New statistics reveal that rising costs are impacting on dentists’ profits
The annual benchmarking statistics just issued by the National Association of Specialist Dental Accountants & Lawyers (NASDAL) show that dental practices have been contending with a significant increase in costs.
In the tax returns of dentists in the year ending March 2012, the total average costs of running a dental practice equated to 67.6% of practice income.
As a result, profits are almost back to the levels in the 2004-2005 NASDAL survey.
While fee income has risen on average by £21k in NHS practices included in the survey, profit is down. In the private sector, fee income is down and profits static. Larger practices, with associates, have seen the greatest reduction in profit. In the year ending 2010 the average net profit per principal in a practice with associates was £148,408, in the year ending March 2011 it was £129,000 and the year ended March 2012 it was £125,000.
Other indicative findings on income are:
• The average net profit for a typical dental practice in 10/11 was £125,000 and by the end of March 2012 it was down to £122,000
• An NHS principal’s net profit is down by nearly 3% to £130,000 while a Private practice principal’s net profit is static at £117,000
According to Ian Simpson, specialist dental accountant and the NASDAL member who leads the annual statistical survey, smaller private practices are finding it easier to protect their profits by trimming costs.
• Most dentists are still sole traders
• Associates continue to experience a fall in income and profit, with average net profit reducing from £68,000 in 2011 to £67,000 in 2012
• Lab and material costs are static
• The average practice UDA rate is £26.02
• Dentists appear to be working harder for less
Overall, NHS practices continue to earn greater profit than private practices, although the gap has narrowed in recent years.
Nick Ledingham, chairman of NASDAL, said that in the context of the wider economy, the survey results showed that dentists working with a NASDAL accountant were surviving through a variety of different strategies.
Calculated annually by Ian’s firm, firm Humphrey and Co, the statistics are gathered from a sample of practices across the UK to provide average ‘state-of-the-nation’ figures.
They are used by NASDAL accountants to help dentists and practices benchmark their figures.
The statistics reflect the fee income of practices with up to 80% NHS commitment while a private practice is deemed to have up to 80% of its income derived from private fees.
•Pictured above: NASDAL members (l-r) David Paul, Nick Ledingham, Ian Simpson and Alan Suggett who all spoke at the annual press conference led by chairman Nick Ledingham