Will dentistry survive a financial crash?

financial crash from COVID-19With the COVID-19 lockdown regulations easing and dental practices commencing a phased reopening, plans can be made to return to something like normality over the coming weeks. John Clarke looks into what the financial legacy from the pandemic will be on dentistry.

Hygiene protocols, infection controls and decontamination procedures are a central pillar of dentistry. However, the pandemic’s legacy will mean a significantly different working environment will emerge from the one we knew before COVID-19 took a stranglehold on our daily lives.

Bouncing back or knocked back?

Almost three months of enforced closure, reduced income and the need to invest in safeguards for their staff and patients, has led many practices to seek government support. Although the launch of the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS) have been welcomed by stricken businesses, some dental practice owners find themselves falling outside of the eligibility criteria.

This comes as a blow at a time when the majority are unable to claim business rates relief. This is due to practices having a rateable value of more than £15,000. Furthermore, self-employed dentists earning more than £50,000 are exempt from financial assistance through the Self-Employment Income Support Scheme.

While some dental practices reopened in June, added costs due to purchasing high-grade protective equipment has left many worrying about their ability to survive. Especially predominantly private practices who have not received any government support. Elsewhere, some NHS practices have qualified for funding. They can take a degree of comfort as NHS England is crediting UDAs during the pandemic, irrespective of clinical activity.

Unless they are awarded additional non-recurrent UDAs, NHS practices presently have less appetite to increase output on a month-by-month basis. As a result, this has offered some temporary relief to private practices. Who may see an uplift in patient demand for routine check-ups.

Banks appetite for lending

Historically, dental practice owners choose from a pool of established high street lenders and a growing number of alternative funding sources to access finance. But the onset of COVID-19 has been the catalyst for a shift in attitudes within the banking sector. The profits of traditional high street banks have been significantly hit by a surge in credit impairments and requests for forbearance from existing customers. Therefore, banks are taking a conservative view on new lending and operating more rigid, blanket lending policies.

In contrast, specialist finance providers have adopted a more flexible stance and remained open for business. Alternative lenders – in particular those who possess deep domain market knowledge of dentistry – are acutely aware of the sector’s financial challenges and its ability to recover in the short, medium and long term. As such, they may be more receptive to supporting dental practice owners with bespoke finance solutions. These lenders can enable practices to weather the current storm and protect their business.

Some lenders now offer ‘back to work’ loans. Practices can use this to spread the cost of the investment they need to make in items like protective screens, sanitising stations and other health and safety equipment, such as air purification systems. By electing to pay over time, typically from one to five years, these loans can also fund investments in IT software, teledentistry solutions as well as modular buildings to provide additional space and facilities.

Planning for the future

Even though social distancing rules have recently relaxed, in reality the majority of dentists face the prospect of reduced patient numbers for some time to come. Regardless of whether your practice has qualified for funding to get you through this period of uncertainty, you will still need to build your income and control your costs. Now is the time to review your finances. This should include updating your business plan. Take into account what has happened and the ongoing feasibility of your strategic plan.

It is important to review resource costs, cashflow treatment forecasts and profitability. As well as the additional expenditure on necessary safety measures. Consider:

  • The cost of personal protective equipment (PPE)
  • Your number of opening hours
  • The mix of treatments the practice is delivering
  • The cost of lab equipment and material
  • Each clinician’s hourly rate
  • ‘What if?’ scenarios in the event of a second wave of the pandemic.

Once updated, review the plan and review again. You need to know it is accurate. Share with others, such as specialist accountants who specialise in the dental industry and trusted advisers. Get their input and do not be afraid to tweak until you feel it is right. Then, after you re-open, constantly monitor the results against the plan. So you know what is working, or to see where you need to change.

With the right preparations, you will be in a strong position to navigate the ‘new normal’. There will be challenges, particularly at first. Restrictions will limit the treatments you are able to carry out. But with changes, and adaptions, you can get your practice back up and running. Back to doing what you do best again.

Not all financial providers were created equal

In the current climate, banks will have a level and type of lending they feel comfortable with. Once they reach their exposure limit, or if they decide to suspend a specific product, they may be unwilling to provide further funding. This might mean looking at alternative funding options. If you find yourself in this situation, it’s worth remembering that not all financial providers will view you in the same way. So it pays to keep abreast of the market and consider alternative solutions.


For further information, click here to read Wesleyan Bank’s COVID-19 business guide series – Back to the future – planning to return to work in a new era.

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