Dentists Who Invest Podcast

How Much Do Dentists Earn (New NASDAL Figures Analysed) with Johnny Minford [CPD Available]

• Dr. James Martin • Season 3 • Episode 364

Share episode

Get your free verifiable CPD for this episode here >>>  https://www.dentistswhoinvest.com/videos/how-much-do-dentists-earn-new-nasdal-figures-with-johnny-minford

———————————————————————
The financial reality of dental practice ownership and associate earnings is often misunderstood. In this revealing discussion with dental accountancy expert Johnny Minford, we uncover the true earnings of UK dentists, based on the latest NASDAL figures.

Surprisingly, NHS practices are showing slightly higher profits than private practices—£166,000 versus £162,000 per principal—challenging conventional wisdom. Johnny explains how private practice profits have declined from post-pandemic highs, while NHS practices have maintained steady growth despite recruitment challenges.

We also delve into the earnings gap between associates, with private practice associates earning £105,000 compared to £74,000 for NHS counterparts. But earnings are more than just numbers—they’re influenced by lifestyle, working hours, and specialised services.

One of the most eye-opening findings is the geographical disparity in earnings. Dentists in London earn approximately 33% less than their colleagues in regions like East Anglia, Scotland, and the Northeast—an unexpected insight into the factors driving regional income differences.

As the dental profession continues to evolve, we explore how diversification of income streams is reshaping the financial landscape. The percentage of predominantly NHS practices is falling, reflecting a broader shift in strategy.

Curious how your earnings compare to industry benchmarks? Listen now and UK dentists can earn free verifiable CPD by completing the short questionnaire linked in the episode description.

———————————————————————
Disclaimer: All content on this channel is for education purposes only and does not constitute an investment recommendation or individual financial advice. For that, you should speak to a regulated, independent professional. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. The views expressed on this channel may no longer be current. The information provided is not a personal recommendation for any particular investment. Tax treatment depends on individual circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment, you should speak to a regulated, independent professional.

Send us a text

Dr James:

Let's talk about something a little sensitive today, and that is the subject of dentists' earnings both principals and associates, and, more specifically, their profitability. I've got with me today Mr Johnny Minford, expert accountant to dentists. We're going to be reflecting on the recent NASAL figures which were released on this very subject. We're going to be comparing them to figures in years gone by to see how they've changed, analyzing what they mean in the present tense and getting a real good idea of just where we are at comparatively whenever it comes to the profitability of our dentistry.

Dr James:

I'm also super excited today to announce a brand new feature for the Dentists Who Invest platform, and that is free verifiable CPD to all UK dentists who have enjoyed this podcast episode. Whenever you finish the episode, all you have to do is click the link in the podcast description. It'll take you right through the Dentists who Invest website. You'll be able to complete a short questionnaire and, once passed, you fill in your reflections and we'll go ahead and email over to you your verifiable CPD certificate, which is entirely free. What that means is this podcast episode will be able to contribute towards your verifiable CPD hours during this learning cycle. Let's talk about something that's super sensitive for dentists, Johnny how much they earn, how much they can earn, and NASDAL came out recently with their perennial figures to shed a little bit of light on this, haven't they?

Johnny:

I think that's true. James NASDAL come out with figures every year with a set of statistics, how they are generated. We at NASDAL throw most of our dentists into the pot, anonymize everything and take averages for practices of different types and associates of different types. Now the reality is, we can only do this in retrospect because the figures that we use are the tax figures for a particular year or the figures that have been sent in to the taxman. So, given that the submissions are made at the end of January for the previous year, we only really have a full idea of what's happening after the end of January. So it's around about this time of year that we can collate all the data and actually produce what we have. Now I do have to say that these are averaged statistics and, as in any sort of average, there is a range that is happening in here. Some people are way above, some people are way below. It is an average, but it should be statistically significant. Now the other thing I'll do we separate these out into three main categories. One is NHS practices and one is private practices and one is mixed. Now how we classify those is that an NHS practice is one whose income is 80% or more derived from the NHS Private. The opposite, and mixed, is everywhere else in between, as you would expect. Now, what we don't do is separate out any specialisms. So if you have an implant practice or something doing a lot of Invisalign or some high ticket items or that type of thing, that is all within the averaging. We don't try and make an attempt to take those out, for the simple reason we wouldn't have the statistics within a couple of months. It would be probably the rest of the year. It would take us to get all those categories.

