The extra mile

Jenny Cook explains why she trained in facial aesthetics and the benefits to her practice.

I am an associate dentist at the Summervale Cottage Dental Practice in Tunbridge Wells. The surgery was created around 20 years ago, when the practice principal, Peter Newman-Brown, converted a town house conveniently located just outside Tunbridge Wells on the A26 with easy parking. There are two surgeries with two dentists who are assisted by two hygienists, two dental nurses and two reception staff. We have around 3,000 patients who come from the local area. The practice opted out of NHS treatment around 18 months ago, making it 100 per cent private. I joined this practice because I particularly liked Peter Newman-Brown’s patient care ethos; for him and his staff members, the job is vocational and patient care is a priority. I became a dentist after a very bad dental experience when I was 17 and I wanted to ensure that dentistry could be less stressful for others.
I started offering facial aesthetic treatments around 18 months ago. I basically went on a study day and found it so interesting and felt that it was such a fantastic and interesting addition to dentistry. I am very enthusiastic about these treatments and find the work exceptionally rewarding. I offer dermal fillers and skin injectables (Botulinum Toxin Type A). Prior to carrying out any of the procedures I did three full days training that allowed me to gain my certificate to commence training and secure insurance cover.
I got very good advice about insurance and I am insured through Hamilton Fraser, who do a particular package for dentistry and facial aesthetics. You obviously cannot practice without the cover, but I have noticed that the premiums are decreasing now that more dentists are carrying out this work and claims are not coming through, so they view it as less of a risk. If you think about it, this work should be no less risky than the dental work we do and, therefore, a fear of litigation should not be a reason for not offering these procedures.
The take-up at the surgery has been steady. At the moment, it is largely powered via word of mouth and repeat visits. Peter Newman-Brown carries out a lot of implant and veneer procedures and my work goes hand in hand with his treatments.
If a customer is paying to have a large amount of cosmetic dentistry done, I like to imagine that I am the person that puts a frame around that new smile, so that the patient gets an overall new look and not just new teeth.

Working in partnership
In addition to working at the surgery, I also work alongside a beauty therapist based at the Gallery in Southborough, Tunbridge Wells, where I do promotional evenings. I do see my employment at the salon as combining skin care, dental care and facial aesthetics. This partnership also creates a lot of referrals for each of the businesses.
As far as the future goes, I would like to grow the facial aesthetics part of my work.
Take-up is increasing and I would like to see ten per cent growth year on year. I still do at least two days of full-time dentistry a week, but I would like to really concentrate on the facial aesthetics, as it is so rewarding. More than anything patients need to be re-educated about facial aesthetics, as many simply do not know much about them. Many clients may pay to have a facial once a month, but actually they could have some filler or Botulinium Toxin Type A treatment done once every three to four months and have the same results. Busy people could, therefore, spend less time for an even better effect.

Profits
The treatments are very profitable, but only with good diary planning. For example, I use Dysport for my injectables, which costs around £165 per vial from the Dental Directory. As you can get three to four patients from one vial, you need to ensure that you book your facial aesthetics patients in one block to ensure that you can use the whole vial and not waste any. One can charge £200 for the treatment of one area, £300 for two areas and £360 for three areas. If you only used the vial on one person, bearing in mind a consultation and procedure time of around an hour, it simply wouldn’t be worth it, unless you are treating several patients. The vial lasts around three days once opened, but I ensure that I do block bookings so that the vial is used up as soon as possible.
Dermal fillers are actually more profitable as the cost of the product is around £50 and yet superficial lines are charged out from £250 a treatment and the nasolabial furrows are charged from £350 a treatment. The effects of these treatments also last between three to four months. There has been some new research undertaken which says that the use of fillers stimulates the natural production of collagen in people. I am sure that when patients are aware of this research, uptake in dermal fillers will only increase.
If you are going to offer facial aesthetics the main task is to move out of your comfort zone. I would also say that as soon as you are trained and have your certificate, don’t hesitate, you need to get on with it immediately so that you do not lose your confidence. I would recommend having a pool of individuals ready to be your first patients, offering the treatment at no charge for the first session, for example, until you are happy and confident at offering the service. This approach worked for me. I am now looking to do some advanced training next month just to make me more confident and aware of the new procedures.

Profits report

Paul Kendall compares dentists’ income from NASDA’s annual statistics.

