The pandemic combined with struggles to hit NHS targets has seen dentists reconsider whether providing NHS care is worthwhile. BDA research indicates that over half of current NHS dentists are looking to reduce their NHS commitment. Whilst a recent Dentistry magazine census found 84% of dentists anticipate doing more private dentistry in the coming year. What are some of the things to consider on when thinking of a potential switch from NHS to private dentistry?
The England and Wales NHS contract provides a practice with a guaranteed income on the basis that UDA targets are met. This is beneficial for cash flow purposes as you know a certain amount of money will be received each month. However, the contract between practices and the NHS dates from 2006 and has been long overdue reform. One of the main issues is there is no incentive for beyond targeted care provision, as no additional funds will be provided. Scotland retains a fee per item system that gives greater incentive to providing additional care.
Banks and other lenders look favourably on NHS practices. This is due to a preference for lending where income is guaranteed. This may make it easier to obtain finance to either buy a practice with an NHS contract or to take out lending within an NHS practice to purchase assets etc.
Patient considerations are not the concern that they once were. While many desire the lower cost of NHS dentistry they are often aware that there is limited service availability. There is an increasing understanding that private practices may offer care plan services or payment plan options limiting the impact of the cost difference. Other patients place a higher priority on their health in general now and are investing more in private care with access to hygienists, cosmetics and potentially some aesthetics. Overall, while patients may favour lower cost NHS care over private care, the higher cost of private care is not the deterrent it once was.
The paperwork and administrative burden to private care is often less than in the NHS where regular reports are required to be submitted on the NHS Compass portal. Both NHS and Private practices must ensure that they are GDC compliant.
Retirement and pensions should be a major consideration when thinking of leaving or reducing NHS work. The NHS superannuation scheme offers income in retirement that outstrips private pension schemes. You will also be stepping away from other protections such as death in service, sick pay and maternity/paternity pay. Therefore, discussions with an IFA who specialises in the NHS pension scheme are a must before handing back an NHS contract.
The other consideration for retirement is selling on your practice and the value of goodwill. Historically NASDAL goodwill valuations and sale values have been higher for NHS and mixed practices. Whilst the gap is narrowing the most recent stats to October 2021 show goodwill values as a % of sales values for NHS 138%, Private 132% and mixed practices at 179%.
The treatment options and time available to provide care are greater in private dentistry where there are no targets or guidelines on what types of care can be offered. Private dentists are able to provide options for cosmetic treatments such as whitening, veneers and non-fixed braces.
Modernising the care that practices offer, in terms of the quality of materials, equipment and technology used, may be easier with the additional fee income private care provides. Annual NHS contract increases have struggled to maintain pace with rises in costs for these items. A particular concern for practices now with inflation so high and rising wage costs on the horizon.
Should you wish to discuss any of the matters raised in more depth please contact Rob Oliver who will be happy to assist you. Email rob.oliver@doddaccountants.co.uk.
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