Most principals will at some time have taken out some form of practice expenses cover. After all if the principal is unable to work, the bills still have to be paid such as mortgage or rental costs, staff wages, utilities, professional expenses. Indeed the majority of expenses to allow a practice to operate continue irrespective of whether the principal is working or not. Most importantly, the patients still need to be seen and this is likely to involve paying a locum to cover for short-term illness or finding an associate to cover for long-term illness.
This would obviously have a significant impact on the profitability of a practice, limit the ability of the principal to continue drawing an income and indeed potentially affect the whole future viability of the practice.
It is important for a principal to review contingency plans on a regular basis to ensure they are sufficient, especially if there have been changes to the practice. One such change for most dentists is the new contract. This has had an effect on the need for cover. Certainly practices that have become private should review all their plans.
Exactly how much of an issue the absence of the principal is will depend upon the structure of the practice. A sole practitioner or small practice may have very considerable problems. An absence of only a short period could prove to be very expensive and it can be almost impossible to find locum support. If the practice has a number principals or associates, there may be greater scope to provide internal cover. Patients can continue to be seen and the loss of income will be more manageable.
The situation also differs depending upon the income make-up of the practice. If the practice is private then income will cease as soon as the patients are not being seen. If there is a Denplan or equivalent scheme in place then income will still cease, however this is likely to be a reduction in income over a period of months.
Contract terms
The new NHS contract works in a similar fashion. Historically under the old contract capitation and continual care payments would continue for a period of months even if patients were not seen, however the bulk of income received from work undertaken would cease almost immediately. With the new contract, income is likely to continue for much longer, the terms of the contract stipulate that the PCT review the UDA’s six-monthly so one would reasonably expect income to continue in full for that period.
Dependant upon the result of any review, the PCT can withhold or reduce income paid. There are a number of specialist providers of practice expense cover. As with all forms of insurance, it is important to read the small print. Policies fall into one of two types. Most policies provide annual cover in the same way as car insurance. This does make them cost effective, however at a practical level this means if a claim is made one-year premiums may be increased significantly, or cover declined altogether when renewal is due. This is likely to leave the principal without insurance, as cover elsewhere will be difficult to find.
A far better option is to take a permanent contract, which is potentially more expensive at the outset. However these plans provide the certainty that cover will always be in place irrespective of how many times a claim is made.
Practice expenses cover is not cheap.
With the new general dental services contract being more generous than the old contract in this respect, it is important to ensure that cover does not commence sooner than necessary, as this significantly affects the premiums. As with all forms of insurance, it is important to ensure sufficient protection, however it is equally important to ensure that it is possible to claim from any policy and that premiums are not wasted.
