Over the past 18 months, dental care has demonstrated strong resilience against the political and economic uncertainty, resulting in high levels of investment and increasing multiples as investors compete for the best assets.

Over the past 18 months, dental care has demonstrated strong resilience against the political and economic uncertainty

Dental practices with a strong mix of both public and private funding provide diversified revenue streams, whilst the fragmented market offers great opportunity for PE-backed dental groups to implement buy-and-build strategies. The most active of the top 10 corporate groups in the market over the past 18 months have been Portman Dental, Rodericks Dental, Clyde Munro and Riverdale Health Care, all of which are PE backed. The two largest dental companies in the UK, MyDentist and BUPA Dental Care, have both refrained from making acquisitions, with BUPA announcing in March 2023 their intention to close, sell or merge 85 dental practices. This is reflective of a broader market trend, whereby corporates have been moving away from larger NHS practices due to the national shortage of dentists and increased inflationary pressures, discussed previously.

Instead, corporates are increasingly focussing on predominantly private practices over those with NHS contracts to drive value, whilst the quicker transaction times make private practices more attractive to private equity. Jacobs Holdings-owned Colosseum Dental, for example, begun specifically targeting the private sector for the first time in 2022.²

1. Office for National Statistics
2. Clearwater International Research
6. IBIS World
7. Grand View Research
8. British Dental Association
9. NHS GP Patient Survey, 2021 & 2022
10. BBC
11. Dentistry
13. Bold Data
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