Johnny:

But the thing about the statistics is that we do it the same way every year. So it's an index. So year on year it's measured the same way. So it's the trend that is just as important as the figures because it's measured the same way. And I think that sort of thing is quite important to recognize, say at the beginning, is that some of the indexes that we use for example, if we're talking about valuations of practices or values of practices we do an index which is based on the percentage of the gross. So if you sold a practice for one times the gross income, it would be 100% of the gross as an example. That's not how you value a practice. We all know that it's all done on a multiple of the profit and multiple of the EBITDA, but we've always shown the index on that way. So as long as we show it the same way, the trends you can see one after the other.

Dr James:

And am I right in saying sorry to barge in that that's how practice used to be valued way back in the day?

Johnny:

Way back in the day and this is a historic thing, james way back in the day you would have a practice at, say, 35% of the gross, and that came in because pretty much most practices their profit was about 35% of the gross, plus or minus. So when we looked at the EBITDA aspect, it was one times the multiple. The multiple was one times the profit, one times the EBITDA. Now the multiple is maybe three or four or 10 times the EBITDA, depending on the nature of the practice. So the 35% of the gross isn't sufficient to measure it on that. But that's where that thing started. And when we went back to 2006, 2007, when this sort of thing started, these statistics started. We carried on on that basis and, frankly, as long as we're doing it in the same way and measuring it in exactly the same way every year, then the index shouldn't matter. It's the up-down trend that matters more.

Dr James:

Could I ask another question just to preface, because I know we're going to get into the figures in just a second? And one thing I just wanted to ask you because you're an accountant. I've looked at the NASDAL figures before on their website and I know that you accountants operate in profit, right. So the figures that we're about to talk about is the profit. Am I right in saying that off the associate, so that would be income less business expenses? Have I got that right?

Johnny:

yes, I will. I've got both sets of figures, both gross gross and profit. Should we talk about both?

Johnny:

good, let's talk about both okay let me talk about practices first, because what we see in the practice is to an extent reflected on the associate side of things. Overall the average gross income per principal is up and the profit per principal is up. Now when we average the figures it is all done per principal. So if you've got a two-person practice then that will be split into half a million gross, 100,000 profit and all the other figures in between. So that's how we do it. So people can measure whether they've got a one single-handed practice or they're in a 10-partner practice, which is unusual but putting these into play. So that's how we work it. So all the grosses are up. A private practice gross has gone up by from about 560 up to 590,000. So it's gone up by 30,000. Mixed stays about the same. But the NHS practices between 23 and 24 have gone up from 440 to just over 500,000. So the gross of an NHS practice per principle has taken a really big jump upwards. That's interesting when you dig into it. We think that's for two reasons. One is you haven't as many clawbacks. So a lot of the clawbacks happened post-COVID in the year before. In the 23-24 year we didn't have as many clawbacks, so the grosses are higher. Now that also flows its way down onto the bottom line and I know we can't see any figures, but I'm going to give you some figures, just verbally on this.

Johnny:

The NHS profit for the year on an average is £166,000 for an NHS 80% NHS practice. For a private practice, the gross income sorry the profit is £162,000. So according to the statistics, or all the accounts that we have analysed, the NHS practice is making slightly more money than the private practice. Now that is completely bucking the trend of what the expectation would be. If I show you the trend going forward, the NHS is just gradually steady. It's gradually steady. The income levels have gone up by a few thousand profit-wise every year over the last few years up to that 166,000 that we're looking at now.