Each year the National Association of Specialist Dental Accountants, which represents more than 20 per cent of self employed dentists in the UK, produces a profits report summarising the results of a sample of their dental clients. They look at both principals and associates and analyse income and expenditure. They provide the only comprehensive independent benchmarking figures against which clients can compare their performance.
This year’s report is of some note as it includes the earnings of the first full year of the new National Health Service contract, showing the effect that the contract has had on dentists’ net income. For the practices with year-ends set in 2007, the key results were as follows:

1. Principal practitioners
The average total fee income generated per principal practitioner increased in 2007, to £367,314. This was an increase of just £4,722 (1.3 per cent) on the figure achieved in 2006, when the average total gross income per principal was around £362,592.
For the second year running private income has exceeded NHS income with the gap widening between the two, resulting in a ratio that is now 53 per cent private to 47 per cent NHS.
The shift towards more private work has again increased the gross profits in those practices, and a further reduction in material and laboratory fees has also resulted in NHS practices showing an increase in gross profit. The gross profit is the total income minus the direct costs, for example dental materials, lab costs and payments to associates. The average gross profit per principal rose by 3.6 per cent from £241,165 in 2006 to £249,904 in 2007.
The net profit is the gross profit less all the practice overheads, including staff costs and premises costs. In line with the increase in gross profit, the average net profit per principal has also risen over the year. The average net profit per principal in 2007 was £142,705 compared with £133,661 in 2006, an increase of over 6.7 per cent.
The data shows that increases in both staff and administration costs are in line with the increase in gross turnover and as a result have not affected the profit and loss as much as in previous years. The staff costs represent 17.6 per cent (17.8 per cent in 2006) of turnover and the administration costs represent 13.1 per cent (13.3 per cent in 2006).
The figures are based on a ‘typical dental practice’, which is calculated as an average of the results of NHS practices, private practices and mixed practices. The average net profits for these practices are shown in the fig.
The increase in NHS practices’ net profits has been 4.9 per cent, whereas private practices have shown a marginal decrease. Mixed practices have managed to increase their net profits by 13.5 per cent.
The net profit percentage (the net profit as a percentage of the total income of the practice) has risen this year in each type of practice except private practice where there has been a very small drop in profit. NHS practices have been able to reduce their wages and direct costs by £6,761 whilst the private practices expenses in respect of wages and direct costs have increased by £5,472. The mixed practices appear to have got the best of both worlds, they have managed to increase their gross income from private work by £9,187, but have also managed to reduce their costs in line with the NHS practices. In particular they have managed to reduce their laboratory, materials and direct costs by £6,334.
The ‘typical’ practice average is made up of more private practices than NHS or mixed as yet again more practices have gone private in the last year. Whether the NHS practices will continue to increase their profits will depend on the number and value of the UDAs in their contracts, and whether they can achieve any further cost savings. NASDA has seen UDA values as low as £15.10 and as high as £34.97 this year, with the average being £22.76.

2. Associate dental practitioners
Associate dental practitioners have experienced a decrease in their average gross earnings by 1.7 per cent in 2007. The average gross earnings are £82,864 per associate after deducting the payment to principal; this figure was £84,308 per associate in 2006.
The average net profit per associate has also decreased this year dropping from £70,695 in 2006 to £70,396 in 2007. This drop is disappointing when compared to the increases in profits in 2005 of £6,561 and 2006 of £5,759. The average net profit percentage has however remained very similar, increasing slightly from 83.9 per cent in 2006 to 84.9 per cent in 2007. This indicates that associates are managing to reduce their costs in line with their decrease in income.
We forecast this drop in gross income and profits last year, as the new contract was expected to bring about a reduction in income for those associates involved in delivering NHS services.

Mortgage rates outlook

Keith Taylor considers the ‘best buys’.

