The risks of dental partnerships

Introduction

Entering into partnership is more than a natural next step in your clinical career. It’s a move into business ownership, bringing with it a new level of financial, legal and operational responsibility.

While the long-term rewards can be significant, so too are the risks. Understanding the differences between being an associate and a partner is key to making informed decisions. In this article, we explore those risks and the practical steps you can take to manage them.

Understanding liability in dental partnerships

As a dental practice partner, you’re not just sharing in the profits of the business. You may also be taking on unlimited liability for the practice and the actions of those working within it.

This can include:

• Practice borrowing and outstanding debt
• Property-related obligations, including leases or ownership
• Contractual disputes with suppliers or commissioners
• Employment-related claims or settlements 

Under joint liability, responsibility doesn’t stop at your share. If the practice is unable to meet its financial commitments, creditors may pursue individual partners.

And if one partner is unable to continue, others may be required to make up the difference. In more serious cases, this could put personal assets such as savings, investments or property at risk.

Vicarious liability

Claims or disputes don’t always arise from your own actions. For example, issues involving employed dentists, hygienists or support staff could still result in financial exposure for the partnership as a whole.

Even where disputes are resolved without fault, the associated legal and professional costs can be significant and may not always be fully covered by indemnity arrangements, particularly where matters fall outside core clinical work.

While severe outcomes are uncommon, the financial strain of prolonged disputes can still affect practice cashflow and partner income.

Seeking financial advice can help you understand your level of exposure and identify ways to protect yourself. This may include reviewing your partnership agreement and considering appropriate insurance solutions, such as practice or partnership protection policies.

The business impact 

Becoming a partner means taking on responsibility for a high-value healthcare business. This can expose you to: 

• Borrowing and refinancing risks
• Changes in NHS or private income streams 
• Rising staffing and operational costs
• Pension and tax administration complexities
• Risks linked to fraud or financial mismanagement

Effective governance and strong financial controls can reduce these risks, but they cannot remove them entirely. 

Risk vs reward

While it’s important to understand the risks, partnership also offers clear advantages. These may include increased earning potential, greater influence over how the practice is run and the opportunity to build long-term capital (particularly where property ownership is involved). 

As with most business ventures, higher potential rewards are typically accompanied by greater financial exposure. The key consideration is whether your personal financial position is robust enough to withstand unexpected challenges.

Can you reduce risk? 

There are practical steps you can take to help manage your exposure. If you’re considering entering a partnership, gaining a clear understanding of the agreement is essential. A well-structured partnership agreement, structured by independent legal advice, can help define responsibilities and reduce ambiguity.

If you’re already a partner, it may be worth reviewing your current arrangements. Consider whether your insurance cover remains appropriate and whether your financial position provides sufficient protection.

You may also want to reflect on your personal exposure. For example, are your assets structured in a way that offers protection should the unexpected happen?

Finally, it’s important to consider exit planning. While it may feel premature, having clarity on how you would leave the partnership, and under what circumstances, can help avoid complications later on. 

Speaking to a financial expert

At Wesleyan Financial Services, we understand the unique financial challenges faced by dental professionals. Our Specialist Financial Advisers work closely with dentists and have a deep understanding of the risks associated with practice ownership.

We can support you to:

• Review your existing insurance arrangements and identify potential gaps
• Structure your finances with your personal and family protection in mind 
• Prepare for uncertainty while planning for long-term success 
• Gain a clearer understanding your overall financial exposure 

To see how our experts can help you navigate the complexities of practice ownership and how it impacts your finances, book an appointment today. Charges may apply.