Cost of living crisis impact on dentistry

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While dental finances appear to be in good shape overall, NHS practices are struggling to meet demand and patients could be losing out with uncertain times ahead. Adrian O’Dowd investigates.

Cost of living pressures at the moment in the UK are affecting many businesses and industries including dentistry, which is having an impact on services provided and the balance of NHS to private provision.

As the public are becoming increasingly conscious of what they can afford to spend, thanks to rising inflation levels and interest rates, dental treatment is one ‘expense’ that may be being put on the backburner, experts are warning, especially within NHS dentistry.

Financially, on the surface, the dental market looks healthy, as confirmed by the latest Christie & Co Dental Market Review published in July.

The report says: ‘The level of market activity in 2021 continued into 2022 despite geopolitical uncertainty, the cost-of-living crisis, and increasing running costs which are affecting nearly every business sector in the UK.’

However, as there are predictions that inflation will continue to rise in the coming months, this means that dentists’ savings will be worth less at the same time as costs for dentists – such as those for materials, practice rents and mortgages – will also rise.

Mike Marigold, Chief Executive of Montgomery Charles Financial Management, which provides financial planning advice for dental principals, spoke to a handful of client practices recently about their opinions on the current market.

‘I have spoken to some mainly mixed dental practices recently to ask them how they are feeling about the next 12 months in dentistry and what their main challenges and opportunities are right now,’ he says.

‘All of them were positive about the next 12 months and that may well be because we tend to deal with the mixed practices that have a penchant for private.

‘They also said that NHS practices in deprived areas are quite worried about the future because they are on fixed contracts and their demand is insatiable. They cannot deliver and they are getting a lot of burn-out of staff.’


NHS versus private balance

A real divergence between the fortunes of the private and NHS sectors is becoming increasingly apparent with one commentator in the Dental Market Review saying: ‘It is like running two completely different businesses under one roof.’

James Morter, Partner at business advisers and accountants Hazlewoods, says: ‘A significant factor is that NHS income is fixed, whereas private practices can set fees to accommodate rising costs. NHS profits are being squeezed, meaning they cut costs, which risks losing staff and in turn results in not being able to provide a basic, consistent standard of service.’

Some practices are also finding it hard to recruit NHS dental associates currently, particularly in more rural areas, which can cause problems in achieving NHS contract targets, resulting in clawbacks and increased pressure on NHS practice finances.

Mike agrees, saying: ‘One of my clients said to me that the NHS work is being squeezed so much that it is dying on the vine.

‘Those NHS practices that are out there will be looking more to convert to private and there is going to be more neglect because if you convert an NHS practice into private you are probably halving the service in the area.’


Treatments on hold

An unfortunate consequence of the cost of living squeeze on patients’ finances appears to be a growing trend for people to put treatments on hold for as long as they can, according to some of the experts.

Priya Kotecha, Partner at Mac Kotecha & Company says: ‘Some patients may decide to have a tooth out rather than to carry out more expensive treatment which would actually be better for their dental health.

‘It is also a matter of priority. Some people may spend a lot of money on hairdressers/gyms etc and not much on dentists. The level of fees charged for private work may make a difference between someone going with the treatment or not. Perhaps having an interest free instalment plan for treatments of £100 and over may help improve the take up of procedures.’

Mike from Montgomery Charles adds: ‘The practices I spoke to are seeing that certain treatments are being delayed. Patients are still coming in for their examinations and where they have got plans and paying monthly amounts, those patients can budget for their dentistry.

‘Some of these practices have increased their plan costs by 10% without any issue from people. Some practices were worried about the impact of putting prices up. What is happening is we are seeing hygienist visits are being cancelled as patients view that as a saving.

‘Sometimes large treatments are being cancelled such as periodontal or root cancel work but the receptionists are geared to replace those meetings with other people.’



Another key issue at the moment is workforce challenges and a lack of available professionals to work in dental practices.

The BDA recently highlighted its concerns over a continuing ‘exodus from the workforce’ in dentistry, saying that the number of dentists working in the NHS in England fell by almost 1,000 in 2021.

Recent BDA surveys found that more than 40% of dentists were likely to change career or seek early retirement in the next 12 months and 71% of General Dental Practitioners said they would not recommend dentistry as a career.

At the same time, recent research carried out by the BBC in August found that of almost 7,000 dental practices contacted over the summer, most (90%) were not accepting adult NHS patients while 80% were also refusing to take on children – a sign of how practices do not have sufficient workforce to take on new patients.

Experts can see the pressure that workforce gaps are having on the industry.

