No Images? Click here DENTAL NEWSLETTER December 2017 Dental Numbers On 17th November 2005, ADA Inc President Bill O’Reilly made a submission to the Productivity Commission concerning the Australian Health workforce, but dentistry specifically. The ADA position was: “that the Commonwealth Government facilitate the education and training of increased numbers of Australian dental students as they will represent the best long term solution to workforce shortages”. And “that the recruitment of suitably qualified overseas dentists, by the Australian Dental Council assessment process, be utilised as a short term solution to the significant labour shortage in Australia.” It turned out to be a case of being careful not to get what you wish for. The alleged shortage of dentists in Australia was based on numerical projections of dental numbers rather than on a study of the real demand of patients. A survey of dental practices to determine what spare capacity all dentists had in their practices would have been much more accurate, but would have been more expensive to conduct. That’s the problem when studies concentrate only on the supply rather than on the demand for dental capacity. Statistics showing that there was a heavier concentration of dentists in capital cities than in rural Australia didn’t prove much if the capital city dentists had spare capacity. In a country with widespread rural populations there will always be less density of professions in the country even when the cities are in oversupply. That doesn’t reflect a shortage of dental numbers, it reflects a preference of health professionals to live and work in capital cities near education and job opportunities for their children and a greater variety of cultural and sporting opportunities. The result was that the number of dentists in Australia went into a substantial oversupply perhaps reaching 1500 of surplus dentists. The Australian Dental Councils exam process is still heavily booked with dentists who are yet to pass their exams. A big part of the problem at ADA Inc, having lobbied government for more dental schools and dental immigration, was that it found it extremely difficult to reverse its stance towards government as its credibility was on the line. It really identified that the ADA state bodies were the bodies more in touch with dentists at the grass roots level, whereas the federal body was out of touch. More recently, changes in personnel, particularly its CEO have resulted in a different attitude at ADA Inc, but it’s hard to work against the position of the organisation in the past. Morgan Stanley says scrap private health insurance! As reported by Sue Dunlevy of News Corp Australia Network of 26 November 2017, investment bank Morgan Stanley says: * The public hospital system is now so good that Australians can get away with not joining a health fund and * The claim that private health insurance is vital to easing pressure on public hospital waiting lists is also a myth. Morgan Stanley’s executive director Daniel Toohey says that the private health industry has become lazy and the government should refuse any premium increases for three years to force the industry to sort itself out. Morgan Stanley’s report was issued to guide its clients contemplating investments in listed private health insurance companies presumably NIB, and Medibank Private. Health fund membership has declined from a peak of 47.4% in 2015 to 45.8% in September 2017 and is predicted to continue to fall placing pressure on private hospitals. According to the report, the public sector could absorb the excess demand caused by an aging population and falling participation in the private hospital sector. The report avoids commentary on extras cover on which health insurers generate a 22% margin. Health funds made $1.4 billion in profits in the 2017 financial year dragging in an average 4.3% extra premium revenue but benefit payouts only rose by 3.7%. The report even suggests that high income earners who are ‘grudge purchasers’ of health insurance will be better off paying the Medicare levy surcharge than buying insurance. Synstrat’s comment is that it depends on the amount of taxable income above the surcharge levy threshold that such people have.
