How Oral Chain Clinics Are Breaking Through in the Post-Pandemic Era: A Prospectus Overview
“Unimaginable—once again, in less than a year, I find myself at the crossroads of deciding whether to change jobs.”
Xiao Qian (a pseudonym), who had switched careers mid-last year to work as a nurse at a dental clinic in Chongqing, told VCBeat that during the “home quarantine” period, she longed each day to return to the clinic to earn some money for her child’s formula. However, just as she finally returned to work after the pandemic came under control, she and her colleagues received the news from the owner within less than half a month that the clinic would be closing due to a broken capital chain.
Xiao Qian’s experience is not an isolated case. According to incomplete statistics from Zhen Suo Jie,In the first half of this year, more than 400 clinics have closed down, and over 500 clinics have publicly sought transfer. Among them, approximately 100 were dental clinics, accounting for about 17% of the total.. It was assumed that clinics across the country, having already endured growing pains during February and March, would enjoy a respite after resuming patient consultations. However, the post-resumption period has instead exposed a cash flow crisis, forcing them to either transfer ownership of their practices or shut down entirely.
For several consecutive months, meager revenues—or even a complete lack thereof—have dealt a fatal blow to private clinics, accelerating the pace of industry consolidation. Among these, dental chains are facing particularly distressing challenges due to their large number of outlets and substantial capital investments, causing significant concern within the sector.
What Challenges Remain in China’s Dental Healthcare Industry? How Can Entrepreneurs in the Dental Chain Sector Break Through in the Post-Pandemic Era? What Best Practices Can Be Leveraged? In response, VCBeat conducted interviews and compiled insights from leading private dental enterprises and investors with long-term focus on this sector.
The greater the expectation, the greater the disappointment.
For the dental healthcare industry, the period preceding the Lunar New Year is traditionally a slow season; consequently, business performance in January of this year was generally weak. Industry practitioners are awaiting the return of patients after the holiday and have prepared their marketing and promotional campaigns accordingly, aiming to start the new year on a strong note.
The onset of the COVID-19 pandemic disrupted the business rhythm originally planned by the dental healthcare industry.During dental treatment, specialized equipment such as high-speed turbine handpieces and dental scalers generates substantial amounts of water mist, droplets, or aerosols. If patients in the incubation period of an infectious disease seek care unknowingly, this poses a significant risk of transmission. Therefore,Multiple Regional Health Commissions in China Issue Notices to Suspend Routine Outpatient Dental Services。
Business suspension means no revenue, while expenses continue to mount. A series of costs, including base expenditures such as rent and labor, follow in quick succession. According to a questionnaire survey released in March this year by Guangzhou Ai Li Bi, a third-party hospital management consulting firm, nearly 60% of private hospitals have less than two months of cash flow runway. Industry insiders revealed that,In the first half of this year, at least ten dental clinic chains have had to borrow from banks to weather the crisis.
The sudden outbreak of the epidemic has only exacerbated the long-standing profitability challenges in the dental chain industry. According to a report by Kan Yi Jie,Approximately 30% of dental hospitals and clinics across China are struggling for survival, 40% are operating in a rather dismal state, and only about 30% are achieving favorable profitability.. Behind this lies the fact that dental chains, in their pursuit of scale, face challenges related to capital, talent, technology, market, and management, primarily including the following points.
First, the barrier to entry is relatively low, and clinics are fragmented.. The startup costs for dental practices are not high compared to other medical service sectors; in some regions, an initial investment of only RMB 1–2 million is sufficient to open a clinic. This has led to a proliferation of independent clinics across various locations, with a relatively dispersed distribution. In certain high-demand areas, the growth rate of clinic numbers has outpaced both the covered resident population and the number of dentists.
