Checking up on your finances – top five financial questions for dentists

Magdalena Harding answers the top five questions that dentists ask about their finances.

1. Will I achieve my UDA targets and avoid clawback?

If a practice fails to achieve 95% of its target for units of dental activity (UDA), it will have to repay the value of any work that wasn’t delivered. More than £80 million was clawed back last year – a figure that’s expected to have increased significantly since then.

Careful planning of appointments and holidays throughout the year and the month-on-month monitoring of progress against your target is vital to avoid the last-minute rush to hit targets that many practices face during February and March. This can mean delays to private treatments as schedules are cleared to see NHS patients.

2. How will changes to NHS dental contracts affect my profitability?

The contract reform programme in England is set for a national rollout in April 2020 and it remains to be seen exactly how the changed contracts affect profitability, which will vary from practice to practice. However, reports from practices trialling the two proposed prototype contracts suggest that, while there are positive aspects, achieving patient number and activity targets is proving challenging.

A substantial minority of prototype practices are experiencing clawback, while others have only avoided it by boosting running costs by as much as £50,000 a year so they can see enough patients.

This is leading to concerns about the suitability of the reformed contracts for many practices and the impact they might have on profitability, although the wider impact of it is still to be determined.

3. How will the value of my practice impact my exit strategy?

Practice values are particularly difficult to forecast due to the number of variables in play. That said, NHS goodwill values remain remarkably resilient, despite pressure from the current contract and lack of clarity about reforms.

The certainty of cashflow that comes with the NHS contract has a definite appeal, though we are also seeing signs of a swing in interest towards private practice and particularly those with a large membership plan base.

Whatever your situation, it is important to factor in the value of your practice to your retirement planning and monitor this regularly to help identify a target exit date or exit value.

4. How will I raise the funds and develop the expertise to become a practice owner?

Being a practice owner is more challenging than 20 or 30 years ago, thanks to an increasingly strict regulatory environment, the growing threat of litigation and evolving NHS contractual arrangements.

However, some things have changed for the better, with a more health-conscious society meaning growing demand for dentistry.

Raising the funds to buy a practice will almost certainly mean approaching banks for a loan. They will demand a robust business plan, demonstrating how you will manage the change in ownership, preserve the existing patient base and develop the practice.

Ambitious associates will find that getting involved in the business side of their current practice is a useful starting point, providing a valuable insight into the reality of being an owner.

Talking to an adviser with an intimate understanding of the dental market, such as Wesleyan Bank, can also help.

There are other sources of advice and support, from dental business coaches to membership plan providers like Practice Plan and professional bodies like the British Dental Association and the Faculty of General Dental Practice.

5. How can I tackle the cost of regulation, litigation and complaints?

There is little that one individual can do when it comes to the cost of regulation, including Care Quality Commission (CQC) and General Dental Council fees, other than to engage in any consultations.

CQC inspections will always cause trepidation, but many of its principles are consistent with the approach that any safe, effective and successful business should be taking anyway. Adopting these standards wholeheartedly will take some of the stress out of inspections and avoid any expensive remediation work.

While practices should shop around for professional indemnity cover, most providers are facing the same challenges when it comes to rising litigation and complaints.

However, it’s well understood that most complaints come from a breakdown in communication, rather than any clinical failing.

Dentists should therefore allow time to fully explain treatment plans, not just to make sure informed consent is given, but to manage patients’ expectations and build relationships.

What next?

Whatever financial concern is on your mind, the specialist expertise of an impartial financial adviser, who understands your personal and professional needs, can help.

Wesleyan provides specialist financial advice and services to dentists. To speak to a Wesleyan financial consultant, visit or call 0800 092 1990.

This information is based on our current understanding of legislation. Tax treatment depends on individual circumstances and can change in the future. The information contained in this article does not constitute financial advice.

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