By DR SIMON HOCKEN
How do NHS dental practices make a profit? I mean, seriously. Let’s look at some basic figures. In my experience, a good NHS associate will complete somewhere between 30 and 35 UDAs a day. Let’s give the UDAs a typical value of £23 each. So in pounds they gross between £690 and £805 a day if there is no additional private work added to the day’s gross. (More often than not, there isn’t, because it takes all day to do 35 UDAs!)
So, let’s take an average (between my two figures) NHS gross of £746 a day (32.5 UDAs). And let’s pay the dentist £11 per UDA. That’s £358 a day. Let’s assume there’s no lab (it’ll make the figures worse!). The principal is now left with £746 – £358 = £388. The next call on this money is the material costs, currently running at an average of seven per cent in practices we work with. £746 x 0.07 = £52. £388 – £52 = £306 for the principal.
So the principal is left with £306 to pay this surgery’s share of the practice overheads and then preferably make a modest profit. In my experience, the overhead or the cost of opening a surgery per day, before you put materials in it or a pay the clinician, is somewhere between £300 and £500. If the owner of my fictitious practice is lucky enough to be at the lower end of the range, £300 per day, he can cover his overhead and make £6 a day profit…
At this point (if you are still reading!), I suggest you look at the cost to open a surgery per day in your practice and then run the same sums that I have demonstrated above so as to get at your profit per surgery per day figure.
In order to calculate the cost of opening a surgery per day:
- Take your annual overhead figure (some accountants refer to this as your indirect costs or your fixed costs – in reality, it’s all of your annual costs except spending on associates, hygienists, lab and materials.) Let’s say it is £300,000.
- Work out the number of days per year each of your surgeries is open and treating patients, so you get a total number of surgery days per year. Say the number is 725 days.
- Divide your overhead by the number of surgery days you open and you will have the cost per surgery per day. £300,000 divided by 725 days = £414 to open a surgery per day before you pay for materials and for the clinician.
I suspect that anyone who has done this sum will now be wondering what they can do to make things better! Which levers can you pull to improve your situation? Let’s look at the options:
- Have the NHS dentist do more UDAs per day
- Have the NHS dentist do the same number of UDAs per day while adding some private dentistry to the day by extending the day length
- Reduce the overheads
- Reduce the materials bill
- Pay the associate less
I’m not advocating any of these solutions; none of them will add to the collective happiness of the practice! A lot of NHS dentists I meet are determined to gross £746 a day and earn £11 per UDA, somehow making the principal the bad guy if they don’t support this. Frankly, I don’t meet many bad principals, I just meet principals struggling to make the numbers work for them, just as I am here.
In reality, if the dentist is unwilling or unable to increase their gross, the only lever that will make a significant difference is how much the associate dentist gets paid. In recent years, low prices in high street opticians and a competitive corporate market for vets has meant that both opticians and vets earn half of what they did 20 years ago.
If NHS dentistry continues to be sold at rock bottom prices (and there is no sign from the government that this will change) the downward pressure on NHS dentists’ pay will inevitably persist. The dental corporates know this, and with an oversupply of willing young dentists we have the perfect environment for pay cuts.
If you want some help making sense of your NHS profitability, contact me and I’ll go through the numbers for your practice.
m. 07770 430576