Second, high labor costs. Dentists are the core productive force of dental institutions and the primary providers of patient care. Clinic services rely on dentists’ clinical expertise; however, dentists are a relatively scarce resource in China, and their training requires a considerable amount of time.Labor costs for dentists represent the largest expense in chain operations, accounting for approximately 40% of a clinic’s total revenue.。
Third, high customer acquisition costsAs a highly marketized sector, the dental industry has prompted dental institutions to invest not only in offline advertising but also in online marketing. Coupled with patients’ increasingly high expectations for service experience, customer acquisition costs have remained persistently high, with some clinics incurring expenses of even RMB 3,000–4,000 per patient.
A turnaround may be underway. Since the domestic epidemic was largely brought under control in mid-to-late April, various industries have been gradually recovering. However, due to the cash flow pressures accumulated in the first half of the year and the ongoing operational costs that need to be covered, the recovery of the dental healthcare market will take at least another six months, leaving companies under considerable pressure.
Undoubtedly, exploring new pathways has become the keyword for the dental chain industry in the second half of the year.
How to Break the Deadlock?
Pioneers in the dental chain industry are already exploring answers. For instance, Taikang Bybo Dental has adopted a differentiated development path that integrates “academia, technology, and specialization,” while striving to establish a new integrated healthcare model in China that combines “payment + services.” Arrail Group positions itself as a mid-to-high-end brand among private dental clinics and has accumulated an extensive medical case database within the industry over its more than 20 years of development.
For Meivei Dental, a leading player in the dental chain sector, to break through the profitability dilemma facing dental chains,Meiwei has launched a third dental care model, introducing the DSO (Dental Support Organization) model—already validated in the U.S. dental healthcare market—to China, and implementing localized adaptations based on this foundation.Innovation: Launching Meiwei’s “Business Partner” Strategic Mechanism, by partnering with leading regional dental institutions that demonstrate strong profitability, we have carved out a unique path for the development of our dental chain and built a stable community of shared destiny characterized by mutual benefit and win-win outcomes.
The Attempt Yielded Results, Meiwei’s performance during the epidemic was remarkable. “Since the outbreak was largely brought under control in early April, Meiwei’s overall business has gradually returned to its pre-epidemic levels, achieving profitability every month from April onward. Moreover, revenue in May and June surpassed that of its best-performing month last year.”As an investor in Meiwei’s Series A round, Wang Xianzheng, Investment Director at Fortune Capital, shared his enthusiasm with VCBeat. For example,Meiwei Dental’s proprietary brand, Weile Dental, sees 99% of its clinics maintaining sound operational performance, while over 90% of its partner-affiliated institutions remain stably operational.
Why has it achieved such significant results? The core lies in Meiwei’s efforts to deepen its business partner mechanism. The core of Meiwei Dental’s DSO model is empowerment, namely helping more dentists with entrepreneurial aspirations realize their dreams,Allowing them to focus on healthcare, while Meiwei concentrates on post-investment management, clarifying standards, implementing robust risk control, providing empowerment, and formulating decisions to ensure the effective execution and implementation of strategy.The ultimate goal is to establish high-quality dental healthcare service providers, making dental care simple and convenient.
Looking back on the development history of Meiwei,From one clinic at its first anniversary to a network now covering more than 150 dental hospitals and clinics, Meiwei has developed very rapidly. More notably,Meiwei has achieved rapid revenue growth over the past two years, rising from monthly revenues in the tens of millions just two years ago"Last year's revenue exceeded 100 million yuan, and its business model has been continuously validated and recognized by the market."
Specifically, the “Partner” mechanism centers on service partners, upholding the core values of “staying true to our original mission, continuous innovation, customer success, and win-win cooperation,” to jointly build a stable, mutually beneficial community of shared interests. Meiwei Dental operates primarily by selecting regional dental brands with competitive advantages to become “business partners.”By leveraging Tianyi Group’s robust industrial capital advantages and its powerful health industry ecosystem, we advance scaled and branded development through a dual strategy of investment-led acquisitions and self-built chain operations.。
To break it down further,Meiwei integrates resources to build an empowerment platform across three dimensions—strategic investment, standardization export, and brand management—to address the challenges faced by regional brands in areas such as healthcare services, financing, talent acquisition, operations, and management., empowering leading domestic dental chain brands and experts to achieve personalized development. To empower regional dental chain brands across healthcare, technology, supply chain, investment and financing, capital, and management, Meiwai establishes standards, enhances technical capabilities, attracts talent, strengthens operations, and prioritizes informatization.
