Entrepreneurs looking to setup chains of dental surgeries similar to the boom in medical centres that occurred in the 1980s should study the recent decision by huge multinational company Boots to divest itself of its chain of 54 dental practices in the UK following substantial operating losses. The chain of non-NHS practices had been operating since 1999.
Boots, best known in Australia as the manufacturer of the ibuprofen-based analgesic, Nurofen, operates a highly successful chain of pharmacies under the Boots the Chemists brand in the UK. Along with its dental practices, the company also opted out of its Laser Eye Correction, Chiropody and Laser Hair Removal businesses. The well-established and profitable Boots Opticians remains.
"You can't value the relationship that exists between practitioner and patient," said Dr Bill Seddon on the GDP (UK) chat forum. "Boots threw a lot of cash at this and found that people didn't like to see different operators each visit. We should remember this in considering our futures."
A statement from the company said "in the businesses to be exited, there are expert and dedicated teams delivering services to the highest standards. However, despite improvements in productivity, there is no prospect of the businesses making acceptable returns for the Group going forward."
The Dentistry business opened in 1999 and Laser Eye Correction opened in 2000. In 2003/04 Dentistry, Chiropody and Laser Hair Removal sales were £28.9 million with a loss of £16.3 million. Following the decision, Boots Group PLC subsequently reached agreement to sell the businesses to Optical Express.
As one analyst stated, "as solo practitioners or in small group practices, dentists can make very good livings for themselves. In a corporatised environment, however, the high running costs of individual practices and the necessity to pay substantial salaries to attract skilled practitioners conspire to diminish profitability. Add to this an expensive corporate management infrastructure and acceptable returns may well be unachievable."