Johnny:

The private started at almost 180,000 a few years ago, post-covid, steadied at about 175 last year 2023, and then has dropped to 162 this year. And again you can see the reasons for that because a lot of high-ticket items were done in those previous years. There was a lot of pent-up demand and that was satisfied by the private practices. Then in 2024 we had the squeeze on incomes. We had the interest rates going up and people are spending as much on their oral health, so you could see quite a big drop on the private side of things. Whether that will continue, I'm not entirely sure. I think it will probably settle out. But it's interesting though that whether you're an NHS practice or a mixed practice or a private practice, in 2024, the overall profitability per principal appears to be coming out very close to each 160, 165, 166,000. So your average principal, irrespective of the practice, is making a similar amount of money according to the statistics.

Dr James:

Super counterintuitive, and what you have to. The reason why that's extra surprising is that's factoring in the fact that it's really hard to get dentists to do NHS as well. It is, so if people were happier to do NHS, the margins would be even more significant.

Johnny:

It is. It is and I'll just jump onto talking about associates I and this is not NASDAL statistics, this is just my statistics from my practice, djh We've done a little bit of analysis of the proportions that will have been done by associates in that increase in value. Increase in value and again, counterintuitively, associates have done more in both private practices and mixed practices but they've also done a higher proportion in NHS practices. Now, that is not what you hear. That is not what we had expected at all. It's not a great deal of an uplift.

Johnny:

But the point is you would almost expect in an NHS practice for the principal to be doing more and more and more NHS because the associates are fading away and not wanting to do NHS, because the associates are fading away and not wanting to do NHS.

Johnny:

But that's not really being borne out by what we're seeing in the statistics. There is a possible reason for this in that there's a qualitative difference between a lot of associates working in heavily NHS practices or heavily private practices, and how they work is different. So NHS may be a steadier income, a steadier associate base Obviously this I'm generalizing Steadier associate base in there and more part-time people and I'm surmising here whereas in the primarily private practices, whereas in the primarily private practices it's probably the associates in there are probably guys who want to work all the hours that there are available and increase their profits, their income, from those practices. Now I have some of the statistics that sort of a little bit later on, that show private income for us sorry, associates income in private practices compared to associates income in NHS practices. But I'll come on to that maybe a little bit later on. No-transcript.

Dr James:

Makes sense.

Johnny:

So they also the other thing that we do see in the statistics if you have a practice, any practice, and it's just private whatever with an associate, they generally make about £25,000 more per principal if they have associates.

Dr James:

Interesting and did you say sorry I might have missed that? Is that for an NHS practice or all?

Johnny:

practices on that, but it's clearly having the leverage of using associates creates more profit. It also begs the question, looking to the future would that also apply if you used therapists more? More, and maybe there's a structural model there or structural change that might be explored. It's something that I'd like to have a look at in a little bit more detail with our clients to see whether that is a possible model which gives better, better profit levels coming out from the, from the operations. So that might be quite interesting to see I'm guessing they don't have those stats.

Johnny:

Then on the nassau report no, there's a there's a limit to how much you can see, because we take the figures from tax returns practically Sorry, not tax returns from the accounts that go onto the tax returns and we do that because that's generally a straightforward set of data, because if you think of a lot of other things within the accounts, people can make their own decisions as to how much they put in Depreciation. My car expenses, it depends whether you drive a Ford Fiesta or a Lamborghini. You've got to strip all that sort of thing out because that skews the figures. So, on the tax return stuff, what is going into that? That probably gives you a better, more standardized view of what's happening. So you are related to that.

Johnny:

There's a limit to how much you can do with it. Also, you've got to look at the fact that we're all accountants. We're the best will in the world. We actually do accounts for people for a living. We don't have the time to go off and pick out 100 or 200 of our clients and analyze everything through just for these statistics. You've got it. You've got to be, uh, have a level of proficiency of what you do. So there is a limit to what we can achieve out of it understood that's not a good time to segue into the associates.