The Christie & Co report says: “ All operators commented that costs had increased significantly over the last six months but that the workforce was by far the biggest area of concern. Nursing pay was the primary concern, with pay increasing by an average of 6.5% amongst those questioned.

‘There is less pressure on Associate and Hygienist/Therapist pay where earnings are based on a percentage of revenue, however, NHS Associates who operate on a fixed price per UDA are likely to seek an increase.

‘This will impact practices with lower UDA rates, and we expect Associate costs to rise to over 50% of gross UDA rate in practices with UDA rates of sub £25 and/or those in more rural areas.’

Nigel Utting, Associate Partner at Hazlewoods, explains: ‘Staff recruitment is not just isolated to dentistry and is a major problem in many sectors. We are currently living within a fluid, workforce dominated market, and demand is outstripping supply across a range of industries.

‘If staff think they are not getting paid enough then they can easily walk out of one job and into the next, even if that is in a different sector, which can be appealing if moving to a less stressful role for a similar, or better, salary.’ 

Workforce pressures are a serious worry, according to Priya from Mac Kotecha & Company, who says: ‘The most significant impact of the cost-of-living rise and inflation on dental practices has been getting good nurses at a reasonable cost and getting good dental associates at an affordable rate. There are also pressures from cost increases in lab and dental sundries.’



Despite the issues in NHS dentistry, banks seem to be happy lending to dental practices and the dental sector continues to receive positive support from lenders, regardless of their status as NHS, mixed, or purely private practices.

The Dental Market Review says: ‘Whilst 2020 was hit substantially by lockdown (mainly on the unprotected private side), 2021 saw practices’ turnover return to pre-pandemic levels and, in many cases, exceed them. This has been recognised by the banks.

‘However, historic performance of the practice, together with the experience of the buyer, continues to be the main driving factors for lenders.’

Nigel from Hazlewoods says: ‘Fundamentally, dental practices are profitable businesses and banks like that. It's a relatively safe, lower-risk lending environment. NHS practices have regular monthly cash inflows, as do private practices with healthy plan income, which helps to service the debt.

‘However, given rising interest rates banks are changing their “stress test” criteria to reflect higher interest rates and some practice buyers might need to put more money in upfront to give banks comfort and reassurance.’

Mike from Montgomery Charles, adds: ‘‘Banks are looking for businesses that have guaranteed revenues so dental practices that have plan patients are ideal. The banks are exploiting the situation. The interest rate they are trying to squeeze out of practices are quite high. You are looking at commercial loans of 4.5% to 5% now.’

Priya from Mac Kotecha & Company agrees, saying: ‘Banks and lenders look at the health sector more positively. However, there are dentists and practices that are well run and some that are not. Lenders look for well run businesses to support as they always look to check and assess if any support will be easily afforded and prefer secured lending for obvious reasons.’



Dental practices can take steps to help protect themselves and survive the current financial pressures that the cost-of-living crisis is throwing their way, according to the experts.

Asked what steps can be taken to try and mitigate higher expenses and a potential drop in patients, Priya says: ‘Have a flexible approach and an appreciation of the types of patients one has. Also have a policy where unprofitable policies are reviewed and made profitable or discontinued. For example, if hygienist visits are loss making, then increase the charges or eliminate that service in preference to some other types of treatments like Invisalign.’

The advice from James from Hazlewoods recommends a review of the practice’s finances, as he explains: ‘Sadly, inflation is a product of many external factors which are beyond a practice’s control. One thing to do is a deep-dive review of the practice’s finances – policies, contracts, outgoings, the day-to-day running of the practice.

‘If a cost is not truly necessary, why continue paying? Consider alternative suppliers. Now is the time to shop around to make sure you're not missing out on a cheaper alternative – you want value for money.

‘From a private perspective, owners can tolerate a drop in patient numbers if the ones they retain are paying more – patient fees can be reviewed in conjunction with practice outgoings.

‘Many NHS dentists may consider whether they should go private – potentially fewer patients and less stress, whilst making just as much money, if not more.’

Mike from Montgomery Charles agrees that some savings can be made, suggesting: ‘Hygienists, where they can be self-employed, is good because they’re then responsible for their own missed appointments and will be more motivated. With associates, you need to be focusing on increasing their income not their percentage.

‘It’s incredibly hard to mitigate the rising costs in practices. You need to have a chief nurse responsible for materials that are allocated. Materials are bought centrally and that nurse is responsible for the budget so they are in negotiations with anyone that tries to put the price up.’

As the cost-of-living crisis looks likely to continue for some time, many practices may be facing a drop in private fees in the next year as well as fewer NHS patient visits. Dental finances are entering an uncertain period.


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