Showing posts with label Moelis Company. Show all posts
Showing posts with label Moelis Company. Show all posts

Friday, August 27, 2010

Corporate Dental A Good Investment? Not for the patients!

I hope you don't want your dentist to have your best interest in mind, those who work for these places only need answer to shareholders and keep the bottom line in the black.  Know what that means, swift, cheap and low quality care and being sold crap you don't need. 
The New York Post

The private-equity barbarians may soon be running a dental office near you.
In recent weeks private-equity firms have been bidding for two of the largest national chains of dentists' offices as they drill further into the space.

In fact, a PE firm is close to winning the auction for Syracuse-based Aspen Dental with a winning bid likely to stretch past $500 million. A separate auction for the slightly larger Kool Smiles chain is well underway, sources said.

Aspen, with its nearly 300 branches, is working with investment bank Moelis & Co. to sell itself. Kool Smiles, which generates $80 million in EBITDA (earnings before interest, taxes, depreciation and amortization), has hired investment bank Harris Williams, The Post has learned.

Financially, dental is the old-fashioned piece of the healthcare industry. Most practitioners still work outside a management practice and more than 80 percent work with, at most, one other dentist. Most importantly to private-equity firms, it is one of healthcare's last bastions of fee-based services, according to the American Dental Association.
 Financial consultant Tom Climo said 89 percent of dental services, including preventative care, are covered by insurance, with patients only paying for oral and cosmetic surgery. Healthcare reform that is cutting into reimbursement for medical doctors is not affecting dentists, he said.
An investment banker said private-equity firms like dental offices because they sell for low valuations and one can borrow a fair amount of money against them because of reliable cash flow.

The downside, Climo said, is private-equity firms are likely to work dentists longer once they take over practices to boost profits and that could lead to worse service.
[COULD!?  It has! They also failed to mention in most states they operate Illegally!]
Private equity firms already own the Forba and Bright Now! dental chains. Kool Smiles did not return calls for comment.
[Kool Smiles didn't return phone calls, well hell no, they didn't!]