It's the economy stupid

Because we are entering a recession, with the economy about as healthy as a asthmatic in a smoke house, I will be focusing my blog on the economic health of the country. I know you don't think that has anything to do with dentistry, but ask someone who was practising in the 70's and I am sure they will disagree. The economy has EVERYTHING to do with running a practice, especially with the safety net of the NHS collapsing around our ears.

Very shortly the bank of England will start cutting rates again, which will have the effect of driving up the price of everything imported into this country. As we are now a net importer of oil, and as oil is used for pretty much everything, I don't need to tell you what this means. Cutting rates damages the strength of Sterling, especially against the Euro. Yes, it might make credit cheaper, but we are entering a period of credit contraction. It will be a while before we see any easy credit, and the days when you could get a loan for your practice with no collateral are pretty much over...... at least for a while.

I remember when I tried to get my first practice purchase loan. The first tow banks wanted me to not only sign over my soul, but they also wanted written guarantees from the great maker that the soul was actually worth something. The of course came the Royal bank of Scotland, who gladly threw money my way, and off we went.

The thing that happens in credit contractions is that people stop spending money. With their credit cards maxed out, and the equity in their house disappearing as the housing market slumps, people close their wallets and stop buying luxuries. Luxuries like tooth whitening and cosmetic dentistry. Having your toothache sorted is a necessity, but having Invisalign on your wonky teeth isn't. When money is scarce, necessities come first. Food on the table, and heat in the radiator. Gym memberships, Pizzas and second cars suddenly become an unexpected strain. A million people in the USA are close to having their homes repossessed, a million people in the worlds largest economy. The stock market looks ready to give back all the gains from the last few years, and Christmas for shop owners was a complete nightmare. You can hide you head in the sands, or you can PLAN for what might be several years of severe economic pain.

Recessions are healthy. They are necessary. Unfortunately, do to manipulation by governments and central banks, this recession will be worse than is should have been. With our housing market now starting to decline, the British consumer has reached the end of his economic rope. We are all spent out. Anyone thinking of undertaking major practice alterations/relocation's/readjustments may want to think twice. 2009/2010 may well see several thousand dentists enter the private sector, just as people start to feel their Bank accounts heavy with debt and light of savings. People will become angry, and if we are not careful their anger will be aimed towards us. If the economy goes into a major recession (and Gordon, you will have a lot to be held accountable for if it does) then the profession will be seen to be abandoning the public in its hour of need. Imagine the newspaper headlines on that one.

"AS PEOPLE LOSE THEIR JOBS, DENTISTS THINK ONLY OF THE MONEY"

The BDA's feeble mumblings that "dentists have a bad deal from the new contract" will be meaningless. You have to take this into account. if you choose to leave the NHS for the private sector (and it is still my opinion that you should) you have to take this all into account. We have to do it the right way, even if it means treating some of the most deserving in our communities for nothing.

And I want to repeat something. It is my opinion that you should leave the NHS. The PCT's themselves will be facing pricing pressures as government revenues sink. Your income will not be guaranteed, so you might as well work with the local population in a way that is affordable and ethical than risk it all on a paycheck that might not be there in 3 months. Businesses can still thrive in a recession. they just have to be prepared, frugal and sensible.