It’s no secret that rising costs are affecting companies everywhere – yet dentists are taking a disproportionately heavy hit. As owner-managed businesses with specific industry overheads, dental practices are being squeezed from many different directions.

For a start, rises in National Minimum Wage and employers’ National Insurance have driven up the cost of your team (making each person around £1,000 more expensive per year in NI alone). To this, we can add the ever-increasing cost of materials, heating and lighting, while the tax burden on whatever dwindling profit you have left is only getting larger.

It’s obvious that dentists are having a tough time, and the proof is right there in your numbers.

Taking a hard look at running costs

Not too long ago, the daily cost to open a surgery was around £500. This could be established using a standard industry calculation, which combines your running costs (including consumable material spend) and allocates this to the number of surgery days your practice has.

From this, we knew that to cover a clinician’s costs, their Average Daily Yield (ADY) needed to be at least £1,200. To put this into perspective, this is the same amount that a fully booked general dentist could expect to generate in a day from checkups. But of course, not all general dentists are fully booked all day, every day – meaning many struggled to consistently earn this amount.

Now, the standard cost to open a surgery has leapt to £650 per day, meaning a clinician needs to gross between £1,750 and £2,000 to prevent the practice actively losing money. It’s a massive shift that’s happened quickly – leaving many owners unaware of the updated benchmark.

This also means that logically, practicing only general dentistry no longer adds up. To pass the £1,200 ADY threshold – and be in with a chance of cresting £2,000 – every dentist needs to offer a specialism or be able to sell further treatments.

We know that for many dentists, this feels easier said than done. Sales are an entirely different skillset to technical dentistry, and one that can feel daunting at first. For associates especially, this is a tough shift to navigate.

With practices under strain, indecision reigns. As a simple solution, you could increase prices by 20% to compensate – right? It’s tempting, but raising your own prices makes it hard to remain competitive, especially if there’s a practice down the road offering the same for less.

Does your practice add up?

If your spare cash is diminishing and your profit margin reducing, it’s easy to resign yourself to the changed landscape. You may even feel there’s very little you can do. But this isn’t true. It’s perfectly possible to get a handle on your finances, if you’re willing to invest some time.

The first step is to get visibility over your numbers. What are the ADYs of your clinicians? What does it cost you to open a surgery?

Drilling down into these figures can tell you if there’s a sticking point, but it can’t tell you why. A low ADY can be due to a whole host of factors, from a badly structured diary to clinicians struggling to treatment plan. In some cases, a large plan list can leave little room in the day to see new patients.

Each strand needs to be approached in a different way – which is where Hive comes in. By working with a partner like us, there’s no need to solve every problem on your own. We can help identify where your issues lie, and suggest ways to solve them, giving you achievable actions you can take.

By doing this, we can collectively address your margin and protect the profit you’re making. While cutting costs is sometimes helpful, it’s never the sole solution. Through a combination of optimising profits and mitigating taxes (which in itself can be worth thousands), you can keep as much as possible from every pound you earn.

We know this approach pays off for our clients, which is why we’re comfortable offering a money-back guarantee if you’re working with us for the first time. For practices seeking change, it’s one less worry – meaning there’s really nothing to lose from asking for our help.

If you’d like to know more, just get in touch with our accountancy team.