Johnny:

Um, yes, I'll come back on to the practice accounts, because one other interesting thing on the statistics that were coming through is that the expenses, the key ratios, the expenses, the key ratios, have taken a bit of an uplift between over the last two or three years, and this is for all practices. The big uplift is on staff costs and other clinicians costs which include associates. So it has been in the rounded taken all together and the lows are 41, 42%. It's now jumped up in 2024 figures to almost 46%, so it's quite a big percentage uplift. Most of that in that year is to do with associated costs to the practice.

Johnny:

So I said before that the associates were doing more in a practice. That was take those words with a pinch of salt. It's the associates are earning more out of the practice. So therefore the profit levels left in the practice are reducing. And, as you said before, james, if we look at the private practices, if associates in private practices are cracking on and doing a lot more, working more hours and doing more private and there's a limited amount of work to be done, then it follows that the principal is doing less or there is less available for the principal. So the level of income paid out to the clinicians goes up, the level of income, the profit left for the principal, goes down. It's pretty straightforward mathematics Makes sense so that is something that we're seeing.

Johnny:

If you look at the same figures for NHS practices or private practices, it still follows the material costs. So, as you would expect, in an NHS practice are lower it's about 11 percent, you would expect, and in a private practice it's about 14.5%. So you've got an extra cost in a private practice which isn't rising much year after year. But as everything else goes up in value, that goes up in value. The overheads in a private practice also are higher than in an NHS practice because generally there's different decor, different furnishings and see what we go on that. Then we can segue on to the associate income and, as you were saying, that's an interesting thing to look at. The income for a private associate has walloped up a lot over the last two or three years, whereas for an NHS associate it's gone up actually, but not massively so. So for an NHS clinician you were looking in the mid-70s, $74,000, $73,000, $74,000 as an average associate profit and I've got a comment to make on that just a little later. But for a private associate you're looking at 105,000. So that's 30,000 more for somebody working in a private practice rather than somebody working in an NHS practice.

Johnny:

What I don't want people to take away from this is that if you work in a private practice, you will earn more money. That is not what the statistics are showing, although there will be people that will say that's what they're showing. You've got to dig deeper and you've got to look at the averages, because those statistics don't don't show the full-time, part-time split and they don't show the specialisms which will generally happen on the private side of things. So you've got the higher ticket items are going to earn more profit and they're only going to happen in the private side. You're also likely to have guys and girls in the private side.

Johnny:

Sorry, if I say guys, I mean guys and girls together in the private side that have absolute ambition to earn big money, and that's where you'll find them. So again, the drive in the private side is there. That comes across in a different way when people working in NHS practices. So there's a lot more detail and nuance in here, even from what I just said. So a lot more nuance in there that you need to push out. That is happening between the NHS and the private associates. So that's something that's there.

Dr James:

Context right.

Johnny:

The context is there. So that is something that's important and we don't really look into this quite as much, but we will look at that. We look at the drop in private practice earnings and you see the increase in associate earnings private associate earnings and you can see one follows from the other and the NHS associate earnings follows in within a steady-ish NHS type of practice, whereas on the private side associate earnings go walloping up. Principal earnings come down Again. It's very straightforward. What's going to happen with next year? That's an interesting one because we have another year that's gone past, which is 2025, 24, 25. There's been some changes in that because we've had some uplift on NHS side of things and, of course, we have the bounding changes which helped in 2024 that we're looking at and will be in 2025. But we've also had some increasing coming through on wages and salaries within dental practice. That affects all dental practices. It doesn't just affect one side or the other, one type or the other. The associate proportions and the associate earnings are increasing. I think even more so unless the private earnings are rising to keep pace with that, then there is going to be further pressure on private profits that have come. So it's going to be interesting to see what happens in 2025 and also where we are right now looking at 25, 26.

