In 2006, the NHS and Primary Care Trusts (PCTs) introduced the current funding system to NHS dental practices based on the amount of Units of Dental Activity (UDAs) completed in one year. Since NHS England took over the responsibility from PCTs in 2013 operating this system, a total of 27 Area Teams replaced the 150 PCTs nationwide.
There is no sign the pressure on practices to reach their UDA targets will ease. In fact, underperforming practices today could be finding the targets even harder to meet; any shortfalls in one financial year are carried over to the next, meaning a ‘rolling’ deficit is a real concern for year-on-year figures. During this financial year, NHS England is also required to reduce running costs by between 10-15%, so if anything a tightening rather than a slackening of the rules on meeting targets is inevitable[i].
In the quarter of the financial year ending December 31st 2014, the NHS published data showing that in England, 88.8 million UDAs had been commissioned. This presented a 0.8% decrease from the same quarter in 2013, equating to 696,000 fewer contracts and also 90,000 fewer contracts than were commissioned in the previous quarter of 2014[ii]. This situation has had a knock on effect that determines the prospect of selling those NHS practices struggling to make the quotas they’ve been allocated.
The sale of practices with NHS contracts in some areas of the UK has been detrimentally affected where NHS England has over-commissioned dental services. Simply having enough people in a locality to justify a contract hasn’t proven to be reason enough to award one. It doesn’t automatically follow that the community wants more NHS dentistry; they may instead prefer long-standing local private practices, or worse still, not be seeking dental services at all.
Failing to be within 4% of the fixed year-on-year target can be catastrophic, in the most extreme cases practice contracts can be terminated. In examples such as underperformance or closing during contractual hours, NHS England initially serves a breach notice but if the practice then makes any kind of future breach of contract (which may be for an entirely different reason) the contract can be immediately revoked. NHS England will then negotiate a new contract, with less funding. Also, the degree of leniency previously afforded to NHS dentists will diminish with Area Teams having to enforce a harsher approach and breaches of contract are far more likely to be issued this financial year than ever before. In cases of underperformance alone, NHS England may deem that a practice was over-funded for the services being provided and will effectively ask for a refund from the practice (a claw back).
Nowadays, competition is fierce between NHS practices to entice patients through the door so that they have a fighting chance of meeting their UDA targets. This fact contributes towards complicated agreement negotiations when valuing a dental practice for sale. Purchasers (and their financial backers) involved in buying NHS practices must thoroughly research and become assured that the UDA contracts can be maintained and that they have the finances for any necessary improvements to facilitate this. Sellers on the other hand, will want to ensure that the post-completion obligations and liability are kept to a minimum. In short, a shrewd perspective and business plan are two essential ingredients for all involved in the sale of NHS practices. The predicted outcome of patient recruitment plans and any expense involved in them needs to be assessed and built into the valuation of the dental practice for sale.
A claw back of 500 UDA’s is equivalent to a £11,000 reduction in funding (based on average treatment costs) which can seriously undermine profit, so a potential buyer will need these kinds of figures incorporated in the practice value. Essentially, you are on your own in terms of building a patient base, NHS Clinical Commissioning Groups play no part in filling appointment slots. This means examining the practice’s current performance to see if there is room for improvement on reputation and profit.
Action plans cover anything from a complete re-fit of the surgery and reception areas, to designing a trendy website, prioritising SEO and right down to the skill of your receptionist in welcoming patients and putting them at ease. The team at Dental Elite can help you identify key areas to note during the sale of NHS dental practices whilst retaining a realistic view of the changes that actually need to be made to the business; often the simplest aspects such as chairside manner and the comfort of the patient waiting room are the cheaper and most effective alterations needed.
For more information and to find out how Dental Elite can value
[i] Local Government Chronicle – NHS England to cut hundreds of posts in restructure by Dave West 30 July, 2014. http://www.lgcplus.com/opinion/health/more-on-health-and-social-care/nhs-england-to-cut-hundreds-of-posts-in-restructure/5073456.article (accessed 28/5/2015).
[ii] NHS UK – Dental Commissioning Statistics, England – December 2014. https://www.england.nhs.uk/statistics/2015/02/05/dental-commissioning-statistics-england-31-december-2014/ (accessed 2/6/2015)
Denplan has released its latest research (commissioned through Facts International), based on a survey asking NHS dentists* for their views on a variety of issues related to NHS dentistry. The survey examined their opinions about the current contract as well as their knowledge of the pilots and prototypes. Other key issues the NHS dentists were asked about included their confidence around NHS funding commitments filtering through to primary care dentistry, motivation levels for making changes to their practice situation and the impact of the Friends and Family Test.
The key findings are summarised below:
Current NHS contract and prototypes
NHS funding for primary care dentistry
Impact of Friends and Family Test
Roger Matthews, Chief Dental Officer at Denplan commented: “It is apparent from these survey results that many NHS dentists continue to feel disillusioned and frustrated with the lack of clear direction around the NHS contract changes. There also appears to be a general lack of understanding in relation to the pilots and prototype models. With the realisation that the NHS funding situation for primary care dentistry does not look likely to improve, it is unsurprising that many NHS dentists may be feeling uncertain as to the future viability of their practice if they stay with the NHS. The result is that a significant proportion of NHS dentists are considering a change to the way they manage and fund their practice in the foreseeable future.
“Dentists appear to also be concerned about the hours it will take their practice to compile the statistics from the now mandatory Friends and Family Test, with half saying it will take their practice between 1-4 hours a month to process the results. This could add up to the equivalent of at least 6 days a year spent away from delivering patient care.”
Matthews added: “Managing the transition from NHS to private dentistry can be a daunting prospect for many dentists, but at Denplan we have a long heritage in supporting NHS dentists in making this transition, helping to ensure they retain their practice income and continue to run a successful practice in the future. Denplan ‘Principal only Transitions’ give dentists the option to retain NHS patients whilst benefitting from all the support and experience necessary to choose the right payment plan for them, their practice and their patients.”
Denplan is running a series of seminars throughout June, entitled “Your practice, Your Choices” which will examine the upcoming changes to NHS contracts for dentists, how dentists might be affected and help them understand what actions they need to be considering now. For further information and to book a place practices can visit: www.denplan.co.uk/events-and-
*100 dentists responded to an online survey in April and May 2015, with all respondents holding an NHS contract in England, treating over 70% of their patient base as NHS patients. They were not part of a corporate body or a member of a payment plan provider.