In terms of strategic investment,Meiwei Dental injects its brand team through capital increases, deeply develops and operates new clinics in existing cities, thereby establishing a leading dental brand position locally.. For example, after becoming a Meivie business partner, Zhongshan Stomatology expanded from dozens of dental chairs across three cities to 15 clinics with nearly 200 dental chairs, achieving more than a twofold increase in annual revenue; Quanmin Zhimei Stomatology expanded from over 100 dental chairs across four cities—Zhanjiang, Maoming, Huizhou, and Zengcheng—to 13 clinics with more than 150 dental chairs,Annual Revenue Growth Exceeds 1.2-Fold。
In terms of standard output, Meiwei has established the “M+” system—the first dental clinic management and medical standards certification framework in China that surpasses international benchmarks—by centering on a “healthcare + patient” model and collaborating with DNV GL, an internationally renowned certification body. Additionally, leveraging cloud platform technology, Meiwei has invested in developing the “Wei Xiaomei SaaS Management Platform.”Provide partners with comprehensive, one-stop solutions covering healthcare, procurement, talent, operations, and management, to achieve integrated development characterized by “academic rigor, refined management, professional expertise, digitalization, and enhanced comfort.”
In terms of brand management, the Meiwei Platform deeply integrates upstream and downstream resources as well as internal and external capabilities. It provides comprehensive, multi-dimensional services to the public across oral prevention, diagnosis, treatment, pharmaceuticals, and medical services. These services include physician group solutions, IT system exports, centralized supplier procurement, and AI applications. Daily operations leverage informatization to enable front-end monitoring and mid-to-back-office management.Focus on the overall clinical workflow from patient appointment scheduling and initial consultation to case conversion and subsequent follow-up.
Undoubtedly, by positioning itself not as a pure financial investor but rather seeking business partners who possess a vision for the dental industry, are committed to deep engagement within the sector, and demonstrate the passion, capability, and willingness to strive together, Meivi has already charted a clear and viable path. Facts have also proven that some of the regional dental clinic chains acquired by Meivi have already achieved a qualitative leap.
In the rapidly expanding U.S. dental industry, more than 10 Dental Support Organizations (DSOs) already operate over 200 clinics each. Among them, Heartland Dental is currently the largest DSO, boasting an extensive network of dental professionals spanning from the East Coast to the West Coast, with more than 1,000 clinics under its umbrella. Underpinning this growth are the attractive opportunities that DSOs present for private equity investment and expansion.
Headquartered in Illinois, Heartland Dental has partnered with multiple vendors. For instance, Patterson Dental, a U.S. dental products company, serves as its sales partner, while the Bell Leadership Institute acts as its curriculum provider. These collaborations not only offer continuing education opportunities for dental professionals but also provide non-clinical management support.
Specifically, Heartland Dental’s key focus areas are primarily concentrated in the following domains:
I. Human Resources Services, i.e., helping clinics match with the most suitable employees.The core of a dental practice lies in having an excellent team, and Heartland Dental leverages this as the starting point for building its human resources team. Furthermore, the HR team is responsible for serving team members on various related matters, including health insurance, vision insurance, and life insurance.
II. Marketing Services and Brand Building.Heartland Dental’s marketing team comprises experienced professionals who provide expert marketing strategies and creative solutions, serving as dedicated marketing agents for individual practices. These dedicated marketing agents are assigned to work closely with each practice and its team to develop external marketing initiatives and advertising campaigns, while also supporting internal marketing efforts.
III. Empowerment through IT Technology, with an average of 20 professionally certified IT personnel per team. The IT team provides real-time monitoring and management for computers, networks, digital imaging equipment, chairside patient education systems, dental practice management software, and peripheral hardware at supported clinics. On-site technical support is delivered via remote access to all computers; when necessary, on-site technical services, including installation and maintenance, are also provided.
