Profitability of NHS dental practices under increased pressure

The UK Government states that it remains committed to providing dental services on the NHS. The objective of the recent update to the standard dental services contracts for 2023/24 was to reduce health inequalities in access to dental services and outcomes for patients. However, in reality, is this achievable?

The House of Commons research briefing, ‘Dentistry in England’, published in April 2023, noted that between 2010/11 and 2021/22 total funding for dental services in England fell by 8% in real terms. They also found that during this period, dentists were reducing their commitment to the NHS and turning to the private sector, whilst patients were struggling to access NHS dental services.

The Government is looking to reform the dental sector. Since April 2023, ICBs have been responsible for commissioning dental services, a minimum UDA of £23 was introduced in October 2022 and the Government is looking to expand the responsibilities of dental hygienists and dental therapists. However, these reforms are being rolled out slowly at a challenging time for the dental sector.

The medical and dental pay award published in August 2023, effective from 1 April 2023, states that salaried dentists are to receive a 6% pay award. The majority of dentists are self-employed, either as principals or associates, so the pay award does not directly apply to them. However, the expectation of a 6% pay uplift is set for dentists and, presumably, other dental practice staff.

The uplift to the dental contract for 2023 amounts to 5.13%. This is to cover the increase in practice staff pay and the costs of running the practice, as well as providing an increase in income to the principal. The Review Body on Doctors’ and Dentists’ Remuneration report, issued in July 2023, recommended that a 6% pay uplift be awarded to dental practitioners. This amount is net of expenses and the calculation of expenses was not considered by the review body.

At a time when inflation is high, commentators have stated that the contract uplift is insufficient to fund the increase in operating, staff and other costs. Therefore, the profitability of dental practices will be under increased pressure. Dental practitioners will need to consider their costs and whether any savings can be achieved. In addition, they may be more likely to further reduce their NHS commitments and concentrate more on the private sector.

In challenging times, it’s vital that practices get specialist advice from accountants and other advisers.

As the majority of dentists will have belonged to the NHS Pension Scheme at some point during their careers, it’s also helpful to have an accountant with expert knowledge of the scheme and the impact of the McCloud judgement. As a result of this judgement, anyone who transferred into the 2015 NHS Pension Scheme on 1 April 2015 will automatically have their pension for the period 1 April 2015 to 31 March 2022 transferred into their legacy scheme.

This is a complex area, which has tax as well as pension implications, and a specialist accountant will be able to advise you on dealing with these.

If you would like to discuss how we can help you or your dental practice, please contact the medical accounting team at Larking Gowen. You can find contact details on the Our People section of our website. Alternatively, call 0330 024 0888 or email enquiry@larking-gowen.co.uk.

Melanie Garrett