Death of The Self-Employed Associate Dentist?

Alan Suggett of Baker Tilly has been warned that the death of the self employed 50 per cent associate is imminent. He has examined the evidence and is not convinced. 

I have been told that “the end is nigh” for the 50 per cent associate and their self-employed status and this puzzles me. It puzzles me because I am an accountant and I am a member of NASDA, an association of specialist dental accountants.  This is certainly not our view.

On a personal level, I have also got a special interest in “the death of the 50% associate” as one of my sons is a final year dental student, and is starting to get nervous about the encouragement I have given him over the years about entering the dental profession!

There is strong evidence underpinned by an understanding with Her Majesty’s Revenue and Customs which supports NASDA’s view  that, for the time being at any rate, associates are self-employed.

On that basis, it would be crazy for any principal to voluntarily re-categorize his associates from self employed to employed because there is a risk of re-categorization in the future.  The financial advantages of self employment to both the principal and the associate are huge.

It’s true there are a significant number of actual and potential changes within both the NHS and private sectors, and no-one knows if and how the overall situation will settle down.

Although we have all heard a lot about cheaper foreign dentists, from my experience of working with many principals, I cannot see this having a significant impact on the market.  If operating a dental practice was similar to a call centre, then there would be some logic in staffing up with the cheapest possible option.  However, most practitioners who I work with (even those who haven’t woken up to the patient care methodology advocated by modern business dental advisers) care not only about the quality of work carried out, but also about the way treatments are delivered and the overall reputation of the practice.

It is far too early to determine the medium to long term impact of the new NHS fee arrangements on the proportion of profits which associates are “allowed” to have.  In addition, forecasts show that there will be an explosion in cosmetic dental work.  If a large amount of extra dental work is to be carried out, then the effect of this, combined with the impact of NHS practices converting more and more to private work (when on average less patients are dealt with per dentist) leads to the need for many more dentists (unless of course we assume that huge numbers of the UK population choose to go without dental treatment of any kind).

My view is that the situation for new associates is tremendously exciting.  Under the old NHS regime they could look forward to a high pressure treadmill (with average earnings of approximately £60,000 per annum based on the recent NASDA survey).  Finding a job was very easy and no personal entrepreneurial flair was required, but the suicide rate for the profession was high!

Contrast this with the new regime – there is a whole spectrum of possibilities.  For those associates who can demonstrate personal entrepreneurial flair there will be the potential for higher income levels, within a pleasant and positive working environment, carrying out interesting procedures for patients who will willingly come to have their lives improved, rather than reluctantly undergoing check ups and rectification work. 

There will undoubtedly still be a place for the majority of associates in the middle ground - those practices which, broadly speaking, will remain the same.  I do not subscribe to the view that NHS practices will be squeezed out of existence – this would be politically unacceptable to any government.  Most of my traditional NHS dentist clients have simply gone along with the flow, and have had significant increases in earnings over recent years (despite all of the hoo-hah generated in the dental press). A period of stable profits (for principal and associate), even if it happened, wouldn’t be a disaster.

There will be those at the bottom of the pile who will undoubtedly suffer.  These will be dentists without any personal entrepreneurial flair, extra skills, and with a slow work rate.  These dentists will (justifiably) earn less than they have in the past.

Finally, as I said to my lad, last week: Next year you will be 24 and probably earning over £50,000 per year.  After a few years of experience I expect to help you to buy your own practice and earn about £100,000 per year (based on the average principal’s profits in the recent NASDA survey), would you rather be training to be a Chartered Accountant like your brother?

Alan Suggett is based in Baker Tilly’s offices in Newcastle-upon-Tyne and can be contacted on 0191 2557055, or alan.suggett(at)bakertilly.co.uk. Alternatively, visit the NASDA website at www.nasda.org.uk