Before entering the biding process, seek advice.
The new model PDS+ Agreement sees a shift from the standard GDS contracts and PDS agreements that dentists are familiar with, to more of a short-term contract. It was launched in November by the health department for improving dental access, it runs for more than 50 pages and has 17 working schedules.
Although it is in a significantly different form to the first draft presented by the health department and now contains amendments reflecting their consultation with the British Dental Association and their specialist advisers, the new agreement still falls short.
The agreement is to be for a term of five to 10 years, extendable, at the PCT’s discretion, for a further five to 10 years. The main concerns are that the agreement is very prescriptive, one-sided (favouring the PCT) and requires robust management systems to be in place. Consequently, fulfilling the requirements may be difficult for the big dental corporates, and to a greater extent, the small dental practice.
No doubt PCTs will shortly commence procurement and contracting of the new agreement and, in some instances, have already begun testing early model documentation. The format of the agreement is such that PCTs can amend and modify parts of the agreement depending on their perceived local requirements.
Be prepared
If dentists are thinking about bidding we would suggest they first read carefully the agreement being tendered, the requirements being imposed, the viability of achieving the targets, and whether any initial outlay can be recouped within the term of the agreement.
Unfortunately, it is an unduly complex agreement and before time and money is spent going through the tender process, potential bidders should seek advice. Being able to decide at the outset whether this agreement would be a good investment, before large resources are committed to this project, is a definite requirement, since signing in the expectation the PCT will vary the agreement substantially once you have achieved preferred bidder status, is unlikely, if not impossible.
The department expects dentists who bid for these agreements to be able to reflect in the bid price the additional risks that they will be accepting and the extra time and manpower that will be required to satisfy the stringent requirements of this agreement. Getting this right will be a challenge.
It is very important to ensure that the payment element and related key performance indicators are also right. Although this aspect of the agreement is still in primary stages it is important to ensure the KPIs are achievable and dentists know the consequences should they fail to achieve them.
Note that the payment provisions are split into three parts: services, access and quality (measured by achievement of the KPIs). A minimum of 51 per cent of the payment is to be allocated to services and only this proportion falls under the provisions of the Statement of Financial Entitlements. This is likely to impact on the contractor’s superannuation payments and additional claims permissible under the SFE. Dentists should ensure an accountant is able to quantify the financial implications of this.
The clinical and governance standards to be met are high. The one sided nature of the agreement is reflected in sweeping requirements whereby the PCT is to be indemnified by the contractor when any of these standards are not satisfied.
Although the agreement must (and does) follow the standard PDS regulations in respect of termination or breach, the concern for the contractor is that there are potentially more opportunities for the contractors to find themselves in breach.
Right
Since the right to a GDS contract derives from the PDS regulations, a contractor providing services under a PDS+ Agreement will have the right to move to a GDS contract when this agreement comes to an end. However, contractors must be aware that in doing so, only the service element (not the KPI or access elements) will be transferred to the GDS contract. Further, whilst the UDA requirement is transferred to the GDS contract, there is no guarantee under the PDS regulations that the value attributable to those UDAs will also transfer.
Considerations
It is important to get the bid-price right. Most contractors will probably bid on the basis that they will achieve band B in respect of the KPIs. Whilst this is probably a sensible approach, potential bidders should be aware that even mid-range targets may be difficult in the first few years simply because the system is new.
Bidders should also:
- Factor into their bid price other costs that are apparent throughout the agreement and for which the contractor may be liable
- Ensure they are likely to recoup their start up costs early in the term in case the agreement is terminated early or is not extended
- Consider how the provision of services under this agreement fit in with the requirements of their existing contract or agreement.
Micromanagement
Historically, a dentist’s practice was his private business. This PDS+ agreement hands over significant parts of that business autonomy to the PCT. An issue of great concern is that the agreement struggles to distinguish between a contractor taking on this agreement as a supplement to his existing business and a contractor who takes on this agreement as a new business.
Bidders must be very careful when deciphering the draft agreement to ensure where they are looking to provide the services to supplement their existing business they will not, at the expiry of the agreement, be required to transfer or assign their business assets, licences, leases and so on (which existed prior to the PDS+ agreement) to the PCT or a new provider coming in. Alternatively, this could always be reflected in the bid price.
Conclusion
In order to best protect a contractor’s existing and future dental business, it is advisable to seek the advice of specialist dental accountants and solicitors early in any tendering process and this is particularly true of the new dental access arrangements.
For information contact Mark Jarvis at mj@lockharts.co.uk or 020 7383 7111. To find a solicitor member of the National Association of Specialist Dental Accountants in your area, go to www.nasda.org.uk