Dental Partners / Mike Timoney A report in the New Zealand Herald of 15th November 2017 quoted Abano Healthcare CEO Richard Keys saying that Abano’s first half year profit may fall. Dentists will recall that Abano acquired the Australian business Dental Partners Ltd. Abano also operates radiology facilities which it says are doing well. Although remaining optimistic Keys said that New Zealand dental practice has generated same practice fee growth of 1.2% but that Australia’s same practice growth fell 2.2% in what he described as “challenging and volatile economic conditions.” Dental Partners founder Mike Timoney sold out to Abano and subsequently had a legal dispute with it. How that dispute was resolved is unknown as the result would have likely to have been embodied in a confidential agreement. Timoney is now pushing his Smiles Inc 60/40 scheme to dentists. Dental Divorce – Practice Valuations Refer to the following at Synstrat.com.au – Dental Publications: 1. Dental Divorce and Dental Disputes Jul/Aug 2017 2. Dental Divorce – Australia Style Nov/Dec 2002 To resolve value Synstrat is the most experienced valuer of Dental Practices for Family Court or business dispute resolution purposes in Australia. Contact Graham Middleton or David Collins 03 9843 7777 or email dental@synstrat.com.au Rental Guarantee – A Sucker Bait Rental guarantees are being offered to purchasers of high rise apartments in Sydney, Melbourne and Brisbane. These have always been a sure sign of the falling market. Inevitably when the rental guarantee expires the underlying rent is less than the guaranteed rent and the value of the property on the secondary resale market if substantially lower than the purchase price. Identifying Practice Builders and Practice Destroyers Some dentists are great practice builders. They communicate effectively with their patients, build up trust and generate repeat business and personal referrals. Others including some with excellent academic credentials fail to generate repeat business and don’t receive personal referrals. Their patients booked to them tend to disappear from the practice. It’s critical to identify quickly whether a dentist you have employed is a practice builder or a practice destroyer and in the latter case, action needs to be taken quickly. Practices cannot afford to carry practice destroyers. Saving money on life insurance Many dentists have been sold inappropriate level premium policies which are unnecessarily expensive. In reality successful dentists gradually reduce their need for life insurance as their assets including superannuation increase and can therefore reduce the amount of cover they have. Cheaper life insurance cover will meet their needs. Speak to Cameron Darnley, the Synstrat partner who deals with life insurance to determine whether you can save money through a better deal. Housing Markets – Avoid High Rise House auction clearance rates are falling across the eastern states and the high-rise apartment market is in disarray in Brisbane, Sydney and Melbourne. Those who signed up to buy apartments off the plan as a result of attending property spruiker’s gatherings, are finding in many cases they could have bought an equivalent completed apartment in the secondary market for 20-25% less. One factor is that China tightened the rules for moving currency abroad and as a result a number of Chinese buyers who signed up to buy apartments on a 10% deposit have been unable to settle the contract on completion. These apartments find their way back into the market at a reduced price. Another factor is that the change in the depreciation rate on new properties has had a significant impact on the net after tax cash flow. The high rise market may have a fair way to fall as many buildings have been commenced but will be completed over the next 18 months.
Synstrat Dental Stories is a 335 page book which is a must read for dentists. It details a series of good and bad practice experiences but names and some details have been changed to preserve identities. It contains valuable insights for practice owners and intending buyers as to what works best and what doesn’t. To obtain a copy of this publication, make a tax deductible donation of at least $30 to the Delany Foundation, a charity which brings hope and opportunity into the lives of young people deprived of education in Australia, Papua New Guinea, Kenya and Ghana. Once you have made your donation, please email confirmation of your donation along with your postal address to cheryl@synstrat.com.au and a copy will be sent to you. Donations can be made by mail to: Delany Foundation PO Box 429 CASULA MALL NSW 2170 Or via direct debit to the Delany Foundation Ancillary Trust, BSB 062 784 CBA account number 4050 5402. Should you have any difficulties, contact Matthew Mahoney on 0419 202 787 or 02 9600 8184. Bitcoin Bitcoin Future Contracts are now being traded on a US Exchange. These are not Bitcoins, but rather punters betting on whether Bitcoin will go up or down. The price of Bitcoin has gyrated wildly in recent days yet we don’t know who started it, or who many of the major holders are. There are no regulated markets in Bitcoin itself, and hence no requirements to explain unusual price movements. If it all collapses like Dutch Tulips in the 1600’s nobody will be held accountable. Reports of hacking Bitcoin exchanges and of treasure troves of Bitcoin disappearing into cyberspace should be a warning. Perhaps somewhere on the globe there is a character akin to a villain in a James Bond movie chuckling madly as the weakness of human greed leads punters toward the great Bitcoin unknown! Yep, there is a sucker born every minute. Regards to all Dentists, Graham Middleton The Synstrat Group are Australia's most experienced Dental practice business advisers, accountants, practice valuers and licensed financial advisers. The information contained herein is of a general nature and no specific action should be taken without individual advice. Synstrat Management Pty Ltd P. 03 9843 7777 ABN 57 006 295 325 If you are not the intended recipient of this communication please delete and destroy all copies of this message and telephone Synstrat on +61 3 9843 7777 immediately. If you are the intended recipient of this communication you should not copy, disclose or distribute this communication without the authority of Synstrat. Any views expressed in this communication are those of the individual sender, except wh ere the sender specifically states them to be the views of Synstrat. If you do not wish to receive this email in future, please reply to the sender requesting termination of service. |