IV. Assisting Clinics in Identifying Cost-Effective Suppliers. A clinic must be equipped with high-quality, advanced instruments and equipment. The Heartland Dental Supply Division collaborates with leading suppliers in the dental industry to provide supported clinics with high-quality equipment supplies. As the Heartland Dental team can place bulk orders with suppliers such as Patterson Dental, it secures corresponding cost discounts, resulting in more competitive pricing.
Heartland Dental has pursued a steady and pragmatic approach in both its development model and scale expansion. Its chain model has been proven successful, offering valuable insights for China’s domestic dental market. Some pioneers have already drawn on the DSO (Dental Support Organization) model and undertaken localized adaptations, thereby exploring new pathways suited to the development of dental chains in China.
Regarding the remaining opportunities and trends in the dental chain sector, Wang Xianzheng, Investment Director at Fortune Capital (Dachen Caizhi), shared the following insights with VCBeat, which can be summarized as:
First, large chain groups will become the trend.. Currently, the vast majority of dental clinics in the market are single-location practices or small chains, with the latter typically operating 2 to 5 outlets. These enterprises have weak financing capabilities and low risk resilience, leaving them completely unable to cope with sudden crises such as the COVID-19 pandemic.
The advantages of large chain groups lie in their strong financing capabilities and brand expansion power. When faced with unexpected situations, chain groups can raise funds through equity financing, debt financing, and internal capital allocation within the group. Moreover, chain groups demonstrate faster self-recovery capabilities compared to single stores and small chains.
Second, information technology construction accelerates the process of chain expansion.. In chain organizations, even individual stores require management of personnel, finances, and materials; therefore, the development of information technology becomes critically important. In fact, IT infrastructure and the degree of chain integration are mutually reinforcing. Dental chains equipped with comprehensive Hospital Information Systems (HIS) or Software-as-a-Service (SaaS) platforms will significantly enhance management efficiency.
From the perspective of scalability, the development of information technology also implies stronger replicability, which will be more attractive to capital. A newly opened chain store requires empowerment from the group headquarters to enable it to attract customers and even achieve profitability in a shorter time frame, an issue that can be effectively addressed by information systems. This is because an information system is not merely a tool but also a manifestation of proven group business processes.
Third, the holding-type DSO model will be the first to emerge.DSO is a collective term for operational management companies that provide non-clinical business support services to dentists and dental clinics. Its core function is to offer clinics the necessary support in management, operations, finance, legal affairs, training, and other non-clinical areas, enabling dentists to devote more energy to improving their clinical skills and treating patients. Currently, DSOs have adopted various models in their localization efforts, including holding, non-holding, and pure service-oriented structures.This is where Meivi distinguishes itself from other DSO models..” said Wang Xianzheng, Investment Director at Fortune Capital.
In the healthcare services industry, the quality of care is a critically important metric. The holding-company-based DSO (Dental Support Organization) model exerts strong control over each clinic and every dentist, thereby helping to ensure consistency in the quality of medical services. Moreover, this model demonstrates significant advantages in managing operational systems, supply chain networks, and other key areas.
According to the “2020 White Paper on Dental Care” released by VCBeat, China’s total population grew from 1.34 billion in 2010 to 1.39 billion in 2017, and with this expanding population base, the number of people requiring dental care services rose to 694 million.Overall, approximately 50% of Chinese residents suffer from various oral diseases, with demand remaining consistently high., however, depending on the severity of the condition, most patients with oral diseases do not pay sufficient attention to them, and a significant proportion of residents still fail to seek diagnosis and treatment for oral diseases due to various reasons.The oral healthcare consumer market still has significant room for growth.。
Although the COVID-19 pandemic this year has dealt a severe blow to dental chain clinics, once again exposing the challenge of achieving profitability, we remain confident thatAs dental chain clinics continue to break through and iterate, they will emerge from the recovery phase in the second half of this year and usher in a new spring in the coming year.。