Johnny:

There is always a problem with staffing. That has been the case right through 24 and 25. We hear on the ground that it's easing a little bit in some places, but I'm not sure that I completely believe that. I think it depends on the practice and it's certainly not a geographical thing. So the practice has to do what it can to attract its associates and, of course, its other clinicians, the nursing staff, the therapists, the hygienists.

Johnny:

That's always going to be a problem. The uplift in the minimum wage and the national insurers is going to be a squeeze. The private practices can put their prices up. The private practices can put their prices up. The NHS practice cannot. And of course, the NHS practices don't get the 10,000 allowance against payroll that the private practices have. We've been pushing for some time to try and find out how that's fair, but it's not. The word on the street is that there will be an uplift in the NHS rates to compensate that, but that hasn't been seen yet. We wait to see how that will be because that would have to be quite a sensible uplift to try and do that.

Dr James:

Seems reasonable. And just on that, you know that 10,000, that you get that little kind of leeway tax-free allowance. How does that work? Is that per staff member? Is that no? No, I'm just interested.

Johnny:

It goes into your payroll and you get that as an allowance against your payroll for your total staff. You get upped to that amount every year against your national insurance that you pay. So if your payroll is a million pounds and you pay 10,000 pounds of national insurance, basically that allows you to wipe it out.

Johnny:

Some of my payroll colleagues will be jumping up and down and saying that's not entirely true. It's much more complex than that which it out. Right, some of my payroll colleagues will be jumping up and down and saying that's not entirely true. It's much more complex than that which it is, and I appreciate that and I apologize for simplifying things, but I'm simplifying a lot of things today. Simple is good.

Dr James:

Simple is good, yeah, cause I was just always. I knew it existed, but I just wasn't quite sure how that worked. But no, okay, right, so that's brilliant. So we've done principles, we've we've done associates, and again, there was a few things that you said then and I was. I could almost feel myself like, hmm, I want to ask more about that, right, but then you've actually just given me the answer. There we're kind of we're simplifying things a little bit, like, for example, you know, the, the profit of the principles. Uh, obviously, if they pay themselves a wage, the profit is going to be less the wage that they pay themselves. So that's not, it's not the full story that that's the amount of money that they're generating, right?

Johnny:

no, it is. It is. We would always add the uh if they pay a salary to themselves or dividends, that the figures that we take are before those figures right, because I wasn't.

Dr James:

I knew that the salary, the dividends make sense because obviously it comes after profit, you know. But I didn't know that they'd factored the salary in as well and I was like how does that mess with things if they take a bigger salary?

Johnny:

Because you're absolutely right, James. It messes with things if you don't take it out.

Dr James:

Yeah, yeah, yeah. Okay, fair enough, good to get clarity on that one.

Johnny:

So you've got to make your life worth.

Dr James:

Life Makes sense. Makes sense. Well, listen, I mean the Nassau figures are interesting and I read them. I have read them, uh, before. It's just important to reiterate what you were saying earlier, in that they are averages. So if we have a bell curve, we're literally talking about the middle of the bell curve right here, and there's going to be outliers either way. But it makes for interesting reading and certainly it says something about the trends as to what's going on within dentistry it is, I think.

Johnny:

I think this year, as in any year, you always have bumps. Um, whether or not this year is a bump both for the nhs side of things and a bump the other way for the private side of things, and all bump the other way for the private side of things and all the mixed practices, by the way, are in the middle. We remain to be seen. One other interesting factor on that there are a lot less practices who qualify as NHS practices. You know the 80-20, if they're 80% NHS. There are a lot less of them now than there were, say, two, three years ago. So two, three, four years ago we would have maybe the high 20% would qualify as an NHS practice. So more than 80% NHS. This year that we've just finished, we are about 17% 18% only that qualify of our data sample which qualify as NHS practices because a lot of other practices are taking on more and more private work. So the percentage of NHS has reduced. So they're now falling into the mixed category rather than the NHS category. So that's an interesting thing.

