Dentistry, social care remain resilient but profit margins under pressure, says Christie & Co

UK’s private dentistry and the care sector showed great resilience in 2021, but profit margins are to come under further pressure this year due to workforce-related challenges and increased cost pressures, according to a report released on 19 January by Christie & Co specialist business property advisor.

Christie & Co’s global managing director Darren Bond stated that the common challenge facing all of its specialist sectors including dentistry and care, is staffing.

He said: “We expect the labour shortage to continue well into 2022. There has been considerable pressure on rates of pay, which will undoubtedly hit margins, as some businesses struggle to pass the full cost increase on to their customers. This will almost certainly impact all businesses in some way throughout the year.”

Speaking at Christie & Co’s webinar launching the report, Simon Hughes, managing director – medical at Christie & Co, said that deal activity in the dental market bounced back strongly in the first half of 2021. “The private dental market has boomed,” he said adding that demand is exceeding supply.

Since most dental practices re-opened in June 2020, patient demand for NHS and private dentistry has been “unprecedented”. The NHS sector continues to experience significant capacity issues caused by a huge backlog of patient appointments, whilst the private sector has boomed, according to the report.

Looking at the care market, Christie & Co also predicts workforce related challenges and increased cost pressures this year with mitigation provided by increased occupancy rates and fee levels, however. The funding reform will also remain a ‘hot topic’ on the political agenda, the report added.

But is not all doom and gloom. Despite these forthcoming headwinds, the sector remains attractive to investors, and the strong healthcare development market seen in 2021 will continue as the UK and international capital continues to be attracted by the strong fundamentals underpinning UK healthcare.

Further activity from European consolidators could potentially lead to one or more OpCo transactions occurring, the report, Business Outlook 2022: Adjust, Adapt, Advance, highlighted.

The company said it saw a 14% increase in the number of care transactions for 2021.

Richard Lunn, managing director – care at Christie & Co, explained: “2021 saw a resurgence in market activity with strong demand and limited supply underpinning pricing across most segments of the market.

“Whilst there are current operational challenges, particularly around staffing, we believe that the outlook for the sector is very good and anticipate that 2022 will be a busy year.”

Date published: January 19, 2022

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