Up until the third quarter of 2007 rapid economic growth across the globe and fears of rising inflation were the headlines. The Monetary Policy Committee had been expected to raise base rates as much as 0.5 per cent from what was then a 5.75 per cent level to control inflation running well above target.
We have since seen the unraveling of the global credit crunch in the wake of the collapse in the housing market in the United States under mounting pressure from the sub-prime crisis unfolding there. With the contagion spreading into losses at major banks around the world estimates of the size of the problem ballooned from £100bn to £200bn.
Now we have all the signs of a slowdown in that mortgage volumes are falling and house price growth is also slowing. On the subject of house prices, 2007 was still positive at an annualised basis growing by just 5.3 per cent. It seems likely 2008 will see falls overall.
With the widely expected base rate cut in February to 5.25 per cent we now have the Consumer Price Index at 2.2 per cent against the Government target of two per cent with rising fuel prices and food prices partially to blame.
Many are now worried about the conflicting pressures on mortgage costs. We have seen a number of providers charging more for higher percentage loans to valuation mortgages. Some providers have left the market altogether.
A positive side effect of the credit crunch has been lower fixed rate mortgages. The cheapest two year fixed peaked at over six per cent in early August but has since fallen back sharply to around 5.3 per cent and even lower as markets priced-in the increased likelihood of lower base rates. That will ease the payment shock for those remortgaging from cheap two year money fixed rates, however you may be one of those caught in this ‘trap’ and concerned about your options.
We would consider the following avenues of discussion:
• Longer term fixed rates which are cheaper and after factoring in mortgage switching costs, may work out a better option .
• Offset mortgages where you can utilise other savings into one account and benefit from lower monthly outlay or reduce the mortgage term.
• Currency mortgages which may appear radical but have a valid place in aggressively repaying your mortgage balance, taking advantage of the currency markets.
• Mix and match, that is, part tracker and part fixed so that you are hedging your bets.
• A lifetime tracker mortgage if you are confident that UK rates will decrease further and you can afford the volatility swings.
• Gear up on your buy-to-let portfolio and repay personal mortgage capital which can also assist with personal income tax planning.
Although fixed rates continue to dominate the mortgage market, the popularity of variable rate mortgages is still high.
Many mortgage lenders have increased arrangement fees as another way of bolstering their upfront income to keep the pay rate competitive and in the ‘best buy’ tables. Clearly it is prudent to look at the total cost of the mortgage loan over the period before making your decision.
If worried about interest rates the consensus amongst recent financial commentaries edges towards rates falling further to 4.75 per cent by the year-end. This is not far off the average of bank base rates since 1999 – this being 4.8 per cent. For the medium term commentators are predicting rates are likely to remain in a range around five per cent.
So if you are one of the 1.4m people coming off cheap fixed rates now is a good time to be seeking mortgage finance provided you are not seeking a 100 per cent plus mortgage!

Human rights wrinkle

Dentists under a tax investigation may have more power than they realise, says Geoff Long.

Human rights have turned into big business in the UK. The subject is a large drill in the hands of dentists with which they can, in the right circumstances, grind down unfair taxes and penalties imposed by Inland Revenue. The latter is not quite up to speed or comfortable with the Human Rights Act and here follow some areas that dentists should be aware of when dealing with the IR.

Data protection
New rights have been given to dentists against the Inland Revenue under the Data Protection Act, which grants dentists a right to see the IR’s file on them. However, this is not as clear-cut as it would appear. The Inland Revenue has a defence against a claim to see its files if this would prejudice the due collection of tax.
Another defence is in cases where it would be impossible for the IR to give out the requested information without identifying someone else’s private data, although this could rarely be a valid defence, as it is possible to blank out names and other information in most cases to prevent sensitive details about anyone else from being identified.

Tax penalties
One of the worst aspects of tax investigations are penalties. These vary depending on how far out of line the IR considers someone to have stepped. Under European Law a tax geared penalty that contains an element of punishment is a criminal penalty, meaning that there are all kinds of human rights that apply.
First of all, the burden of proof on the prosecuting authority is much greater. To be convicted of a criminal offence the Court has to be sure beyond reasonable doubt that someone is guilty of the offence that has given rise to the penalty. This makes it much harder for the Inland Revenue to prove. Secondly, an individual has a right to silence if accused of a criminal offence. Thirdly, the amount being charged as a penalty must be proportionate and not be greater than a reasonable punishment would be in the circumstances. All of this has well and truly unleashed a cat amongst the pigeons, given that most of the rules relating to penalties were made up years before human rights were even thought of.

Surveillance
A tax inspector recently complained that the new human rights rules tie inspectors hand and foot as far as their policy of covert surveillance goes. One way to put Inland Revenue on the back foot, if presented with surprise evidence, would be to enquire how it obtained its proof. If they have been guitly of bending the rules on your human rights, you have a powerful card to play in making a complaint. It is important to remember that these rules are comparatively new and that the taxman is still getting used to them.
It is not going to be easy to secure one’s rights. Revenue officers will try to withhold information that assists an individual’s case and damages theirs. People must persist and not accept what the taxman says as being a definite statement of law. They probably have more rights than they think!

April spoils

Graham Penfold considers what will happen when dental money is no longer ring-fenced.

