- Published: Friday, 26 March 2021 10:19
- Written by Chris Tapper
- Hits: 2152
The coronavirus pandemic didn’t bring all gloom to dentistry according to NASDAL’s ‘State of the Nation’ press conference.
The National Association of Specialist Dental Accountants and Lawyers has said that against what many may have expected, the latest period showed very little reduction in practice values due to the pandemic.
NASDAL’s most recent survey of members shows that although there have been only limited price reductions and a general maintenance of goodwill values, there has been a considerable lengthening of the sales process.
Specialist dental accountant at UNW and NASDAL Alan Suggett said, “It certainly does show that the UK dental practice sales market is not the dystopian nightmare that some commentators have suggested!”
Ian Simpson, Chartered Accountant and a partner in Humphrey and Co, presented the Benchmarking Statistics for the year 2019-2020 at the conference, held virtually at BDIA Dental Showcase. The NASDAL statistics are published annually in March to reflect the finances of dental practices and dentists for the most recent tax year. They usually provide a detailed picture of dental practice finances, sourced directly from dentists working privately and in the NHS, but due to the disruption caused by the pandemic, they only ran until March 2020, thus limiting their usefulness.
But the data from NASDAL did show a continued fall in NHS practice profits, possibly attributed to NHS practices tending to depend more on the use of Associates.
The data statistics also showed a slight fall in net profit across the market as a whole although Associates overall saw an increase in fee income of 3% and an increase in net profit of 2%
Practice expense ratios stayed very consistent with previous years.
Mr Simpson said, “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 £129,178 from £134,387 in 2019 and both NHS and Private practices saw a reduction in profit (NHS - £116,284 in 19/20 down from £124,475 in 18/19; Private - £133,192 in 19/20 down from £140,591 in 18/19). Only mixed practices bucked this trend with a small rise from £132,940 in 18/19 to £134,342.”
“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, he added.”
Addressing this year’s Q4 targets, Alan Suggett said “First and foremost, my concern is for a small but significant number of practices that will be unable to hit the threshold of 45% of UDA contract amounts and how that ‘cliff edge’ will affect them. The fact that many NHS practices are already hitting this target is good news but irrelevant to those that cannot.”
“Another perhaps 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.
“I feel that a fair compromise is quite simple - remove the ‘cliff edge’ at 36%. I worry that 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%.”
He said “There will be no material change in circumstance between 31st March and the following day and therefore I would be surprised to see any movement from the 45% figure.”
Chair of the NASDAL Lawyers Group and partner at Ward Hadaway, Damien Charlton said “Practice sales were as a whole a lot busier than many might have expected. What the pandemic did do was slow the entire sales process. Damien said,
“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, didn’t 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 ‘blind’ 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.”
Heidi Marshall, NASDAL Honorary Secretary and heads of the dental team at Dodd & Co Chartered Accountants outlined what she felt what the next few months might hold for dentistry.
She also shared evidence that mixed practices are taking the decision to leave the NHS as they are ‘finding that the numbers no longer add up.’
Focussing on the end of furlough, she felt that September 2021 will see a real reckoning in many sectors. “I 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 dental care too?”
Rounding off the conference, Nick Ledingham, of Morris & Co, Specialist Dental Accountants and Chairman of NASDAL concluded, “I am 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.
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