Dental practices continue to increase profits, latest statistics show

Dental practice principals increased their profit by an average of 3% over the last year, according to the latest statistics from NASDAL.

The figures from the National Association of Specialist Dental Accountants and Lawyers (NASDAL) showed the average net profit per principal for each dental practice type:

‘We’re seeing an increase in profit of all types of practice,’ Ian Simpson from Humphrey and Co, who helped put the figures together, said.

‘There’s very little to choose between NHS practices and private practices in terms of profitability.

‘Mixed practices tend to have the highest level of fee income, but then will typically have the highest cost ratio as well.

‘Therefore typically, a mixed practice’s profit is nearly £10,000 less than a dedicated (more than 80%) NHS or private practice.’

Upwards trend

The increase in profits across all dental practice types continues an overall upwards trend since 2012/13.

Despite a continued increase, profit levels in NHS and mixed practices still do not match the peaks seen before the financial crisis in 2008.

‘Although the gap between mixed and NHS or private practices is not huge, it is significant,’ Ian continues.

‘It may be controversial  to say but might this be explained by NHS practices maximising profits by concentrating on NHS dentistry with a low-cost base and private practices maximising profits by offering higher value treatments, whereas, mixed practices could be left offering private dentistry at nearer to NHS prices and therefore seeing lower profits?

‘Perhaps mixed practices fall into the all too common business trap of losing focus and not being entirely clear on who they are and what they deliver to their patients.’

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Associates

Despite an increase in profits for principals, associate pay remained level, at an average rate of £10.89 per UDA.

That’s as associates continue to see a small reduction in fee income, dropping on average by -1% to £81,714, which also corresponds to a similar average drop in profitability, now at £66,318.

Despite this, dental practices with associates saw their net profits increase to £143,446 per principal (up from £138,511 in 2016) compared with £107,896 per principal for practices without associates (up from £105,914 in 2016).

‘With associate fees its a continued reduction in fee income,’ Ian explains.

‘That has resulted in a further reduction in net profit or around £1,000.

‘There are increasing costs too (for associates), something we did pick out for associates was the increase in indemnity insurance.’