Since the abolishment of the 2006 framework and the implementation of dental contract reforms in 2013, the process of selling a practice with an NHS orthodontic contract has become much harder. It is important to note that if you hold an NHS orthodontic contract, you most likely have a PDS agreement – and it is this not so small detail that will affect the way in which your practice is sold.
Essentially there are two possible pathways that can be taken when trying to sell an orthodontic practice. The first is through the sale of assets accompanied by a direct transfer of the contract between the seller and the buyer. However, this can only be achieved with permission from the LATs, which requires long and laborious negotiations, and as the NHS is under no obligation to accept a proposal to transfer a contract, this is not a guaranteed route. In fact, this is incredibly rare as most are petrified of being challenged under the EU Procurement Regulations.
The other option is to incorporate the dental practice into a limited company structure, which means transferring the company’s assets as well as the contract to the limited company. By selling the shares to a buyer, the transfer can then be completed. Although incorporation is certainly a viable option for practices with an orthodontic contact, it is not one that comes without difficulty. As it stands NHS England Policy allows LATs to approve these requests but there are still local politics to deal with, and many try and refuse such applications. They can demand a genuine reason for the request, with the focus typically placed on how the incorporation will benefit the patients and the LAT itself rather than the practice. You guessed it – a price per Unit reduction! Thus, it would be prudent to accept that certain compromises may need to be made in order to incorporate, and later sell, a practice.
What’s more, it is important to note that if a PDS contract is permitted to become a limited company and a practice decides to sell, the LAT must give approval and produce what is known as a Deed of Novation. This is an agreement that transfers one party’s rights and obligations under a contract or agreement to a new third party.
There are, however, complications that can occur at this point, which is why it is always advisable to seek the guidance of a trusted finance and sales agency such as Dental Elite. Selling a PDS orthodontic contract is not a straightforward process, but it also isn’t impossible. To ensure that you are aware of all options and possible pitfalls, seek advice today.