Denplan launches partnership scheme
Denplan has launched a new dental partnership funding programme that will see the company enter a partnership with individual dental practices.
The programme of investment will create a 50:50 partnership/ownership arrangement.
Denplan will invest in the practice to acquire a 50% share and work with the practice owner and accountants to work out and agree a profit figure, then offer to purchase 50% of the practice for an agreed multiple of the profit.
Steve Gates, managing director of Denplan said: ‘The scheme aims to support the heart of family dentistry.’
Denplan will initially pilot the partnership programme with five member practices, acquiring a 50% equity stake in the practice and becoming an equal partner, with the dentist retaining full clinical management of the practice. The equity stake that Denplan will hold of these practices will be set up in a ring-fenced new Denplan company – Denplan Partnerships Limited. The new company will operate separately to ensure there is no conflicts of interest.
Why has this been done?
Many factors are contributing to this move. The cost of regulation and compliance is increasing. Student debt often running at £40,000 to £60,000 before they pick up a handpiece, and the dental qualified demographic is changing too. Bank lending for squats and acquisitions has tightened. All these factors have lead to an increase in dentists choosing to work for a corporate and increase practice consolidation. So a natural progression for Denplan is to invest in dental practices and its members.
Denplan has been running loan schemes for over eight years to practices and patients and this new scheme is seen as the end of that journey.
It will strengthen Denplan’s support, investment and involvement for its member dentists and support the future of private, preventive dentistry, so Denplan continues to provide the widest possible level of support.
Steve Gates said: ‘Our strategy in launching Denplan Partnerships Limited has been led by member dentists as it has become clear that for many of them, succession planning and retirement is an area that is taking increasingly high priority.’
Denplan will target practitioners in smaller practices who are perhaps between five and 10 years away from retiring. Denplan believes it can play a role in supporting succession planning for those dentists who are considering their clinical and financial future through to retirement.
When a dentist retires a new dentist will acquire the 50% share and Denplan pledges to guarantee the same multiple of profit to the new incoming dentist/owner.
The aim is to pilot five practices before swelling to between 100 and 200 practices in the next five to 10 years. Simply Health, Denplan’s parent company is backing this venture financially.
Steve Gates was keen to confirm steps are being taken to ensure Denplan does not accidentally become a competitor to its member dentists.
Steve Gates added: ‘We believe this partnership model will reduce barriers to a new associate taking over a practice as we’ll also support the eventual transition to a new owner.
The partnership will support the dentist in realising some of the financial benefits of running a successful practice immediately, while continuing to take responsibility for the day-to-day management of the practice.
Denplan has been working on developing the right model for over two years. Part of the research was conducted with accountants Pricewaterhouse Coopers.
The partnership scheme is open to Denplan members only. It is ideally suited to those looking to retire in the short to medium term from a one or two-handed practice.
Denplan will not turn the practices into 100% Denplan-owned – that is not the strategy.
Denplan will not convert all patients to Denplan care.
Denplan won’t control the day-to-day running of the practice.
Denplan will not dictate products and materials use.
In conclusion Denplan has worked for two years on a model with positive benefits for all sides. Steve Gates said: ‘This is in our view the most sustainable model for the short and long term.’ Dr Martin Fallowfield altruistically added: ‘This model will be great for dentists who see three generations of patients and want to ensure that when they retire the same quality of care continues.’
‘We believe the new partnership funding programme is an exciting and scalable initiative for our member dentists and they can be assured the practice and goodwill they have built up over the years will continue with the security of Denplan as a stable partner’, concluded Steve Gates.