The NASDAL benchmarking figures have recently been released for 2024 and they show some interesting as well as unexpected results, both for Principals and Associates.
For practices, as usual it is the average profit generated per Principal which is calculated, showing essentially a profit and loss account for each owner-clinician. This identical methodology is used every year, so a comparison trend flows from the statistics, and whilst it may be argued that there is no such thing as an ‘average’ Principal, the trend year on year retains its validity.
The criterion of definition of a ‘private’ practice is that more than 80% of their income is from outside the NHS system. Similarly, an NHS practice has 80% or more of their income deriving from this source. Within these ranges, the practice is defined as ‘Mixed’.
It was expected that performance of Private practices might fall back, given that in the 2023 year was for many one of the best performing years ever for private dental practices due to high patient demand and pent-up requirements for oral health treatments after Covid. 2024 was also the start of the financial squeeze on patients’ pockets, hitting demand for dental treatment, particularly high-ticket items. This is seen in the level of gross income, which has increased, implying that more work is being done, but with a lower profit content.
However, what was not expected in all quarters was that NHS profits per Principal were increased, and in fact came in higher than the private profits. Comparison of the past few years of NHS performance shows a steady return despite the clawbacks seen in 2023, which appear to have largely worked their way through the system in 2024. It may be that we are seeing the NHS dentists having re-set and reorganised the operation of their practices, taking advantage of the new bandings and the other changes, as well as the uplift, and focusing on doing what they can with the system and making it work.
The average private Principal generates £593k to make £162k, whilst the average NHS principal generates £504k to make £166k. Who does this work? The proportion of work done by associates remains between 45 and 50% for all types of practice. There appears to be little drift from the proportion of associates doing NHS work to doing private work.
One interesting statistic is that the number of practices qualifying as ‘NHS’ with more than 80% of their income coming from this source is dropping. Three years ago, around 27% off the sample were classed as NHS; in 2024 the percentage had fallen to around 17%. This is due to more practices having a greater private proportion and so moving into the ‘mixed’ practice category.
The proportion of salary/ associates/other clinician costs to gross income has increased in private practices, but remained reasonably stable in NHS practices. This increase is due to associates in private practice earning more, thus increasing the costs against profit in a private practice. This is also a contributory factor to private practice profits decreasing.
In general, associate earnings have continued to rise, on average £90k compared to £81k in 2023. There is a difference in earning potential between the private sector and the NHS sector; however, this cannot be treated as clear-cut as there are a number of underlying factors which cannot be reflected in the statistics, such as the incidence of part-time/full-time in each sector, age, and specialisms. These choices, sometimes of lifestyle, have an enormous effect on the average results, much more than for Principals and practices. The ‘averaging’ of Associate earnings remains problematic at times and it is easy to jump to incorrect conclusions.
Overall, the 2024 statistics shows the profession in reasonable condition, and with the profitability of all types of practice in the same range. The coming year opens up the industry to further challenges, with reaction to staff costs and pressures on patient finances. As always, the NASDAL benchmarking statistics will provide a base foundation for other comment.