Ask Anne: “Start early and stay on track to hit next year’s UDA target”
We all know that Christmas Day is 25th December, it falls on this day every year, but there is still panic buying right up to the final minute. In the same way every dentist knows that NHS contracts need to be met by 31st March. So why the annual stress around hitting targets? The truth is that most of us work a little better under pressure, but there are a few hints and tips that I’d like to share that might just help avoid dentists and their teams suffering a very stressful final quarter this time next year.
The problem of UDA underperformance is widespread. At the annual LDC conference in August 2017 it was estimated that over one third of NHS practices had missed their UDA target for the Year ending March 17, and widely available statistics report that over a quarter missed by more than the 4% threshold.
One issue is that for many practices, following a high-pressure final quarter, there naturally follows in April, a period of relaxation while everyone takes a breath. But in truth this is the start of the problem. Before you know it, summer is here and with it the holidays and without blinking, hey presto September arrives and already you can be behind. At this point most principals start to push the pedal to the metal and put in place strategies to increase UDA fulfilment.
I cannot underplay the importance of understanding where your practice stands in relation to its UDA target at any particular moment. Practices that have suitable computerised software are, of course, able to track UDAs quite accurately, but the reality is that many simply don’t take even this most basic of measures. Tracking UDAs means that you can see immediately if you are falling behind and take remedial action, such as bringing in an associate or locum, or opening later or on Saturdays for instance.
Every practice has its own contract, with an allocation of UDAs and a baseline contract value. The UK average is around £26 per UDA, but I’ve been in practices where the value is as little as £17 and some where it is as high as £45! But so often we go into an NHS practice knowing it has a contract, but until we sit down with the dentist, we have no idea what it’s worth. Unfortunately, many dentists don’t know the value either. They always know the target itself, but few are aware of the value and this is an important oversight. Dentists need to understand the monetary value and not just the numerical target – in this way you can see exactly what underperformance means in revenue terms.
We see practices that underperform quite regularly, but we always value the practice on the basis that the existing contract will be met in its entirety the following year, unless there are extenuating circumstances, such as a breach notice for example. The reason we do this is that we always look at accounts retrospectively, but it’s our job as valuers to predict the future, and effectively create a forecasted business model, which by definition needs to be based on the total value of the contract offered.
In reality however, missed targets are always reflected in a price reduction because buyers are rightly reluctant to take on outstanding debt. The agreed price will always take into account any clawbacks, and the bigger the liability the more the vendor will lose.
In the last 3 months of a contract, when practices are pushing all the buttons to hit targets, we advise them to do everything possible to get more patients into the practice making sure that all surgeries are working at capacity simultaneously and bringing in extra resource if necessary. Naturally, there is a trade-off in terms of the amount paid to a locum to complete the contract versus the amount of value gained from the UDAs. Making this equation work relies on having knowledge and visibility around the value of the UDA, rather than seeing it only in terms of a target to hit.
So, our advice is always to keep an eye on your numbers, understand the value of each UDA, start in April as you mean to go on, keep up the momentum and monitor progress. In this way you can assure that whenever you come to sell your practice it will have an exemplary UDA record. This will give potential purchasers confidence and belief that the practice can achieve its targets and has a foundation to grow, the result of which is gaining full value for your practice without any ongoing UDA liabilities.
Posted by: Anne Barker on 03 Apr 2018