Dentistry will feel the full financial impact of COVID-19 in late 2021, with private practices around £71,000 worse off, latest NASDAL projections show.
As part of a short life working group advising deputy CDO for England, Jason Wong, NASDAL is reporting on the current fiscal position of the dental sector following the COVID-19 pandemic.
Its observations show that:
- The key factor in the risk profile of a dental practice is the level of pre COVID-19 debt
- Risk is higher for a significant minority of practice owners. Particularly those who have recently bought practices that are highly geared
- The availability of CBILS and Bounce Back Loans resulted in additional borrowing, which practices will not need to repay until mid-2021
- With maintaining NHS contract values and providing the lifting of the activity-based assessment metric is not re-implemented, NASDAL’s assessment is that there is unlikely to be significant insolvency of dental practices over the next 12 to 18 months
- NASDAL anticipates any cash flow impacts and potential practice insolvencies to emerge in late 2021.
Based on NASDAL’s financial forecasts, it believes a typical private practice could see losses of £71,269 following COVID-19. This is mainly due to loan repayments and PPE costs.
‘We are not for one moment suggesting that the UK is now full of poor dentists,’ Alan Suggett, media officer of NASDAL, says. ‘Or that the UK government should support zombie businesses.
‘However, it is clear that most dental practices are fundamentally sound businesses. But to see a good number in potential difficulty purely because of capital loan repayments, is a real concern.
‘That is why the inclusion of a government-guaranteed loan support scheme is key for us. It underpins lenders confidence in supporting dental practices and dental laboratories at risk.
‘Practices with potential cashflow deficits due to loan capital repayments will still trade profitably. To see them go out of business and all that entails for the owners, team and also patients, is a terrible waste.’
The short life working group is making nine recommendations to the CDO and government following the forecasts.
- An extension of the Coronavirus Job Retention Scheme for the dental sector
- An extension of the maximum repayment term (currently six years). For both the Coronavirus Business Interruption Loan Scheme (CBILS), and the Bounce Back Loan Scheme (BBLS)
- Eligibility for business rate relief for all dental practices
- Eligibility for Retail, Hospitality and Leisure Grant (RHLGF) for the dental sector
- A support package for dental laboratories that service NHS dental practices
- A government-guaranteed loan support scheme to underpin lenders confidence in supporting dental practices and dental laboratories at risk
- A government commitment to target additional funding toward an expanded NHS dental provision to address inequalities by:
- Commissioning additional dental capacity for routine dental care and increase patient access
- Commissioning additional capability and capacity for non-mandatory services; to include domiciliary services for care homes and community settings, sedation services, advanced restorative work to address evidenced needs (eg endodontics)
- Flexible commissioning to support prevention initiatives
- Funding for urgent research into the fallow time post dental aerosol-generating procedures
- For the General Dental Council (GDC) to return the 20/21 annual retention fee (ARF) for dental technicians.
Dental practices were already facing a tough time after shutting their doors for almost three months. And it seems the profession won’t truly feel the impact of the loans used and additional PPE purchased to survive until late 2021.
The recommendations put forward by NASDAL go someway to avoiding the mass closure of high street dental practices up and down the country.
But with the government racking up massive debt, and a lack of motivation to invest in oral care previously, will dentistry once again be overlooked?
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