Johnny:

There's another interesting piece of data and that is a geographical piece. Now I'm not sure how statistically significant all our data is across the board, because it's fair to say that with the NASDAL clients, it could well be that we as a NASDAL grouping act for practices which are more forward-looking or possibly more profitable than some. Forward-looking or possibly more profitable than some, and I know that is something that has been said in the past. I'm not entirely sure it's true. It's certainly not completely true. So our data is maybe a little different from the whole of the industry, but not hugely.

Johnny:

What we found is and I'm only just going to give a couple of things here what we found is that certain areas of the country earn substantially more. The average principal earnings is substantially more than others, and I'm talking an extra 33% more. So, for example, in East Anglia and Scotland and the Northeast, the average principal earns 30, certainly 30 percent more than the average dentist in central London. London is the lowest earning set of results that we have and, as I say, all these things are averaged. It could be a bump. It could be that the data that we took in this year just happened to have a lot of low earning London dentists, but that's what it shows anecdotally.

Dr James:

It's something that I've come across before, as in. I've heard people purport that um, I know the uda rate in london isn't. You didn't. You didn't say was it specifically private? You said or just all dentists? No, just across the board. I know the uda rate in london is way less than you expect it is, and the over.

Johnny:

Units are much more and the costs of employing staff are much more. So it sort of follows you're going to make less money as a dentist in London than you are as a dentist in one of the provinces.

Dr James:

Makes sense, and what we've got to remember as well is that well, just as you were saying a second ago, it's more cost of living's way higher, uh, so, uh, yeah, you just got to really weigh that up before you move to london as a dentist I think it is, I think it is, I think it is.

Johnny:

But the statistics, james are, are interesting. This year there's figures in here that we did not expect to come out. We expected the NHS to be about the same as it was. We expected the private side of things to reduce a little bit, but not as much as this. We expected the private earnings of associates or associates in private practices to be bumping up. We all have associates earning privately much bigger figures than what we're looking at here. So the range is huge.

Johnny:

And the figures we have for associates do not take into consideration the hours worked, because there are a lot of associates that work but they're working on the part-time side. There are a lot of associates who work and it is. There are a lot of associates who work and it is part of their lifestyle. There is a work-life balance that is in there which allows them to earn a pretty good rate but not necessarily work till nine o'clock at night or work on a Saturday morning or whatever, and that's not what they want to do. And I think we see this in the associate range of associate earnings in a way that you don't see it in a principal, because if you're a principal in a practice, pretty much you know you get out of bed in the morning because you've got stuff that you have to do and people that you have to pay and mouths that you have to feed, whereas as an associate it's your mouth. You can make those decisions and I think that's the beauty of being an associate you can make those choices, those lifestyle choices, and you can almost make those on a month-by-month, year-by-year basis.

Johnny:

And what we're not seeing in the NASDAL statistics is how that is reflected, because, again, we don't have that data from our clients and the clients change every year.

Johnny:

Somebody works full-time one year they have a set of twins and suddenly they're only working half the year and after that it's two and a half days a week. You haven't got that amount of data that is in there. So it's going to be interesting to see how this is reflected with other sets of data from other sources, and I have other colleagues in the dental industry that I would like to speak to to try and make sense of the figures that we have from the statistics against the figures that are being produced from other sources and have a look at the methodology on that and see what's right and what's wrong, and how they can be brought closer together and how our data can inform the data from other sources, because we're all working in the same industry and it would be nice to actually have everything pointed in the same direction, being informed by the data from different sources, from methodology, from different sources. So that's something that I'm intending to do over the next couple of weeks, before these figures start hitting the streets in a way that people can misinterpret.

People on this episode

Head Shot

Dr. James Martin

Host