NHS dental contract quirks6 October, 2015
NHS contracts are a valuable asset to a dental practice. Whilst a majority of the provisions within GDS and PDS contracts follow a prescribed form, we have seen a number of non-standard terms concealed within the 380 clauses and numerous schedules that make up the contracts. These could be easily missed if contracts are not checked thoroughly potentially leading to operational difficulties and issues upon sale of the practice. Here are a few to look out for:
1. Change of control restrictions – these are often included when the contract is in a company name. They can either prevent the transfer of shares in a company entirely or require the consent of NHSE prior to making any such transfer. Contractors should the check thoroughly for this when contemplating a share sale.
2. Unexpected partners – we have often seen associates or previous owners of a practice included as a partner on a GDS contract. This could lead to ambiguity as to who owns the goodwill associated with NHS services at the practice and the accidental partner may need to sign documentation to be removed from the contract before the principal is able to sell the practice (which could prove difficult if the principal has lost contact with them).
3. Contracts in individual’s names when the practice is operated via a company – This is not necessarily an issue as clause 198 of a standard GDS contract permits sub-contracting however, we have seen situations whereby NHSE have not been notified and no subcontract arrangements are place. If a company is taking the benefit of NHS income at a practice then the NHS contract should either be in the company name or the NHS services should be appropriately subcontracted to the company.
4. Provisions allowing NHSE to terminate the contract at their sole discretion – Clause 16 of a standard GDS contract provides that the contract shall subsist until terminated in accordance with the terms of the contract or general law. Clause 315 states that the PCT (or successor body!) may only terminate the contract in accordance with this “part” – namely the specific circumstances set out in clauses 316 to 362 (inclusive) (which include circumstances such as eligibility / suitability of contractor, patient safety and material financial loss, breach notices etc.). Notwithstanding the usual terms, we have seen a GDS contract that can be terminated at NHSE’s sole discretion i.e. not subject to any specified conditions. Contractors could potentially argue that this was an unfair contact term however, if NHSE elect to terminate the contract and any challenge rejected then it could be extremely detrimental for a practice.
5. Time limited contracts – it is fairly usual for a PDS contract to be time-limited however, we have seen a time restriction also contained within the terms of a GDS contract! Clause 16 of the contract in question specified that the contract would subsist until a set date – the date had actually passed and contract was still enduring however, it is concerning that NHSE could potentially cancel the contract on the basis it had expired – meaning all NHS goodwill at the practice would be lost.
Whether obtaining a new NHS contract, incorporating, purchasing an NHS practice or joining and NHS partnership, best advice is to obtain a copy of the contract as early on as possible in the process and ask your specialist dental solicitor to review it to ensure you know what you are signing up to!