In Charles Dickens’s novel David Copperfield, the character Wilkins Micawber famously says, “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” This claim, spend less than you earn, has become known as the Micawber principle or first law of personal finance.
This character, noted for his inability to work his way out of poverty, had another saying which has also become elevated to a principle: “Something will turn up.” Again, a decent rule of thumb on an individual level. But not always. A guy I know said his partner was put on furlough last April. She did nothing for seven months, then in November she was made redundant. She was shocked.
This woman’s regret over lost time, on top of simply not being ready to “relaunch” — because she hadn’t invested in herself — made a difficult situation so much harder for her. They broke up soon after. Is your business doing a version of what this woman did? Unfortunately some dental practices are.
NHS practices have been getting 100% of their contract fees for doing 45% of the work. And some private practices owners have been content to just get by under the burden of Covid protocols. Fallow time is, of course, a perfectly valid reason for disruption. But why? It needn’t reduce the availability of your services.
Our forward thinking clients all reopened with extended hours last year and a number of them have gone to maximum surgeries on Saturdays and Sundays. This kind of thing does cause consternation among the team. In one case the hygienists point blank refused to accept the new rota. The owner had to replace them. Then they asked for their jobs back (too late). People do understand these things rather quickly when their livelihood is on the line. And it is — that is the point.
As a core tenet of economics there is a supply and demand issue here. Hygienists need jobs. And people need dentistry. Or, rather, these days consumers want dentistry and what it can provide to make them feel better. Anecdotally, private membership plans are going through the roof because patients can’t access NHS treatments. Also, even though on paper there are the same number of dentists, I imagine quite a few will have retired in 2020. And as a human-based supply chain, it takes dentists longer to do the same amount of clinical work now.
Everyone is waiting for demand, which has been good, to drop off. What will happen when those millions of people, currently receiving income but remaining on standby mode with no pubs, restaurants and holidays to spend their money on, reach the end of the road in Autumn, when furlough and self-employed grants (we are told) end? On the other hand, there could be a boom in dental treatment consumption when restrictions end. Forbes predicts a health buying spree when the extra savings hoarded by consumers during lockdown, which amount to 3.3% of world GDP ($2.9 trillion), are finally unleashed.
If that comes to pass, what happens on the other side of it? Who is going to be insulated from the ensuing economic correction, after further waves of redundancies? For now, the latest Christie’s Dental Market Review tells us that UK operators were surprised at the speed of the recovery of private dental revenues, with a key driver being demand for cosmetic dentistry and multiple treatments.
The number of dental practices in the UK actually grew in 2020, with 35% of private practices seeing revenue return to more than 100% of pre-lockdown levels. Extended opening hours and fee increases were the most common strategies to cope with Covid regulations. And, perhaps most revealingly, 40% of practice owners believe their EBITDA will be higher in 2021 than 2019. No time to be lying on the couch then.
