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The Business of General Dental Practice

These pages describe some of the business aspects of General Dental Practice in response to requests by students. They do not form part of any module you will be examined on, but are provided for information only.

They also reflect the views of the author, not the Dental School or University, and accordingly can be considered biased!

Types of General Practice

Broadly, there are two types of general practice – those that are owned by individual dentists, and more recently, those that are owned by Corporate Bodies (such as Vision Express). Additionally, there are a small number of “Community Dental Clinics” which are owned by the NHS and historically provided dental care to children, but now treat adults also. 

Here we will be discussing small General Practices owned by individual dentists.

General Practices may provide dentistry “Privately”, where the patient or a private insurance company (like Denplan) pays the practice owner directly. They may provide it “on the NHS”, where the government pays the practice owner. With a few exceptions, “NHS” practices are not owned by the government, and the dentists who work in them are not NHS employees – they are independent private practitioners who accept money from the government in exchange for dental services. In effect, they are sub-contractors. (Just like the government might pay DynoRod to unblock their drains.)

More details of how dentistry is organised, and how dentists are paid, are available in these Dental Public Health lectures:
/ecourse/DPH/docs/DPH_BDS2_organisation_of_dentistry_in_the_uk_2006-7.ppt 
/ecourse/DPH/docs/DPH_BDS2_How_are_dentists_paid_2006-7.ppt



Profit
A General Practice is a business. The practice owner gets income – from patients, government, and insurance companies. S/he has to pay expenses, like wages to nurses, electricity, rent, dental instruments etc.

The owner’s take-home pay is the income minus the expenses. At the end of the year, the owner declares how much profit they have made, and has to pay income tax on this amount.

Example of an Annual Profit & Loss account for a 2-surgery Practice Owner. 
Income      
Money from Patients 75,000    
Money from Denplan 35,000    
Money from the NHS 160,000    
Total Income   270,000  
Expenses      
Dental Materials 11,500    
Laboratory Charges 28,000    
Associate Dentists 55,000    
       
Staff Wages 65,000    
Telephone & Postage 2,500    
Printing & Stationery 1,500    
Equipment Repairs 2,000    
Rent 8,000    
Rates & Water 2,000    
Heat & Light 1,500    
Accountancy 1,000    
Subscriptions 1,500    
Insurance 1,000    
Depreciation 10,000    
Total Expenses   190,500  
       
NET PROFIT   79,500  

The fact that a General Practice is a business, and has to show a profit, can lead to perverse incentives.

If the practice owner can cut the expenses, they will earn more money.  For example, if very cheap materials were used, or an associate who was prepared to work for less pay was employed, the owner would make more profit.

If the practice concentrated on doing over-priced private cosmetic work like bleaching and botox, the practice income would rise but the expenses would hardly change.  

Hourly Rate
A 2-surgery dental practice would typically provide about 2500 hours of "chargeable dentistry". There are of course many other hours spent in administration, staff meetings, staff training, postgraduate courses, holidays, days off sick etc, but these hours do not attract any payment. If the practice received £270,000 for 2500 hours of actual dentistry, its "hourly rate" works out at £108 per hour. Assuming the associate is working for 35 hours/week, and the owner 45 hours/week, their respective hourly rates in this example are:

Associate: Gross hourly charge: - £108 per hour.  Take home (before tax) £30 ph.
Owner:     Gross hourly charge: - £108 per hour.  Take home (before tax) £34 ph.


 



 



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