Now that a deal is in the place with the EU, specialist dental accountant Nathan Poole examines the possible challenges dentists face.
Predicting the effects of the Brexit deal on the profession is akin to forecasting the weather.
The great storm of the ‘no deal’ Brexit has been averted, and now we must anticipate the effect of numerous forces coming from many different directions. The heat wave from potential future trade deals; the tail end of hurricanes from pandemics; the bitter north wind from the pessimists; the changeable weather from new tech, market entrants and NHS provision… All while trying to avoid a 1987 Michael Fish moment!
The macro-economic impact
There is potential for a lack of stability, which could cause consumers to rein in spending.
This slow-down might lead to a downward spiral, as seen in previous recessions; an otherwise sound economy is shocked by a correction to one sector, causing consumers to hold back on spending with a knock-on effect on many industries, further compounding consumer confidence.
Brexit sceptics already believe the worst is yet to come. Given the negative impact of the current pandemic, there is clearly potential for a downward spiral.
All sounds pretty miserable so far? Time for some optimism?
Let’s consider pent up demand. Most dentists I have spoken to have already experienced the power of pent up demand.
As soon as the first lockdown ended in June 2020 consumers increased spending on aesthetic dentistry and orthodontics.
Some analysts predict a re-run of the roaring twenties as soon as we get through the current mess. Going out, seeing friends and having fun is a predictable response to successive lockdowns.
Whilst receiving treatment from a dentist in full PPE is not most people’s idea of fun, there is a craving for a return to normality.
Emerging from enforced isolation, consumers will want to look their best. A nice smile must surely be part of that. We just need enough of the economy to survive the pandemic in order for people to have the money to spend.
It was widely estimated that if there had been a ‘no deal’ Brexit, the costs of medical devices, medicines and other essential goods would increase. Now we have a deal, there are no tariffs on goods between the UK and the EU.
There may be short-term issues with supply of goods, which could cause price increases. These are due to factors such as the pandemic and the transition to new arrangements.
But broadly, prices should remain stable.
Government anticipated supply issues stockpiling goods; certainly, the government told manufacturers to hold six weeks of stock to ensure continuity in the event of a ‘no deal’ Brexit.
The Department of Health and Social Care says there is no need for hospitals or primary care to stockpile. And we all know that people do as they are told when it comes to stockpiling!
The GDC issued welcome guidance for EEA-qualified dentists and dental care professionals either working in the UK or applying to.
A points system is replacing the right to free movement and working across Europe. Dentists are of course on the skilled workers list. They will, therefore, just need to have the tenacity to negotiate the visa system, or be willing to pay someone to help.
It is likely that given the extra difficulty in coming to work in the UK we might experience a drop in the number of dentists willing to take that step. But that depends on the situation they are currently in and the potential rewards on offer.
It’s likely that it will become harder to recruit from the EU. This could cause an upward pressure on wages.
After many years of negative pressure, this may be welcome news to some. But will provide challenges for others.
To counter this, a new system makes it easier for non-EU migrants who earn more than £25,600 to come to the UK. There has been a lowering of the level of jobs from graduate to middle skilled jobs.
Dental nurses, dental assistants, dental nurse-receptionists, and hygienists are eligible.
When it comes to potentially rising salaries, money is not people’s only motivational driver. But is often the initial hook for attracting new candidates.
There is much that we can do, however, to help retain good people and avoid the need to recruit.
No matter what the effect of the Brexit deal, a degree of optimism and enthusiasm for the challenges to come is essential; this applies in dentistry as much as any business.
The critical issue for dentists is whether their business is robust enough to adapt to and survive shocks to the market such as pandemics, downturns, and cost inflation.
There are signs we associate with dental practices at a higher risk of failing. These are practices dentists own that are:
- Operating at the limit of their overdraft each month
- Have not saved for tax payments
- Routinely using patient prepayments to fund cashflow
- Don’t know the true financial position of their business
- Don’t understand their personal financial position
- Have high levels of gearing – loans and finance – or poor current asset ratios.
Many practices could easily remedy many of these issues. However, we are seeing some lenders look a bit more cautiously at dental practices given the (admittedly small) number of collapses over the last year.
When lenders are working at low margins, it only takes a few big losses to seriously dent their returns.
The government’s CBILS and bounce-back loans provide easy access to finance to offset the problem of banks becoming more cautious during the pandemic. But relying on future incarnations of these schemes could expose your business to higher levels of risk.
In conclusion, those dental practices run on sound financial and business principles can worry less about everything they can’t change…including the weather!