As we enter the second half of the initial three-year period of the ‘new’ contract, where National Health Service dental money is still ring-fenced, attention is beginning to focus on April 2009, when this safeguard is scheduled to be removed.
There are a number of factors that may influence what will happen after that date and one that is often overlooked is the timing of the next general election. The last one was held on May 5, 2005, so the next cannot be later than the spring of 2010. In all probability it will be called much earlier. Whoever is then Prime Minister will not want a repeat of the queues of patients and widespread dissent among dentists that filled the television screens and dominated newspaper headlines when the new contract was introduced. Under the present system, however, it may not be easy to avoid.

Outstanding issues
As every political scientist knows, many policy decisions are not the result of the rational assessment of a given situation but tend to reflect a fragmented, disjointed and incremental reaction to changed or pressing circumstances. In 2009, however fervently the politicians may pray for calm within the NHS dental arena, autonomous primary care trusts will have their own agendas as they seek to address outstanding issues.
Not least of these is universal access to NHS dentistry, which has become the prime focus of media attention. Let us consider this from two points of view: servicing the ‘emergency’ patient who may not attend the dentist regularly but wishes to be treated under the NHS in times of need, and the more ‘regular’ patient who seeks routine examinations and bi-annual preventive care from an NHS dentist.
PCTs could decide to offer contracts determined by postcode area. This would be a simple solution for them, because if practices agreed to provide specified services for all patients within a certain postcode, many access problems would diminish. However, this could not be achieved without redistributing limited funds between the different types of practices within each area, and winners and losers would be inevitable. First among the losers would be those practices only marginally engaged with the NHS, with child only or child and exempt adult only contracts. It could be argued that these are not mainstream NHS providers and are, therefore, ripe for wholesale removal, but a second category must be PDS practices. While the average price of a GDS unit of dental activity is about £20, for a PDS UDA it is closer to £30, and some harmonisation of UDA values is certain. It is the cynic in me that feels that £20 will become the norm rather than £30. Further public and media protest is assured if children are forced to go private or change practices whilst committed NHS practices face reduced funding.
Reading the crystal ball is never easy, but one thing is certain - the next 15 months are going to be very interesting indeed.

Business boom

Monitor progress in your practice and achieve your business goals, says Simon Hocken.

In spite of increasing competitive pressures, many dentists still manage their businesses on the back of their practice’s bank statements and an annual meeting with their accountant. They pay themselves the surplus at the end of every month (or a little more when the school fees are due or it’s time to change the car) and their practices continue to under achieve. All business people, including dentists, need to understand the prime coaching maxim: monitoring performance improves performance.
A typical example of this is dieting. Regular checks on one’s weight keep a person focused and offer an incentive to remain disciplined. Applied to any aspect of people’s private lives, we all know that frequent checks on how we are doing keep us moving in the direction we want to go.

Monitoring productivity
Introducing a similar system to monitor practice productivity is simple. By placing a notebook in the surgery of every fee-earning clinician in a practice and asking them to write down the value of their daily procedures, the actual value of their work becomes clear. Keeping such a personal ‘day book’ with pen and paper is far more motivating than a computer print out, and a key factor is to fill in the details as the day proceeds; a flat, relatively unprofitable morning can sometimes be balanced by a shift in treatment emphasis during the afternoon.
This minor addition to the daily routine is often the only catalyst necessary to upgrade performance from merely adequate to something much better. A heightened awareness of personal performance invariably increases a fee earner’s productivity. I was recently involved with a practice where introducing this simple expedient prompted a one-third increase in the daily gross turnover, representing a massive return on the cost of the investment – with just half a dozen notebooks and biros!
The more distant the ultimate goal, the more important it is to set interim targets and to remember that, however long the journey may be, it begins with a single step. It is a good idea for a practice to start by comparing where it is now with its intended destination, divide the distance into realistic stages, measure the progress at frequent intervals and allow the satisfaction of a reward when a target is reached.

‘The clipboard report’
My business is to advise on and devise methods of achieving specific developments in productivity and profitability in dental practices. Experience has taught me how to measure a dental business’s financial wellbeing and fulfilling of financial potential using only a small number of critical performance indicators, in much the same way as a hospital consultant uses a patient’s ‘vital signs’ recorded on a clipboard at the end of the bed to assess overall health. Those practice principals who regularly inspect their own version of the consultant’s clipboard generally preside over more successful practices than those with a more laissez faire attitude to their practice’s financial performance.
‘The clipboard report’ focuses on five overall performance indicators: profit (as a percentage), monthly bank account highs and lows, active patient list size per clinician, new patients per month (with sex, age, location and source) and the average daily productivity in pounds of each fee earner according to their day books. By collating this data into graphs, trends become evident.
By regularly measuring progress agains targets we can more effectively realise our goals. Life is not a rehearsal and the future should not be left to chance.

