What do the latest dentists’ earnings figures really show?

earnings

Grim statistics for associates are leading many to seek becoming practice owners, Michael Watson says

Michael Watson looks into the latest NASDAL figures on dentists’ earnings.

Before Easter, the National Association of Specialist Dental Accountants and Lawyers (NASDAL) published its statistics for dentists’ earnings in the tax year 2014/15.

Returns for that year, for the self-employed, had to be with the revenue authorities by 31 January this year, so as a historical record they are a year out of date.

They cannot show the situation at the tax year which ends in a few days and we will have to wait another year before we discover how dentists are doing today.

However, some trends are apparent especially in private practice.

Private patients

In the years following the global economic crash, private patients became more reluctant to spend and average net income for their dentists, over a few years, dropped below those of colleagues working in the NHS.

In 2014 private inched above NHS, but 2015 saw the gap between the two widen considerably, according to NASDAL.

An average private practice made a profit of £140,129 per principal, compared to an average NHS practice profit of £129,265.

Private practices last year saw an increase in fee income of over 8%.

This compares with NHS practices, which have been relatively static, bound as they are by the meagre offering of contract value increases offered by the government.

Patient charges

As the economy recovers, so one would expect patients’ disposable income to rise, with a greater willingness to spend on their oral health.

It is perhaps interesting to note that the government recognises this trend, in raising patients’ NHS charges by 5% this year and another 5% next.

At the same time they hold increases in contract values down to 1% per annum at most, helping them balance the NHS’s shaky books.

The dentist, as an unpaid tax collector, has to explain this to their patients, although they can quite legitimately ‘blame the government’.

The contrast between patients’ charges in England and Scotland is stark.

Have a crown made in Scotland and the charge will be around £80; have the same treatment in England and it counts as a band three UDA costing the patient £233.70 from 1 April, and £244.30 a year later.

I am really surprised that no English MP has raised this in the House.

Other changes

Elsewhere the NASDAL figures show little change in the NHS.

Although ‘all types of practice have seen a sustained recovery in profitability’.

Surprising to me was the finding that ‘costs seem to be static across all practices.’

But for associates, who comprise over 80% of GDPs, the statistics are grim.

Their profits have been ‘flat-lining’ for over a decade now, with average profits in 2015 of £68,024, almost identical to that of the previous year.

With their net incomes being around half of that of contract holders, for essentially doing the same job, it is not surprising that so many of them aspire to practice ownership.

11 Comments

  1. 1

    Justice is at last being done.It has long bugged me that rewards from the fatally flawed NHS system were higher than those in the private sector.
    I sincerely hope the gap continues to widen rewarding those brave enough to walk away from the ridiculous UDA pile em high sell em cheap NHS.

  2. 2

    An interesting analysis. It’s good to see private practice beginning to get the rewards it should achieve. I disagree with the idea that associates do the same job as principals however. Principals work many hours a week on the business, and bear a significant financial risk and huge responsibility – for example their staff rely on them for their livelihood. I therefore feel that principals deserve a lot more remuneration than associates.

    • 3

      @Celia burns
      Granted the principals carry the financial risk of running a practice and the burden of current ridiculous regulations imposed on dentistry in the UK but at the same time many larger practices are dependent on a good associate/s to deliver their UDA aka nectar point target.
      I remember the time prior to 2006 when many NHS principals were offering their associates 55% of their gross remuneration.
      In conclusion many larger NHS practices will get into financial trouble (claw backs) if they don’t treat their associates dentist in a fair way.

  3. 4

    Absolutely, Robert! I (in Tyneside) abandoned the NHS in 2006. NOT easy. Now a steady capitation practice not dependent on the NHS LAT clowns. The only thing I miss about the NHS is the pension. But my decision saved my health, sanity and marriage. The NHS can be firmly thrust ‘where the sun don’t shine’.

  4. 5

    Interesting viewpoint…
    “With their net incomes being around half of that of contract holders, for essentially doing the same job, it is not surprising so many of them aspire to practice ownership”

    I do hope that aspiring practice owners are not under the same illusion.

    Fortune favours the brave, however in my opinion, running a modern dental practice involves significant effort beyond the day to day clinical job of being a dentist. Even with excellent support staff in place it is no walk in the park.

    Running a successful dental practice can be financially and emotionally rewarding but it is is not without a lot of additional stress, hard work and huge financial risk that you are not exposed to as an associate.

    My advice to associates thinking of buying a practice is go for it but go with your eyes open!

  5. 6

    The implication that Associates and Principals essentially do the same job is not helpful and will I imagine be derided by many hard working owner managers. Principals take on significant risks as business owners, often (especially younger principals) having to cover the costs of finance and borrowing. Given it isn’t clear whether the profit figures shared are at an operating level or net level, it’s difficult to see whether these figures ‘price in’ that risk. They also have to act both as managers and clinical providers, supervising staff, managing suppliers and directing ever increasing compliance requirements. With the growth of the murky idea of ‘corporate responsibility’ the risks for owner managers have the potential to exponentially increase. The stagnating trend in Associate profits is a concern, but they don’t ‘essentially do the same job’.

  6. 7

    ‘Justice is at last being done’. Does Robert Moxom mean justice for private dentists? What about the patients, especially those on low incomes. The third letter of NHS stands for service. When I entered the profession in 1976, I did so in order to provide a caring service to the population. Up until 2006, it was possible to provide a comprehensive range of treatments for NHS patients and receive a reasonable remuneration for one’s efforts and at a reasonable cost to the patient, The needs of patients have not greatly changed over the years. Their most urgent needs of course may be treatment of pain, of infection and of carious teeth. Their ability to access NHS care and to obtain a comprehensive range of treatments however has changed significantly. The system of remuneration deters NHS dentists from properly fulfilling the dental needs of their patients and supervised neglect is now, sadly, not uncommon. Those already working in the private sector may well earn more than NHS dentists and have the benefit of attending fewer patients in doing so. Their departure from the NHS is understandable given the current NHS contract. But what about the needs of the low paid population whose taxes have no doubt contributed towards the training of the current generation of dentists? What justice is there for them?

    • 8

      @Retiredbds2009
      The low paid population haven’t paid that much in taxes to contribute towards the current generation of dentists. They need to direct their disappointment and anger at the current generation of politicians of this country for how they have failed them not the NHS dentists who have to work under this ridiculous UDA aka nectar point system.

  7. 9

    This figure £68,024 is before taxation, so actually the final figures are even grimmer, around £ 40,000, so a the amount of responsibility and related stress, it looks like a bad joke, but that’s the real pure truth.

    • 10

      Yes Teo
      The answer is to either go private or emigrate and abandon the sinking ship of NHS dentistry. The sooner the the current system collapses the better. Then there might be some hope for a better, reformed NHS dental services.

      • 11

        Dead right, Expat! Core service/pain relief, means tested. The Emperor has no clothes, and hasn’t had for many years. The hopeless pretence to the Sheeple that ‘the NHS’ offers top-notch dental treatment for pound-shop prices is a sick joke.

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