On Thursday 25 March 2021 NASDAL (National Association of Specialist Dental Accountants and Lawyers) held its annual press conference, this year virtually at BDIA Dental Showcase, and many Principals, Associates and team members, along with the dental media, joined what was an enlightening event with 5 presentations and then an interactive Question & Answer session. Heidi Marshall, partner at Dodd & Co was a member of the panel.
It has been an unusual twelve months and this yearâs event reflected this by being billed as a âState of the Nationâ conference dealing as it did with a wide variety of dentally related financial and legal matters.
The conference heard the latest goodwill value statistics which are normally produced on a quarterly basis but due to the pandemic, the latest figures covered the four months that ended 31 January 2021.
Against what many may expect, the latest period showed very little price reduction due to the pandemic. As with the last survey (which covered the period from 1 April to 30 September 2020), in our experience, there have been only limited price reductions but considerable lengthening of the process.
Benchmarking Statistics â âcontinued fall in NHS practice profits but better news for Associatesâ Â
The NASDAL benchmarking statistics are published annually in March and reflect the finances of dental practices and dentists for the most recent tax year (2019/2020). The NASDAL figures provide a detailed picture of dental practice finances, sourced directly from dentists working privately and in the NHS. They are immensely useful but this year, as the period in question only ran until March 2020, they have limited information to share about the effect of the pandemic. However, they do make interesting reading. Some of the key points from this year were:
- A continued fall in NHS practice profits â this is perhaps as NHS practices tend to be more Associate led
- A slight fall in net profit across the market as a whole
- Better news for Associates with an increase in fee income of 3% and increase in net profit of 2%
- Practice expense ratios stayed very consistent with previous years
Overall, we have seen results similar to the previous year with a small impact of COVID-19 in Feb/Mar 2020. Net profit of a typical dental practice fell back to ÂŁ129,178 from ÂŁ134,387 in 2019 and both NHS and Private practices saw a reduction in profit (NHS â ÂŁ116,284 in 19/20 down from ÂŁ124,475 in 18/19; Private â ÂŁ133,192 in 19/20 down from ÂŁ140,591 in 18/19). Only mixed practices bucked this trend with a small rise from ÂŁ132,940 in 18/19 to ÂŁ134,342. Â What the figures will show for the year of the pandemic is conjecture at this point, but we certainly find ourselves in a very different landscape now from a little over a year ago.
NHS Quarter 4 â meeting the targets
Since the beginning of January in terms of Q4 targets (in England) need to achieve 45% of pre-pandemic activity measures to avoid any financial penalties by way of âclawbackâ. There are 2 key issues that were affecting practices.
First and foremost, there is a small but significant number of practices that will be unable to hit the threshold of 45% of UDA contract amounts and how that âcliff edgeâ will affect them. The fact that many NHS practices are already hitting this target is great but irrelevant to those that cannot.
Another unconsidered consequence of the Q4 rules is pay cuts of more than 65% for some self-employed dental associates who carry out NHS work. During the COVID 19 crisis a very important measure of financial protection has been given to NHS associates as so far they have been paid in full. Q4 rules brought this to an end for those associates who work in practices which cannot hit the 45% UDA threshold.
We believe that a fair compromise is quite simple â remove the âcliff edgeâ at 36%. Without this change, a small percentage of the total NHS contract holders could be in real trouble. In addition, the associates who work in those practices could suffer a pay cut in excess of 65%.
As to what might happen as of 1 April, suffice to say that there will be no material change in circumstance between 31 March and the following day and therefore we would be surprised to see any movement from the 45% figure.
Practice sales market â âstill buoyantâ
Practice Sales were then discussed over the last year which were a whole lot busier than many might expect. What the pandemic did do was slow the entire sales process. From March 2020 until June 2020 there was a hiatus as society was locked down. Then, volumes of practice sales picked up quickly and NASDAL members saw a particular surge earlier this year as many sought to avoid a potential Capital Gains Tax increase in the Budget that as it turned out, didnât materialise.
To illustrate the added time now involved, it can take up to 20 weeks for the CQC to register a new partnership allocation! As we move forward, it seems that those buying practices are having to do so in more of a âblindâ fashion than in is traditional. Even though a practice has been successful in the past, the new world that we find ourselves in, means it is no guarantee of future prosperity.â
The Future â âthe reckoning of the end of furloughâ
The final presentation was delivered by Heidi Marshall, who is NASDAL Secretary and is a Partner at Dodd & Co Chartered Accountants. Â Heidi had the unenviable task, even more so in these times, of considering what may happen in the coming months.
Heidi covered a wide range of areas including Q1 percentages, clawback and the âZoom Boomâ of dentistry. She also shared evidence of mixed practices taking the decision to leave the NHS as they are finding that the numbers no longer add up.
Heidi particularly focused on the end of furlough and that September will see a real reckoning in many sectors. âI think that we will see the true impact of what the end of furlough will mean for our economy. Potentially hundreds of thousands of people could find themselves out of work and that will certainly mean a reduction in enquiries for elective dentistry but perhaps even the more regular care too?â
Overall we are pleased to see that the UK dental sector has reacted to the challenge that Covid has provided in a typically robust fashion, but it has been a tough 12 months for many and the future is still uncertain.
Now, more than ever, it is important that dental practices take specialist advice so that they can understand and react to changes in their business situation.
The joint venture will unlock the power of Dentistry Compliance and Dentistry CPD products for ADAM members. Practice managers and other non-clinical members of the dental team will have access to FMCâs vast library of content and support material.
FTA Law was formed in 2016 by experienced Solicitors Thomas Coates and Sarah Buxton alongside Chris Strevens, Lis Hughes and Andy Acton, Directors of the Frank Taylor Group of Companies. The firm was formed out of a jointly held desire to offer legal services in a transparent, timely and cost-effective way, prioritizing client care above all things and free from the jargon typifying the provision of legal services.
New Chair of NASDAL, Heidi Marshall has just announced the launch of the 2023 NASDAL Dental Check by One (DCby1) Practice of the Year award. The award seeks to recognise a practice that has successfully introduced the British Society of Paediatric Dentistry (BSPD) Dental Check by One into their practice. The aim of the initiative is to increase the number of children who access dental care aged 0-2 years, by campaigning to get infant into a dentistâs chair by their first birthday.
The Practice Manager of the Year Award at the 2021 Dental Awards, the original and most respected awards programme in UK dentistry, has gained added prestige as it will now be presented by ADAM (The Association of Dental Administrators and Managers).
