NASDAL report July 2019

It would appear there has been a “rebound” in NHS practice values over the quarter to 30th April 2019 after three successive quarters of reductions. Average goodwill value was 149% of gross fees, an increase from 118% in the previous quarter. A reminder that the highest point was 224% in July 2018.

Alan Suggett, a partner in UNW LLP 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 practiceswith 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.”

I wonder if now would be a good time to turn ones back on the urban areas and look to a build a quieter life. serving a rural community where the pace of life will be slower and the cost of living lower? There’s no line for quality of life on a spreadsheet.

The NASDAL report is required reading for all dental business owners and wannabe owners. You can download it and subscribe to future editions HERE.

Clinical freedom in a time of austerity.

First published online in Dentistry Blog on 8th April 2019. Full article.

Clinical freedom is becoming an aspiration rather than reality.

I regularly have to straddle a line between what principals need and what associates want, whilst attempting to keep both sides happy.

Often this involves money and the phrase ‘clinical freedom’.

Amongst the things they never teach you at dental school is that you must cover your costs before you can take anything out for yourself.

Increasing overheads makes this hard.

For instance, a 13% increase in CQC fees to ‘better align the cost of regulation’ must be borne by business owners.

As far as NHS practices are concerned, the minimal rise in fees during a decade of austerity have been swamped by rising costs.

Where contracts are fixed and consume a week’s full-time work to achieve them, there is little or no room for increasing productivity.

Associates, who have the dubiously privileged position of being self-employed, must take their share of the repeated squeezes on practice owners.

Either earn more (difficult with a fixed contract) or cost less.

Because previous generations earned a bigger slice than you, unfortunately does not mean that there is any divine right.

In any profession it is time and expertise for which people pay.

The third party fee setter (the NHS) took a set of fees from a decade and a half ago and continues to run with them.

This ignores the flexibility and evolution that existed in the dental contracts for nearly six decades, which helped practices stay agile in order to remain profitable.

Sometimes these money pressures are manifested in a reduction in quality of working conditions; for instance equipment might not be maintained, materials and laboratories are chosen on cost and choice is limited and staff might be ‘bargain basement’.

As the first casualty of war is truth, so clinical freedom can become an aspiration rather than a reality.

If you’re in Dublin on March 2nd

My maternal grandparents would be proud of me being selected for Croke Park. I’ll not be gracing the hallowed turf with my prowess with sliotar and hurley. Instead I’ll be up on level 5 in the Hogan suite on the 5th Floor with a Taster session of “The 101 Things They Didn’t Teach You At Dental School”.

It’s always the small that get squeezed the most…

Over the past few years I have seen a few dentists who are being forced into financial situations that are making survival harder with relatively short-term loans that were taken out at “tight” times and their banks declining to support them further by rescheduling the debts over a longer term. Instead of being able to breathe and grow their businesses they are constantly having act in the short term, thus significantly increasing the stress in their lives. Mike Cherry’s words struck a chord, as it isn’t only Dentists who have these problems.

“Despite being a decade on from the crash, we still have this dangerous combination of weak appetite for, and low awareness of, alternative finance options, high borrowing costs and inadequate support for small firms that are turned down by banks.”

Mike Cherry, National Chairman of the Federation of Small Businesses, commenting on research which suggests that UK economic growth is being ‘restricted’ by limited access to alternative finance options for small firms.

via PG&T

As one of the founders of PG&T, that wonderful true gentleman, Ted Price (may he rest in peace) said when he dressed down the Area Director of my bankers in 1992 after they threatened to bankrupt me when my debts ran as high as £42K (less than the cheapest one bedroom flat on the local housing development), “you lot (ie Bankers) can’t lend money to the likes of Robert Maxwell and expect this young man (sic) to bale you out!”

Crises share two things..

Writing in the Weekend FT Gillian Tett looks at (financial) crises old and new and what they share.

First, the pre-crisis period is marked by hubris, greed, opacity and tunnel vision…that makes it impossible to assess risks.

Second, when the crisis hits, there is a sudden loss of trust, among investors, governments, institutions or all three.

Remember that that the roots of the word “credit” comes from the Latin, “credere”, meaning to believe; finance does not work without faith.

The irony is that too much trust creates bubbles that (almost) inevitably burst.

Wise words indeed.

 

It’s never my fault…

“It is a remarkable fact, but few businesses ever seem to fail because of excessive leverage, misconceived strategies, or inability to meet the needs of their customers. They struggle because banks unreasonably refuse further credit, or because of unseasonable weather, or some unexpected adverse effect such as a terrorist attack. Most often, however, their difficulties are the result of some insufficiently supportive government policy. The corporate executive who says “we got it wrong” is as rare as the politician who makes a similar admission.”

John Kay writing in the FT 7th/8th July 2018

Spreadsheets….

“This confirmed my long held suspicion that many people use spreadsheets as an alternative to thinking.”
 
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