April 16, 2020
It is likely that lockdown will continue in some shape or form for some time to come. Even when we can return to work, it is likely that there will be some element of social distancing still in place, for the wider protection of the public.
As far as how that impacts on the dental profession, there has been talk that measures will be put in place to maintain infection control. The general public have as a result of events become far more attuned to avoiding infection and illness where they can, than ever before.
There is a possibility that dentists will be required to space patient appointments out greater than before, to lessen the risk of spread of infection and provide more time to disinfect surgeries between patients. If this happens, this will have an impact on contract delivery.
There are currently about 12,000 dental practices in the UK, with most of them mixed private and NHS. Of the NHS practices, the majority are sole traders, with one Principal Dentist, being the “provider” of services. They may (or not) have Associates assisting then with the “performance” of the contract.
What would happen if the Principal were to become incapacitated to the extent that s/he were no longer able to practice or sadly to pass away, whether as a result of Covid-19 or otherwise?
If that were to happen and there was no-one available to take over the GDS contract, that would effectively terminate the contract with the NHS.
There are two quite straightforward solutions to avoid this happening.
- Appointment of a “Special Executor” in your Will
Firstly, 70% of the population generally, have not made a Will at all. This could be due to the morbidity of the subject or the fact that people have simply not got around to it. There are significant points in everyone’s lives when you should think about making a Will: –
- Getting married
- Moving to a new house
- Owning a business
In each situation, when making a Will, you would appoint Executors to deal with your Estate in the event of death. They would take out a Grant of Probate which confirms the appointment and enables them to perform their allotted task.
The Executors can be of your choosing (family members, perhaps your Solicitor). However, it is likely that whoever is appointed will have no knowledge of the GDS contract (unless they are also a dentist or someone with knowledge of the profession).
If, as a result of the death, an approach is not made to the Area Team of NHS England, within 28 days, the NHS have the authority to reallocate the patients to other dental practices in the locality. That could be catastrophic for the business as the goodwill would then become worthless.
To avoid this happening, you can appoint a Special Executor in your Will. Their role would simply be to approach the NHS and advise them of the death in order to secure the future of the dental contract.
The Special Executor can be another dentist or your specialist dental accountant. It should be someone that you can trust and if another sole practitioner, you could have a reciprocal arrangement whereby, you agree to act as their Special Executor. The Area Team would then allow a period of grace for the dentist to take on the management of the dental contract with a view to either acquiring the practice or assisting with its sale.
If there is no-one you can trust, the alternative is to instruct your accountant to fulfill this function. I would recommend that you have a specialist dental accountant and it would be their job to reconcile the financial position of the business so that a sale can take place.
- A Partnership Agreement
The alternative, which is more formal, is to create a partnership on the dental contract. This would allow you to enter into a business arrangement with another dentist so that in the event of the death or incapacitation of either of you, the dental contract would be unfettered.
Prior to setting up the agreement, an approach needs to be made to your Area Team, requesting a variation of the dental contract in your own name. The regulations allow for a partnership to be created between two individuals but not between an individual and a company.
Providing that the Area Team has no objections, the contract variation will take approximately 28 days to put into effect. At that point, both parties would become providers under the contract and were one of you to die, the other would need to advise the NHS that there would still be a provider able to deliver dental services.
The equity split would be a matter for yourselves. It is equally common for there to be a 99%/1% split in favour of the current provider (IE sleeping partner) as it is for a 50/50 partnership to be created or some other combination.
A formal partnership agreement is strongly advised as opposed to a “gentleman’s agreement” as it will make certain the duties and responsibilities of each partner and in the event of a dispute will form a point of reference. It would be hoped of course that there were no disputes and the agreement was not required to resolve such a matter.
Prosperity Law have a specialist dental services department and can assist you in these very trying times. We have a dedicated business support service and can offer up to 2 hours of advice on an no obligation basis.
Please contact Jonathan Jacobs on jonathan.jacobs@prosperitylaw.com or 0161 667 3686. www.prosperitylaw.com
