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MediEstates - Rolling out the reform
Rolling out the reform

Rolling out the dental NHS contract reform

 

Peter Cummings considers what the NHS dental contract reform in April 2020 might mean for NHS contract holders planning to sell their practice in the next few years



At the BDIA Dental Showcase in October last year, the deputy chief dental officer, Eric Rooney, announced that the Department of Health (DH) and NHS England were working towards a timetable of reforms to the NHS dental contract from April 2020.

He was quick to stress that it depended on the relevant legislation to be able to proceed. He added: ‘There are also corporate decisions to be made in the Department of Health.’

The contract reforms have been the subject of much speculation since the reform process started back in 2011. At Mediestates, we have been following the debate closely and considering what it means for our clients, particularly those practice owners with an NHS contract who are considering selling soon or are creating an exit strategy.

The story so far


The regulations underpinning the current system of prototype contracts are due to run out on 31 March 2020, which is likely to have had a significant bearing on the choice of date for the proposed reforms.

Legislation would be required to extend the prototype contracts, so it seems that the contract reform will be ready to roll out from that date.

At the same briefing, Eric Rooney said that they were seeking a further 50 practices to join the prototype contract scheme by March 2019. This would bring the number of participating practices to 123, with the aim of testing out further variations on the blend A and blend B prototypes.

Based on the feedback from participating practices so far, there is still much work to be done, particularly on the financial elements. There have been concerns about the profitability of running a practice on the reformed contract and the exact blend of capitation and activity is yet to be determined.

It is not set in stone


There is still nothing really set in stone. We now have a new intended date for the rollout to start and we know that it will be a staged rollout, unlike the simultaneous roll-out of the current contract in 2006 – thankfully lessons have been learned!

However, there is no set amount of time for the rollout to be completed and some estimates are four years!


 

Our experienced Mediestates practice valuation team is able to provide a free practice appraisal to any practice owner who wishes to find out what value they might be able to achieve in the current market

 


Consequently, there is still little certainty for the future prospects of NHS contract-holders or for anyone considering their exit plan.

Though not confirmed, a mean UDA value might be introduced to iron out the discrepancies across the country, which are an inherent part of the current contract. It is a matter of speculation as to the exact level this might be or whether there would be any weighting for certain areas.

Finally, any new legislation is entirely dependent upon the ability of the Government to push it through parliament, which will be a significant challenge with so many other pressing matters in 2019. If the new contract legislation does not make it through, it is not clear what will follow.

The good news for NHS and mixed practice owners is that the market is still buoyant. There are lots of active buyers, ranging from individual dentists to corporates. We also must not forget that for dentists in their early 30s and younger, the current UDA-based contract is all they have ever known, so it will be especially important for them to keep track of the emerging changes that are coming.

At Mediestates, we always keep up-to-date with trends and inform our clients of the latest news and thinking in the dental practice market. At the beginning of 2019, our advice to long-term NHS contract-holders is to explore whether now might be a good time to sell.

As the April 2020 deadline approaches, there is bound to be a downward pressure on goodwill values as uncertainty increases and we may see more caution amongst buyers as the reform process kicks off.

The sooner, the better then for dental practice owners looking to sell within the next two years and even for those with a five-to-10-year exit plan in place, who don’t want to be affected by the upheaval that the reformed contract might create in their practice.

Our experienced Mediestates practice valuation team is able to provide a free practice appraisal to any practice owner who wishes to find out what value they might be able to achieve in the current market.

With the future still so uncertain for NHS dentistry, it makes good business sense to find out where you stand in current market conditions.

Posted by: Peter Cummings on

General Buyer Terms 

This agreement is in relation to MediEstates Limited whose registered office is at 1st Floor, Pacific House, Stanier Way, Wyvern Business Park, Derby, DE21 6BF acting for and on behalf of our clients ("the Vendors"); and yourself (Buyer's Name) in relation for an introduction to a prospective sale of a business as a going concern. By registering through this agreement I agree to all terms set out below:

  1. Definitions
    In this Agreement the following terms and phrases shall have the following meaning unless the context otherwise requires:

    Business
    Dental Practice business providing dental care. This business is under the MediEstates Ltd sale terms.
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    Means the actual Vendors identity and all confidential information in respect of the Business, including, but not limited to, any ideas, business methods, prices, accounts, finance, marketing, research, development, manpower plans, processes, market opportunities, intentions, design rights, product information, customer lists or details, employees’ details, trade secrets, computer systems and software, and other matters connected with the products or services manufactured, marketed, provided or obtained by the Vendor, and information concerning the Vendor’s relationships with actual or potential clients or customers and the needs and requirements of such clients’ or customers’ operations.
  2. Obligation of Confidentiality
    The Prospective Purchaser agrees to treat as confidential, information supplied by or on behalf of the Vendor in connection with the sale of the Business.
  3. Exclusions
    The obligation of confidentiality set out in clause 2 does not apply to:
    1. any information received from a third party who was legally free at the time of disclosure to disclose it;
    2. any information which was already lawfully in the Prospective Purchaser’s possession prior to receiving it from MediEstates Ltd on behalf of the Vendor; and
    3. any information which is in its entirety already in the public domain.
  4. Duties of Prospective Purchaser
    1. The Prospective Purchaser shall take such a reasonable security measures to protect the Confidential Information and trade secrets.
    2. The Prospective Purchaser shall not, without the prior written consent of the Vendor, permit any of the Confidential Information:
      1. to be disclosed, other than in confidence to its legal or professional advisors;
      2. to be copied or reproduced;
      3. to be commercially exploited in any way;
      4. to be used for any purpose other than in connection with the prospective purchase of the Business;
      5. MediEstates is registered under the Data Protection Act 1998. Upon Signing this agreement you agree to follow the legal obligations of this act to protect the details of the information supplied to you, with it no to be passed outside of the control of you the prospective purchaser.
    3. The Prospective Purchaser agrees to keep a record of Confidential Information received.
    4. The Prospective Purchaser will return to MediEstates or the Vendor all documents containing Confidential Information and all copies of those documents on demand at any time which are in its possession or under its control, and for this purpose the term “documents” includes computer discs and all other materials capable of storing data and information. The Prospective Purchaser agrees that such documents remain the property of the MediEstates on behalf of the Vendor.
    5. The Prospective Purchaser must not jeopardise or re-direct the sale under any circumstances.
    6. The Prospective Purchaser must not contact the Local Area Team or CCG regarding any practice sale, by any means of media unless written permission is granted from the Vendor.
    7. To carry out own due diligence on practice purchases and accepts that any information MediEstates has supplied is information provided by the vendor and is not responsible for its accuracy or completeness.
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  6. Duties of Prospective Purchaser
    When buying Dental practices, finance is normally needed. Our organisation operated over more than one of the MediHoldings brand, by completing this from you agree that the information can be shared to our other organisations to avoid the need to register independently and provide the best possible service.

    MediEstates will refer you to the specialist dental lending team and MediFinancial who will contact the necessary banks, whom have preferential healthcare lending rates in some cases, to ascertain which funding is available to you.
    By signing this agreement you do not have to use any of the banks MediFinancial contact, it is just another service which we provide.
  7. Deposit for Dental Practice
    If you are interested in putting forward a formal offer in for a practice, once the offer is accepted there will be a deposit required to secure the practice sale which is dependant of the practice size. This deposit is held in a client account and will be returned to the buyer on completion of the practice sale. You the buyer, will be required to sign a deposit schedule which will cover the buyer and the seller in the event that the practice sale does not proceed.
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