A first for Scotland
Nation set to have its own – increasingly data-rich – set of statistics for practice profitability
This month saw the National Association of Specialist Dental Accountants and Lawyers (NASDAL) launch its inaugural Scottish benchmarking statistics.
As Johnny Minford, Principal of Minford Chartered Accountants and NASDAL’s Media Officer, commented: “The NASDAL annual profit and loss benchmarking report is a unique and valuable tool which enables NASDAL accountant members to compare their practice-owning clients with industry norms. It means that we help our clients really understand what is happening in their dental business.”
Now, and going forward, Scotland has its own – increasingly data-rich – version. The first set, unveiled during a special NASDAL Scotland event held at the offices of Johnston Carmichael in Edinburgh, covers the financial period 2021-22. It showed:
- An increase in net profit for NHS and mixed practices compared with 2020-21 (as noted at the event, this may have been expected as practices operated at reduced levels of activity during the previous year due to lockdown).
- An increase in average net profit per NHS principal from £120,666 to £134,594.
- An increase in average net profit per mixed practice principal from £160,343 to £178,802. Private practices experienced a big drop in average net profit per principal, from £237,442 to £207,575.
- Associate average remuneration sees profit up from £53,327 to £65,393.
Roy Hogg, a partner in Johnston Carmichael, commented: “The increase in profits for NHS and mixed practices was perhaps to be expected due to lockdown restrictions which had a greater impact during the previous year.
“It must also be noted, however, that Scottish Government support for NHS dentistry has been very generous across the entire pandemic period. It will be interesting to look at NHS and mixed practices going forward – NHS practices cannot readily pass on increased material and wage costs and this may worsen over the next year – for instance, these figures have not taken into account inflation of more than 10 per cent and the energy price increases that have occurred more recently.
“In the absence of external government financial support, private practices have been slower to return to pre-pandemic levels of profitability, but I expect that the 2023 figures will see them returning to normality. However, because of their typically higher fee income levels, they have continued to operate with noticeably lower wage costs as a percentage of turnover. The increase in Associates’ income is welcome but, in reality, only reflects their greater levels of private activity when compared with the previous year as lockdown restrictions eased.”
The annual Benchmarking Survey statistics are gathered from the accountant members of NASDAL across Scotland. The statistics provide average ‘state-of-the-nation’ figures so that NASDAL accountants can benchmark their clients’ earnings and expenditure and help them run their practices more profitably. The basis of the survey figures is 2022 tax returns and accounts with year ends up to
5 April 2022.
NASDAL’s designation of practices as either private or NHS reflects that 80 per cent of business income comes from that source. The sample size is 110 practices and 98 associates.
NASDAL was set up in 1998. It is an association of accountants and lawyers who specialise in acting for and looking after the accounting, tax and legal affairs of dentists. It is the pre-eminent centre of excellence for accounting, tax and legal matters concerning dentists. Its members are required to pass strict admission criteria, and it regulates the performance of its members to ensure high standards of technical knowledge and service.
Across the UK
Earlier this year, NASDAL published its statistics for the UK. These showed:
- Overall, an increase in net profit across the board. This was to be expected as practices were closed for two-to-three months of the previous year due to lockdown.
- An increase in average net profit per principal from £152,414 to £168,826 for a typical dental practice.
- A big increase in average net profit per principal in private practices: £143,418 to £178,513.
- An increase in average net profit per principal in mixed practices: £168,326 to £177,072.
- A small increase in average net profit per principal in NHS practices, from £145,498 to £150,894.
- Associate average remuneration was up for the first time in a number of years, from £63,304 to £75,488.
Ian Simpson, a partner in Humphrey and Co, commented: “The increase in profits was to be expected due to lockdown in the previous year. The increase was seen by all practices but NHS practices only saw a marginal increase compared with those experienced
by mixed and private practices.
“In fact, there was a differential of more than £25,000 in both cases. NHS practices cannot pass on increased material and wage costs and this may worsen over the next year – for instance, these figures have not taken into account inflation of more than 10 per cent and the massive energy price increases that have occurred more recently.
“The increase in Associates’ income is welcome but only reflects their earning of private income over a full twelve months rather than the nine or ten of the previous year. As we look forward to the 2023 figures, we might expect to see NHS practice profits fall back further and a possible slowdown in the growth in private practice profitability.”
Heidi Marshall, Chair of NASDAL, added: “While there have been increases in the profitability of all practices, it is worth noting that NHS profits are still at a similar level to that of 15 years ago.”