The industry will not take a 50% haircut only those practices...

The industry will not take a 50% haircut only those practices which pursued the medicare work will take the haircut.
If 1300 exposure to medicare is $1million per month then that is 12/36 = 33% of there revenue(this is speculation)
BUPA pays 100% of these for patients who attend a BUPA preferred provider. Many people insure with BUPA but choose to pay a gap in order to attend a Dentist who they trust and with which they are comfortable.
Many of the practices that 1300smiles bought out are successful because of the performance of the personal dentists. These Dentists will be busy and successful wherever they practice and people will pay to see them.
Once these Dentists leave 1300 recruits replacements they do not have the relationship with the client base nor in many cases the skills. Some people will see these dentists if they are available and it costs nothing, ie Medicare pays. But if Medicare goes and people are paying they will be more fussy as to who they see and I suggest these Dentists are the first to lose clients.
The evidence for the fact that Medicare influces demand for 1300 smiles services at least is in 1300's last few years of figures. For the gap period when there was no Medicare the figures tanked. When a Medicare program came back 1300's figures improve. Given Current budget constraints the Medicare dollars in Dentistry may not be secure.
If a dentist leaves and sets up outside of 1300smiles he is not going to have to give them approx 20% of his profit for management so he will be more profitable.
Hopefully that has made the basics of my opinion clear. Cheers