The dental sector has, without question, been hit very hard by the Covid-19 pandemic; in this column I take a detailed look at the outcomes of the recent (July 2020) independent research Braemar Finance commissioned to see what the landscape looks like for dental practices and the people who work in them.
A question on many people’s lips has been about reopening – when is a good time? Not an easy one to answer but our data suggests that 39% of dentists feel it will take between 3 – 6 months before they’re fully operational. The optimists (29%) are of the opinion it will only take them up to three months while at the other of the scale, one in 10 are taking the longer view and think it will take anything up to a year before things are properly back to normal.
Dentists are remarkably positive about their prospects in the coming year, with 31% expecting to expand against only 5% who anticipate contracting; 63% will be ‘staying the same’.
Tempering this positivity is staffing levels - dentists are almost split down the middle, with 51% of dentists expecting to operate with the same number of staff while 44% believe they will need fewer people. Only 3% will be employing more.
In addition, just 18% of dentists are of the view they’ll see an increase in revenue in the coming year, with a further 6% saying they don’t anticipate any difference. Nearly two thirds (62%) of those polled are expecting a decrease of anything between 1% and 60%.
Looking ahead, dentists are fairly evenly split about the prospects for the UK’s economy, with a quarter expecting a quick path to full recovery while another 25% think the economy is still declining, with worse to come.
- The economy is still declining – there is worse to come - 26%
- The worst is behind us but it will be a slow path to full recovery - 21%
- The worst is behind us but I'm concerned the economy could decline again - 21%
- The worst is behind us but it will be a quick path to full recovery - 25%
- I don't think there will be any true economic growth for the foreseeable future - 7%
Impact of the pandemic on dentists’ finances
Dentists’ funding priorities have seen a necessitated shift towards the purchase of additional PPE and practice re-fits, and they’ve been making use of a wide range of finance options, from the government schemes to new funding and loan consolidation.
Interestingly, despite the reliance on additional funding, the topic of debt continues to divide respondents with contrasting views about what it means – 49% feel it’s part and parcel of running a business while 46% have the opposite opinion and think it’s a sign of a poorly run business.
Looking ahead, there will be several considerations and questions (financial and otherwise) that will need to be considered before opening, including:
- Increased costs due to PPE – should these be passed on or not?
- Many practices have had to install safety measures in practice, like air purifiers/protective screens, adding cost at the time when income has dropped
- Lost time because of guidance stating there must be a fallow period between the last aerosol-generating procedures (AGP) and re-entering the room to clean – which means seeing less patients
- New social distancing procedures that elongate the patients’ time in the practice, reducing the numbers of patients that can be seen in a day
- Having the need for different staff teams who themselves must social distance to minimise the spread of the virus, meaning potentially having more staff back from furlough than the business can realistically sustain with the patient numbers being seen
- The increased cost to practices when they will shortly need to contribute further to furlough costs should some of their staff remain furloughed
- July tax bill – although HMRC is allowing this to be deferred to 31 January 2021 it still needs to be paid and this is simply a deferral
- Higher unemployment rates will impact disposable income levels of private patients and could reduce the numbers of those able to afford cosmetic procedures
- Anxiety levels among patients could keep them away from dentists for fear of contracting Covid-19, potentially impacting patient numbers
- Payment holidays from creditors coming to a close and repayments on loans recommencing
- The Annual Retention Fee of £680 charged by the General Dental Council will be due by 31 December, although we are aware of dentists’ opinions on this issue
Dentists have all this to consider while trying to manage patients’ expectations who see practices re-opening and assume it means they’ll be able to get an appointment for any treatment straight away! Stress levels are high and we’re unfortunately aware of some practice staff receiving abuse from impatient patients. This could mean many dentists having to increase the numbers of hours they currently work to make up some of the shortfall created.
To help them cope, every dentist that took part in our research relied on at least one coping mechanism to address their mental wellbeing, ranging from maintaining a routine and remaining organised to being more flexible and giving themselves regular breaks.
My advice to practice owners is to seek advice and guidance from people they trust, including their accountants or financial advisors who will help practice owners produce reliable cashflow projections. These will assist them with understanding and planning for the levels of support they will need going forward.
This could include accessing CBILS (before the deadline), requesting further payment holidays on existing debts, consolidating existing borrowing over a longer period – all good aids to ease cashflow difficulties until the worst is behind them.