For any dentist in England or Wales considering setting up or acquiring a practice, the NHS dental contract is a significant factor – often viewed with a mix of opportunity and trepidation. It can be the bedrock of a stable business or a source of considerable stress. Understanding its intricacies is crucial for your future success.
At Jacobs Legal, we regularly guide dentists through the complexities of dental practice acquisitions, and the NHS contract is almost always a central discussion point. Let’s unpick what it means for you.
Understanding the NHS Contract: GDS vs. PDS
In England and Wales, most NHS dental services are provided under either a General Dental Services (GDS) contract or a Personal Dental Services (PDS) agreement. While both facilitate NHS treatment, they can differ in flexibility and specific terms.
The bedrock of these contracts, particularly GDS, is the Unit of Dental Activity (UDA). Practices are commissioned to deliver a set number of UDAs per year. Each treatment band (e.g., Band 1 for examination, Band 2 for fillings, Band 3 for complex work) equates to a certain number of UDAs.
Pros of an NHS Contract for Your New Practice
Despite its complexities, an NHS contract offers compelling advantages, especially for a new or acquiring owner:
- Guaranteed Income Stream: The contract provides a predictable and often substantial income based on your UDA allocation, offering financial stability.
- Built-in Patient Flow: You inherit or immediately attract a patient base seeking NHS treatment, significantly reducing your initial marketing burden and ensuring your chairs are filled.
- Foundation for Growth: A stable NHS patient list can serve as a foundation upon which to build private patient growth, creating a ‘mixed’ practice model.
- Accessibility: You play a vital role in providing essential dental care to the wider community.
Cons and Challenges of an NHS Contract
However, the NHS contract is not without its critics and challenges:
- Fixed Remuneration and the ‘UDA Treadmill’: The UDA system is often criticised for prioritising volume over complexity or prevention. You’re paid per UDA, regardless of how much time or resource a particular treatment within a band actually takes. This can lead to a feeling of being on a “treadmill,” pressured to hit targets.
- Risk of Clawback: If a practice consistently underperforms its UDA target, NHS England can ‘claw back’ funds. This means you might have to repay a portion of the contract value, which can be financially devastating.
- Limited Flexibility: The contract terms can limit your autonomy over treatment choices, materials used, and pricing, unlike private dentistry where you have full control.
- Bureaucracy and Reporting: NHS contracts come with significant administrative and reporting requirements, adding to the practice’s workload.
The Popular ‘Mixed’ Practice Model
Many UK dental practices choose a mixed model, offering both NHS and private services. This strategy often provides the best of both worlds:
- Stability: The NHS contract provides a stable, foundational income and patient base.
- Flexibility & Profitability: Private services allow for higher remuneration, the use of a wider range of materials and treatments, and greater control over your clinical approach and pricing structure.
- Patient Choice: You can cater to a broader range of patient needs and preferences.
Strategic Considerations for New Owners
When considering a practice with an NHS contract:
- Assess the UDA Performance: Look closely at the historical UDA delivery. Is the practice consistently hitting or exceeding its targets, or is it underperforming with a risk of clawback?
- Understand the Contract Transfer Process: Transferring an NHS contract is a specific legal and administrative process involving the Integrated Care Board (ICB). It’s often a condition precedent to completion and can take time.
- Evaluate the NHS/Private Mix: Does the existing mix align with your long-term vision for the practice? Do you want to grow the private side?
- Review Recent Reforms: Keep abreast of any new announcements or pilot schemes for contract reform, as they could impact your future.
Jacobs Legal: Navigating the NHS Contract Complexities
Navigating the nuances of an NHS dental contract during an acquisition is one of the most critical aspects of the legal due diligence. Our team at Jacobs Legal has extensive experience in:
- Reviewing NHS Contracts: Scrutinising terms, UDA history, and potential risks.
- Advising on Contract Transfers: Guiding you through the ICB process.
- Addressing Clawback Concerns: Identifying and advising on potential liabilities.
- Structuring Deals: Helping to structure your acquisition to best manage NHS contract implications.
Whether you see the NHS contract as a friend or a foe, understanding it thoroughly is paramount. With the right legal advice, you can ensure it serves as a strong foundation for your new dental practice.
Considering a dental practice with an NHS contract? Contact Jacobs Legal today for expert guidance tailored to the UK dental sector.