April 14, 2020
As we enter another week of lockdown, we ask what is to happen to the dental business generally and how is the landscape going to change when life finally returns to normal.
We should firstly praise the NHS for the sterling efforts that they have made in carrying out their jobs, putting the patients with the virus first and foremost in their priorities and also the people who have redeployed to assist the fight against the pandemic which as yet shows little sign of abating.
However, what is to be the future of dentistry as we have known it?
Are there any green shoots?
The practice sales and acquisitions market will change significantly once the present situation has been managed to the point where work can resume.
The market is almost certainly going to change. Prior to Covid-19 we were in a “sellers’ market” IE the demand for practices was greater than the number of practices that were available. This will switch to a “buyers’ market” and as such, with the number of practices likely to become available for sale, those Associates and independent practitioners who can raise the finances required to acquire a practice may be in as best a financial position as has been the case for some time.
This could present a great opportunity for some dentists looking to become Principals for the first time or who are keen to expand.
Prosperity Law have a specialist dental services department and can assist you in these very trying times. We have a dedicated business support service and can offer up to 2 hours of advice on an no obligation basis.
It is likely, given the emphasis that has been placed on infection control during the pandemic that the number of patients that a dentist is allowed to see in a given time period will be closely monitored to avoid further spread of the virus. That could have a material impact on fee income both in NHS and private practice and that situation could remain in situ for some time.
There are currently about 12,000 dental practices in the UK, with the majority of them mixed private and NHS. The majority are self-employed and do not qualify for the support scheme being offered by the government as they earn in excess of £50,000.00 per annum. The Government is in the process of setting up Urgent Dental Centres across the country to treat emergencies.
To date, only a handful have opened in England albeit we are told that there will be a further 100 this week. At present, practitioners are having to triage calls from patients and in most cases, prescribe painkillers as there is nowhere to send them for treatment! Some of the untreated cases could result in dental abscesses developing which in the most severe cases, can be life threatening!
Many dental staff have been laid-off in the past month and some have been forced to close their doors.
On the flip side, although NHS England has now “guaranteed” that NHS contract income will continue to be paid as before, with 1/12 of the contact income being received each month, there are constraints including
- honouring the pre-Covid 19 levels of pay for Associates and other dental staff
- making any staff who are under-utilised for redeployment and
- having to accept that whilst practices are closed temporarily, overheads will reduce and an appropriate adjustment will be made to payment to take this into account.
NHS England did however accept that as March 2020 would have been a non-productive month that the NHS year 2019-20 would be backdated to March 2019 and end in February 2020. NHS ”clawback provisions” will continue as before.
At present, practices are closed and no routine dental work is being carried out. This is a far from ideal situation.
The chair of the BDA is quoted “Dentistry cannot weather this storm when nearly every surgery relies on private income to stay afloat.”
Currently, practice ownership in England and Wales is split 85%/15% in favour of independent practices. The remaining 15% are owned by corporate entities. They have been historically very acquisitive in nature but are currently being very careful in their outlook
The Banks position currently is extremely cautious and, in any event, they are concentrating on Coronavirus Business Interruption Loan Applications (CBILs). The number of applications that they are receiving is disproportionate to the number of staff currently available to process them.
What will current practice owners do?
We have, in my experience, never been in this situation. Dentistry as a profession was always a secure living. That is no longer the case. As a solicitor specialising in representing dentists, I am concerned for the welfare of those I represent and their aspirations.
However, Covid-19 has been a reality check. It has made those dentists who are business-minded look very carefully at their own business models and those who simply want to be healthcare practitioners take on skills that they might not have known they possessed.
If any practitioner is concerned about whether they can ride the Covid-19 rollercoaster and get off at the end, but do not how to navigate the journey or do not even believe that they will survive, we are here to help. We have experienced specialists on hand to advise you.