See this piece about private equity gobbling up the dental market. And who is footing the bill? You, Mr. Taxpayer, through the Medicaid programs. You know something fishy is going on when private equity goes after a market that is almost exclusively funded by a government program designed to help poor people.
May 30, 2012 -- A growing number of private equity firms are investing in dental management companies, which they see as one of the few growth areas in the current economic recession.
Small Smiles is one of at least 25 dental management companies that have been bought or backed by private equity firms in the last decade, according to Thomas Climo, a Las Vegas dental consultant. These companies account for about 8% (12,000) of the dentists licensed in the U.S., he said.
Topspin and AUA Private Equity Partners, both New York-based equity funds, announced earlier this month that they had invested an undisclosed amount in Brighter Dental Care, a regional dental practice management company that operates and manages seven affiliated dental practices in New Jersey.Last November, private equity investment firm JLL Partners paid $398 million to buy American Dental Partners (ADP). ADP is affiliated with 27 dental group practices, which have 282 dental facilities and about 2,400 operatories in 21 states.And in 2008, the Audax Group bought a majority stake in Great Expressions Dental Centers, expanding the platform from about 100 practices to 152 locations.Currently, there are 24 large dental practice management companies in the U.S., with annual revenues of more than $100 million, Climo said.
Private equity buyout firms have been attracted to dental practices because they are less regulated than physician groups, and patients often go to their dentists more regularly than to their doctor, according to Sandy Steever, an editor with Irving Levin Associates, a Norwalk, CT, publisher which tracks mergers and acquisitions in healthcare.
"They attract less scrutiny because dental services are seen as more peripheral than physicians' services," he told DrBicuspid.com. "In one sense, I think healthcare is noncyclical because it's a regular need. I have seen a lot of private equity getting into dental servicing companies."Some of the firms have benefited from the increase in Medicaid payments for dental care, which rose 63% to $7.3 billion between 2007 and 2010, according to the U.S. Center for Medicare and Medicaid Services.
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