Confident dental sector forecasting improved profits and growth
Confidence is on the up among dentists, but remains in negative territory. Three quarters of dentists expect profits to improve in the next year, with fewer expecting financial pressures to grow. Four in five are planning for growth, either by setting up new sites, buying additional units, or staying where they are. Resistance to corporate ownership is widespread, but ultimately it is seen as an inevitability.
Confidence among dentists has bounced back after going into decline last year, with renewed growth plans and expectations of better profits, according to new research released today.
The ninth Lloyds Bank Commercial Banking Healthcare Confidence Index is the latest annual survey of GPs, dentists and pharmacists on the outlook for their industry, using a blended figure of short-term and long-term projections to measure overall business confidence.
On a scale from -100 to +100, dentists’ confidence has improved year-on-year, and up from -10 in 2017 to -2 now. The previous year saw dentists’ confidence fall for the first time in the history of the Index, with a decrease of five points.
Planning for growth
Improved confidence sits alongside more bullish profit expectations, with the number of practices expecting business profits to increase over the next 12 months growing from 65 per cent to 74 per cent, and fewer dentists expecting financial pressures to grow (down from 81 per cent to 75 per cent YoY).
Four in five (82 per cent) now say they are planning for growth, up from a third (35 per cent) last year, while the proportion of dentists planning to sell their practice or retire in the next five years has fallen from 45 per cent last year to just nine per cent.
Indicative of a renewed commitment to their vocation, the proportion of dentists who would encourage friends and family to join the profession has bounced back from 53 per cent last year to 69 per cent.
Future practice ownership
This improving sentiment is reflected in the goodwill values of dentist practices, with almost half (47 per cent) expecting values to improve, against just one in 10 (12 per cent) who think they could fall.
Two in five (42 per cent) now expect larger corporates to make fewer inroads into the industry, predicting either no corporate growth or even a fall in corporate ownership, though 58 per cent still say they expect big corporates to increase their market share over the next five years.
Tellingly, just six per cent would like to sell their practice to a corporate, with 83 per cent favouring a sale to an associate instead.
Ian Crompton, head of healthcare banking services, Lloyds Bank Commercial Banking, said, “This year’s Index shows that dentists remain significantly more confident than the rest of the healthcare sector.
“Growth is firmly on the agenda and the industry is proving its resilience, with far fewer dentists considering leaving the profession than a year ago.
“Lloyds Bank is committed to understanding the challenges and opportunities associated with working in healthcare. This supports our ambition to provide the right knowledge, insights and products to maximise return for practice owners, and ensure the provision of essential services in years to come.”
A more positive outlook overall
The overall Healthcare Confidence Index saw confidence rebound from -31 in 2017 to -21 in 2018 after a downturn last year.
Since the Index began, short-term confidence has always been more positive than long-term, and is now +14 against -56 – a difference of 70 points.
Last year saw a similar gap of 71, but both ends of the scale were around ten points lower (+4 against -67), indicative of the whole sector adopting a more positive outlook for both short and long-term prospects.