Acquiring an NHS Dental Practice?

Choosing your acquisition structure

When buying a dental practice, you generally have two main routes: 

• Share Purchase – You buy the whole legal entity, which means taking on both the assets (including the NHS contract) and any liabilities. This method can offer continuity but comes with more responsibilities and risks.
• Asset Purchase – You buy specific parts of the practice – like goodwill, staff/associates, equipment, patient lists, fixtures and the key asset, the NHS contract – but without necessarily taking on all the existing liabilities. This gives you more control over what you acquire.

The NHS Contract challenge

A major twist in acquiring an NHS dental practice is that NHS England does not allow NHS GDS contracts to be simply transferred or novated, and NHS PDS Contracts cannot be transferred because they are personal to the contractor.  

Share purchase

In a share purchase, the NHS contract stays with the legal entity delivering the dental care.  

Asset purchase – the ‘partnership route’ 

Since an NHS dental contract can’t be sold or transferred outright, the temporary partnership method allows a prospective buyer to join the practice as a provisional partner. This means the buyer becomes registered under the existing NHS contract – meeting legal and regulatory requirements – while gradually taking over the business. 

Whether you’re going for a share purchase or using a temporary partnership method, every person or entity named on the contract must be fully registered with NHS England. This is because, in the eyes of NHS England, if the contract is breached, every partner is responsible. 

Navigating the process with a specialist approach

Because of the NHS contract challenges, a specialist method is essential for acquiring an NHS dental practice. Here’s how you can navigate the process: 

Conduct thorough due diligence

Make sure to review the practice’s financial records, patient lists, equipment condition, and premises. Understanding these details can help you decide which acquisition structure best suits your needs. It’s also essential to establish whether there is any underperformance under the NHS contract given that this is the key asset in most NHS dental practices. 

Seek expert legal advice

Because of the tension between NHS and CQC rules, it’s crucial to work with a specialist dental lawyer from the start. They can help you ensure that all paperwork is in order and that the legal responsibilities under the NHS contract are properly assigned. 

Practical considerations for buyers and sellers

When planning your acquisition, keep these points in mind: 

• Patient base & NHS Contract – Understand the mix of NHS versus private patients, and review the details of the NHS contract, including renewal terms and responsibilities.
• Seller’s motivation & financial health – Ask why the practice is being sold and carefully review all financial statements to spot any hidden issues.
• Premises, equipment, and staff – Inspect the condition of the premises and equipment. Also, check the staff details to see if key team members will remain after the sale.
• Transitional support – Determine if the seller is willing to stay on for a transitional period – this will usually be crucial for the dental practice. This can help ensure a smooth changeover for both patients and staff.
• Future growth opportunities – Look for ways to expand the practice, such as new services or enhanced NHS contract performance.

Summary 

Acquiring an NHS dental practice can be complex – especially with NHS contracts that cannot simply be transferred. Understanding the legal responsibilities and regulatory requirements is key. With thorough due diligence, expert legal advice and a clear strategy, you can navigate these challenges and set up your new acquisition for long-term success. 

Birdi & Co offers specialist representation in relation to the sale and purchase of NHS dental practices, and can assist with the service of notices on the relevant Local Area Team (LAT) of NHS England.