022-025 Your Businesss Corporate July 13

8/13/2019 022-025 Your Businesss Corporate July 13

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NEWS & EVENTS COVER STORY YOUR TOOLS YOUR LIFEYOUR BUSINESS

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P H O T O G R A P H Y : E A M O N G A

L L A G H E R

Is a new wave of corporate dentistry sweeping

over Australia? Up until now the trend hasgenerally been for groups of dentists to

come together in order to centralise practice

management duties, expand the patient pool,

and cut down on overhead costs. The goal was

business oriented, but the corporate groups

have traditionally been run by actual dentists.

Now the moneymen appear to be moving in—sharp-

eyed investors with no connection to the profession. Or

is the latest round of corporate buyouts just a new twist

on an existing theme?

About 10 per cent of practices in Australia are currently

in some kind of corporate set-up, according to MarkEvans, executive chairman of Dental Corporation, which

started up in 2007 and now runs 220 practices across

three countries. Evans says Dental Corp has raised about

$500 million over the past five years from various sources

to fund its growing operations.

That means there’s investor money involved and

performance benchmarks to meet, but the Dental Corp

approach has been to keep the practitioner on board with

the standard five-year contract and blend the practice

into the corporate body over an extended timeframe.

Getting each new practice on board requires a slightly

different approach, Evans says, one that takes the unique

characteristics of the practice into account.

His company’s commitment to giving the practice

owner maximum flexibility is “the most important thing

in our business model”. Achieving the proper balance

is mutually beneficial. “In effect we share the revenue

and profit coming out of the practice, so having the right

people in place and being willing to adjust as needed iscritical,” Evans says.

Dr Chris Hart, director of the Brisbane-based Lifetime

Smiles Group and a practising dentist, is also a believer in

keeping staff on board, but lately he’s come to appreciate

the benefits of greater flexibility on the part of the

corporate owner. In recent years, Dr Hart has pioneered

a model of centralised management that has seen the

Lifetime Smiles franchise expand across Queensland,

where it currently has about 45,000 patients, and up

into the Northern Territories. Dr Hart is evidently a well-

schooled and forward-looking practitioner. He graduated

from the University of Queensland’s dental program in1998 and went on to earn a master of philosophy in

biomedical science at Cambridge University, and these

days his main clinical interests are neuromuscular,

aesthetic, reconstructive and implant dentistry with a

particular focus on occlusal rehabilitation.

The next wave of corporatedentistry is here, with private equity becoming thenew normal when it comesto consolidation.By Andy Kollmorgen



Mark Evans, executive

chair of Dental Corp.



But he has also continued to sharpen his business skills.

Lifetime Smiles recently sold off its Brisbane, Mt Isa and Darwin

branches to National Dental Care (NDC), upping the group’s

stable of dental practices in Australia to about a dozen. NDC’s

main investor, Sydney-based Capital Crescent Partners, is no

stranger to putting capital to work in the medical arena. Prior

to launching NDC, the firm built National Hearing Care up from

40 Australian practices into the second largest privately-owned

audiology group in the world, with 240 practices internationally.

It’s safe to say the boardroom at Capital Crescent does not

see a lot of dentists, and its buyout terms may seem unduly

corporate-minded at first glance. Instead of the usual five-year

earn-out arrangement, the NDC contract calls for a 12-month

handover period, after which the firm is free to shape a practice

to its own ends.

“We prefer the dentists to remain in place after 12 months,”

Dr Hart says, “but the investors aren’t afraid of transition.

Whatever the case, they’ll work with the selling practitioners toachieve their retirement goals.”

Locking the previous owner in for one year instead of five gives

NDC more flexibility to make changes across the chain should it

see an opportunity to improve business outcomes, Dr Hart points

out, but the firm “will also allow the practitioner to continue

working as an employed dentist if they wish to”.

As with Lifetime Smiles, NDC’s objective is to improve

efficiencies and cut costs through a centralised data base of

patients, a single patient contact centre and centralised training,

marketing, payroll, accounting and human resources. For

practice owners, the financial deal is straightforward. NDC pays

75 per cent up front and hands over the other 25 per cent a year

later as long as the practice maintains the previous year’s result.

“The practitioner just continues to run the business as they did,

albeit with different legal ownership,” Dr Hart says.

That’s different to the traditional approach, which usually

involves a smaller up-front payment and a final settlement

dependent on performance over the five-year period. The quicker

handover takes some of the pressure off the seller, Dr Hart

says, since there’s less time to claw back commissions if the

practitioner doesn’t reach the practice targets. In that and other

ways, Dr Hart sees the NDC approach as an improvement over

the old model from both the selling practitioner’s and corporate

owner’s standpoint. But it may not be right for everyone.

“Our offer is tailored somewhat to more mature, multiplechair practices where the selling practitioner wants to step back

from the day to day ownership of the practice they’ve worked

so hard to build but also ensure a good future for both staff and

patients,” Dr Hart says.

Your business

Dr Chris Hart,

Lifetime Smiles

Group director.

The handover period may be abbreviated, but NDC is taking a

long-range approach to building the franchise, according to Dr

Hart. It will make “heavy investments” to train graduate as well

as experienced dentists and “create opportunities for dentists

and support staff to move into broader roles within the group,such as training, mentoring, practice management or regional

management responsibilities”.

Mark Evans of Dental Corp thinks corporate dentistry will

increasingly be the way of the future and that forthcoming

generations of dentists will be less focused on running practices.

“It has become a much more expensive exercise than it was

10 or 20 years ago, in large part because today’s practices need

to have modern X-ray and imagining equipment along with

various other new technologies. In the end it’s a million-dollar

prospect to establish a practice, and that’s beyond the means

of most practitioners.”

Evans says that Dental Corp spends $3 million a year onstaff training, something that likely wouldn’t be available

to dentists at an independent practice. Maybe that’s the

point. As with staff under the NDC banner, the dentists get

to concentrate on dentistry and let their corporate overseers

worry about running the business.

“It has become a much moreexpensive exercise than it was10 or 20 years ago. It’s a million-dollar prospect to establish apractice, and that’s beyond themeans of most practitioners.”

Mark Evans, Dental Corporation executive chairman

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022-025 Your Businesss Corporate July 13

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