After a survey reveals almost 90% of dentists don’t want to become practice owners, Nigel Jones explores what this means for the wider profession…
Only 11% of dentists see their future career in practice ownership, according to a survey of those working in both the NHS and private settings.
Those dentists were taking part in the Dentistry Confidence Monitor survey held by Practice Plan in 2019.
That only around one in ten dentists picture themselves owning a practice in the future, confirms what many have thought; the traditional career path of becoming an associate and then a practice owner is no longer the aspiration of the majority.
In fact, it seems that a career in dentistry itself is no longer the goal of many. When asked where they saw their future career, the second most popular answer at 35% was changing profession (the most popular was working as an associate in a private practice).
But when it comes to owning a practice, clearly it is not seen as an attractive option by almost 90% of those dentists we surveyed.
Stress, bureaucracy and expense
Which begs the question, why not?
Comments made by respondents provide some idea as to the answer.
‘Too much stress’ was a common theme throughout.
And for many that was coupled with remarks about a lack of financial reward and the expense of running a practice.
Many people also referred to the hassle of dealing with regulation and an increase in administration and bureaucracy.
So, it seems that for many, when it comes to the idea of owning a practice they simply don’t think the benefits outweigh the negatives.
If this is the case it raises further questions about the future of practice ownership in dentistry.
For instance, who will inspire the next generation of practice owners? And how?
And it’s not just an issue of inspiration, but also preparation. Should some more thought be given to how younger dentists can be prepared for running a practice?
We often talk about dentists having an exit strategy, but maybe there needs to be an entry strategy as well.
Increase in number of start-ups
Figures from Christie & Co.’s Dental Market Review 2019 report also suggests that there is a difference in the type of practice owner that is emerging in the profession.
While independent practices still make up the majority of the market, at around 68%, there is an increasing number of small groups.
As the report says, ‘there has been a surge of start-ups, with the aim of growing rapidly to become a significant platform size in order to be attractive for acquisition in the future.’
This rise in start-ups has been seen over the past 18-24 months and Christie estimates that there are now more than 400 multiple practice owners (defined as two or more sites), which is a 50% increase since 2015.
The report states, ‘The very keen interest in the dental sector from private equity, family trusts and other investors is encouraging growth of these groups who anticipate an opportunity to exit at enhanced value.’
So, while practice ownership is not an aspiration for the majority, those who are following that career path seem more interested in the route of owning several sites and establishing a small group model.
Different business models
When it comes to the experience of owning a practice, the type of practice it is – i.e. NHS, private or a mix of both – can have a big impact.
While both NHS and private associates said they weren’t interested in ownership, some of the comments of those who were asked why not, specifically referenced issues around the NHS.
For example, ‘not profitable in the NHS’, ‘worries about NHS contracts’, ‘the paperwork and box ticking for CQC and GDC and NHS contracts is ridiculous’, ‘NHS not sustainable to work in and especially run a practice’, etc.
There are also, of course, variations when it comes to the goodwill value of different types of practices.
The latest statistics from NASDAL, for the quarter ending 30th April 2019, show that NHS practices are bucking the trend and after three consecutive quarters of reducing in goodwill value, they have actually risen.
In the latest quarter their goodwill value was 149% of gross fees – an increase of 31% from January 2019.
In comparison, mixed practices saw an increase of 38%, giving them an average value of 146%.
And fully private practices held relatively steady at 120%.
Alan Suggett, specialist dental accountant and partner in UNW LLP who compiles the goodwill survey, said, ‘It is interesting to note that NHS practice values are back up – I wonder whether with Brexit/No Brexit looming, banks are looking for any kind of certainty that they can find.
‘Anecdotally, I also hear that banks are keen on practices with a significant plan income – in uncertain times it is perhaps natural to cling on to any reassurance that one can find.
‘There are still plenty of private equity backed corporates paying big money if your practice is in the ‘right’ place.
‘However, if you are a single-handed practice with a small NHS contract value and low UDA rate in Cumbria or Cornwall, I wouldn’t hold your breath.’
Retention of owners
Some respondents to the survey talked about how they had given up ownership of a practice and wouldn’t go down that route again.
Again, stress and the level of administration involved was a recurring theme as to why many had sold their practices and become an associate.
Add this to the lack of desire for people to become owners in the first place, and it feels as if there is a recruitment and retention crisis within practice ownership that mirrors the issues in dentistry as a whole.
While, as the Christie report shows, the dental practice market is still currently dominated by independent owners, there is a real sense that the direction of travel lies elsewhere.
Nigel Jones is the Sales and Marketing Director of Practice Plan