The CQC vs. the NHS – Is a Bridging Partnership a ‘Legal Fiction’?
Practice Sales Director of Dental Elite, Leah Turner, looks at recent changes announced by the CQC that could have an impact on transferring an NHS contract via a partnership route.
Historically, NHS contracts have always been transferred via the partnership route. This has meant that practice owners have been able to take on a partner and then several months down the line retire, leaving the new owner solely responsible for the contract. Now officially, NHS contracts don’t belong to dentists, they belong to the NHS and are just sublet to them – they’re not allowed to sell them. But because of a widely used loophole it has been possible to transfer a contract to another dentist.
Then in 2013 the NHS decided that in order to be a ‘true’ partnership, both partners had to be registered with the Care Quality Commission (CQC) as well. So whereas previously the process of formulating and dissolving a partnership was relatively straightforward, it became much more complicated to do so. Having said that, the transfer of NHS contracts via the partnership route has continued to be a popular pathway for both vendors and buyers over the last five years, with the process working relatively well without too many hiccups.
That was until recently when the CQC announced that they are going to stop agreeing to what they classify as a ‘bridging partnership’. In other words, they are going to be much stricter about partnerships that they register, in an attempt to deter vendors from being able to use the loophole to sell an NHS contract.
Such a stance very much leaves dentists stuck between a rock and a hard place, as the NHS is very clear that a partnership has to be registered with the CQC. If the CQC decline to register a partnership, on the basis that it looks like it’s for the purpose of selling a practice, what can be done?
Well since the announcement there has been some discussion as to whether the CQC can reasonably identify what they believe to be a bridging partnership, with many arguing that the situation is not quite as black and white as that. In response to this, the CQC declared that from now on any partnership will have to be backed up with appropriate evidence. For instance, proof that documentation such as staff contracts and finance agreements will be in both partners’ names. Only then can they be sure that the partnership is genuine and will consider registering it. As such, any dentist looking to transfer an NHS contract via the partnership route will need to create an actual partnership if they are to secure both registration from the CQC and consent from the NHS. Each is essential, as you can’t have one without the other.
We anticipate that this will place greater demand on dental solicitors moving forward, as it will be up to them to put together the required paperwork that CQC is demanding to prove the validity of a partnership. We may also start to see a change in mindset as a result of this, because dentists will need to convey the impression that they’re genuinely entering into a professional collaboration with the intention of being in a long-term partnership. If anyone makes it obvious that they’re only going through the motions in order to sell later on down the line, they won’t secure the NHS contract.
Unfortunately, the CQC application is already a process that dentists are naturally apprehensive about, as there are so many hoops to jump through that it can often feel like they are the enemy. Adding the pressure of having to prove your partnership in order to secure registration and the process is likely to become very stressful. It is not yet clear as to what extent these changes will affect the market and dentists’ ability to buy and sell NHS practices, but what we do know is that some CQC inspectors are proving to be stricter than others when it comes to paperwork. We can also confidently say that the CQC and NHS are not working together on this. They are two opposing forces that have no interest in collaborating to make things easier for the profession; and that’s worth noting.
With all this is mind, finding an agent that understands the changing market and processes is integral to ensuring a successful outcome is achieved. Receive wrong or out of date advice and complications are much more likely to occur, including delays, or worse – rejection from the CQC and NHS. Dental Elite has years of experience and specialist knowledge of the dental sector meaning they are able to offer an outstanding service in line with the latest market trends and regulations. This includes a complimentary CQC application service – which is also available if you choose to buy or sell through another agent.
If you need expert advice about a bridging partnership that you can trust, contact Dental Elite. In the meantime, be sure to familiarise yourself with the latest changes and how they might impact you.