Risk rating

Investment methods should be based on how much you can risk, says Mark Blakeman.

Investment is a fairly straightforward concept; the aim is for people to grow their assets while taking an amount of risk with which they are comfortable. There are many different types of investments available and, when choosing which is the most appropriate, it is important for individuals to consider how much risk they are prepared to take. Risk appetite is a very personal thing and depends on a number of factors, such as age, circumstances, financial goals and time horizon. Some people are natural risk-takers while others prefer the ‘sleep at night’ reassurance that lower risk investments are more likely to offer. If investing for the long-term, people may be prepared to take on more risk and ride out peaks and troughs in returns along the way. For an investment in a child trust fund, for example, given the age of the person on whose behalf the investment is being made and the likely 18-year time scale, it may be appropriate to opt for something towards the higher end of the risk scale. If, however, an individual is only a few years from retirement, a more cautious approach makes more sense.
What is the risk?
Risk can mean different things to different people. Some view it as the potential for losing money. For others, it is the possibility of not making enough money to meet their needs. All investments involve some level of risk. At the lowest end of the scale is cash. Putting money into a bank or building society account is just about the safest way of investing, although even here the real rate of return is dependent on inflation and whether interest rates rise or fall. Generally, however, unless the bank goes under, the returns will not be less than was put in. Equally, returns are always likely to be lower than those from other asset classes.

Investing in shares
Potentially much more risky is investing in the shares of individual companies. Companies’ share prices are ultimately driven by their profitability, but can also be subject to situations over which they have little control. A piece of bad news concerning a business in the same industry, or more widespread stock market nervousness, can send a company’s share price tumbling. Rather than buy an individual equity, a safer way of investing in a company might be to put money into a fund that reduces risk by holding a diversified portfolio of companies. Again, there are numerous funds available across the risk spectrum, encompassing different geographical regions and investment themes. For those who cannot decide which fund to go for, there are even funds of funds.

Other investment options
The other major asset classes in which people generally invest are fixed income, otherwise known as bonds, and property. Bonds take two main forms; gilts, which are issued by the Government, and corporate bonds, which are issued by companies. As with all investments, there are different levels of risk involved. A UK Government bond would be at the lower end of the risk scale, whereas corporate bonds vary according to the company that is issuing them. Just like shares, a good way of investing in bonds is via a fund, where, again, the risk can be diversified.
Property has always been popular with investors. Over time the value of bricks and mortar tends to go up, although there are periods when that is not the case. Buy-to-let was the favoured option a few years back but when the residential property market slows down, as it has recently, investors are typically unable to achieve the same returns. The same applies to commercial property, the funds for which have taken a lot of money over the last few years, but, as with residential property, a fall in the market is likely to affect performance.

Risk and reward
Historically, risk and reward have been closely related – the more risk taken, the greater the potential reward. Shares generally produce the best returns over time, but with more volatility along the way. Cash is much less risky but with associated lower returns. Barclays Capital’s Equity Gilt Study 2007 provides data on the annual returns from equities, Government bonds and cash in the UK going right the way back to 1899. Over the entire 107-year period, the real return (that is, less inflation) from equities was 5.3 per cent on an annualised basis, against one per cent for cash.
The study also shows that over a ten-year period there is a 93 per cent probability of shares outperforming cash, and an 83 per cent probability of them outperforming gilts. Over longer periods these figures are even higher. Volatility of returns also reduces considerably over time. However, as people in the investment industry always say, past performance is not a guide to future performance.

Diversification
A key word to consider when thinking about investments is diversification. This is an effective way of reducing risk across different asset classes and a range of investments within each. The returns from shares, bonds, property and cash are not correlated – they perform differently in different market conditions – hence spreading investments across some or all of them means that if one performs badly another may perform well during the same period. A large number of what are called managed funds are available that effectively create just such a portfolio. Usually split into the categories of active, balanced and cautious managed funds, these are spread along the risk scale to allow investors to pick the one most suitable for them.
Different types of products come and go, and some do not always work as they were intended. With profits funds, for example, aim to smooth returns using bonuses. When stock markets fell sharply a number were unable to maintain this strategy; but not all with profits funds are the same. There are some in the marketplace that continue to smooth returns very successfully. The providers’ financial strength is critical in their ability to do this.
New products also appear as providers find ever more innovative solutions. Various wrappers, such as insurance bonds, can be used around products, most commonly for tax purposes. But ultimately, the main asset classes remain the same. The choice investors face is how much risk they want to take on and, therefore, how best to divide their investments between these asset classes.