In the five years since the collapse of Lehman Brothers sent the global financial system into near meltdown, the legacy remains with us and the dental sector, like all others, has been affected. However, finally, there is good news as a number of indicators, such as the FSB Small Business Index and the BDO Business Trends survey, have been watched closely and are evidencing that the UK economy accelerated in the second half of 2013. This is backed up by the ICAEW Economic Forecast, which shows the economy is likely to grow more than double the Office for Budget Responsibility’s March forecast. Given the current momentum in the UK economy, economic growth looks potentially to be the best performance since 2007.
Whilst this is encouraging, a bit of perspective is needed. Over the past five years, the UK population has increased by about two million, and as the economy is yet to hit its previous size, the per-person level of economic activity is way down on pre 2008 figures. So, what does this mean? For the average household, none of the above will feel like a real recovery until pay growth starts to keep up with inflation. The boom times are not back, but finally, the UK economy is getting back on its feet and moving forward.
You may be considering your future options, particularly if you have an NHS contract and are still waiting to find out what the new contract will look, feel, and demand of you. Having recently attended ‘The Future of UK Dentistry 2014’, it is clear that there is still no clarity around the new contracts and with a general election and “Proto Pilots” being introduced next year, I believe we are some way off before there will be any.
The good news is we are seeing no lack of interest in NHS practices, as many would-be purchasers appear keen to secure an existing contract as they believe it will provide them with a better base, no matter what the new changes may bring.
Cold calling is rife! We hear all the time of direct approaches to principals, and there is nothing more flattering, but our response is always one of caution and advice to obtain an independent valuation. On so many occasions, we hear of an offer being accepted when we know that if the practice had gone to the open market, the real value would easily be realised.
Many principals are selling to their associates in a private transaction. We would always advise an independent valuation to benchmark the offer against, and the number of private sales we are involved in is steadily increasing as there is so much for a principal to deal with whilst continuing to run a business and maintain the relationship between principal and associate.
Sampana Banga, Head of Dentistry at CQC, spoke at the Future of Dentistry conference; by the end of last year, 8,000 providers had registered with the CQC and 10,957 dental locations. He confirmed what we all already knew, that dentistry is not as high a risk as other regulated sectors, and the good news is that a new approach to inspections is to be considered and should take effect from April 2015. What this new approach will be is yet to be determined, but a consultation document is to be issued in November 2014. Moving forward, CQC will be working more closely with the GDC and NHS England, and one of the aims will be to improve the Registration process. For first-time would-be principals, the emphasis may be more focused on leadership and management – an area we suspect not all associates have much experience with.
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