John Grant looks at the issues surrounding LATs and the NHS guidance on incorporation.
Before the introduction of Local Area Teams (LATs), when we were dealing with Primary Care Trusts (PCTs), each one seemed to have a different, often conflicting viewpoint and way of working. One consequence was that it seemed like a postcode lottery as to whether you would be able to incorporate your practice.
Even the same PCT would have a different approach depending on which side of the bed the contract manager got out of that morning and some of the PDS/GDS contracts that were issued included wording that amounted, from a legal point of view, to little more than nonsense.
It was also the case that when issuing contracts, PCTs were often in the habit of ignoring the PDS/GDS regulations and many issued contracts, which from a legal perspective were void.
For instance, although the PDS regulations clearly state that a contract has to stipulate the precise length of the agreement, it was by no means unheard of for PDS contracts to be issued by PCTs where the term would simply be referred to as a “three-year rolling contract”. What is more, in some instances PDS contracts were being issued to more than one person. Whereas when introduced, the initial idea was that they would only be issued to one party, hence the name Personal Dental Services.
So, in April 2013 PCTs were abolished. They were replaced by a single organisation, NHS England, which is represented around the country by LATs. The idea was that this would then ensure a more consistent approach. Unfortunately, however, this consistency and clarity is yet to appear.
At the time of their introduction, NHS England issued guidance on how LATs should deal with incorporations, and then further revised this in April 2014 (although the revised guidance itself was not published until June!). The basic position being that as long as the contract has been complied with and that the dental corporate satisfies the Dentist Act, and provided that there is a demonstrable benefit to patients or to the LAT, then incorporation should be allowed.
However, for a variety of reasons this new guidance only seems to have muddied waters, creating even more inconsistency than ever before. While happily we now have some LATs positively recommending incorporation in certain circumstances, we also have those that outright refuse it.
One LAT, for instance, has declined to process any application to incorporate altogether, issuing a policy document earlier this year that they would not progress any incorporation until the new guidance came in. But the new guidance came in in June, and they are still refusing. So in effect we have at least one LAT that will not abide by its own organisation’s published guidance.
Matters are further complicated by the phrasing of the guidance. It stipulates that the contractor is required to guarantee the performance of the contract by the limited company. Of course, this is entirely reasonable, except that the way in which it is worded means that the guarantee continues even after they may have taken in another shareholder or are no longer a part of the company.
Inevitably, different LATs are dealing with this in different ways. While some agree to waive the requirement for a guarantee, some insist on following the guidance to the letter, whilst others decide to change the wording so that it will not remain in force once the contractor is no longer a shareholder or director in the limited company, agreeing to issue a side letter so that the guarantee stops when they are no longer a part of the business.
Frustratingly, this shows that once more there are individual LATs interpreting the NHS guidance in entirely different ways.
Another significant issue arises when considering the guidance that states that an LAT can require an application to incorporate to demonstrate a benefit either to the LAT or to patients. The problem being that there is no definition of what constitutes a ‘benefit’.
Once more, the vague wording from the NHS guidance has led to inconsistent approaches from LATs. I have clients, for instance, who have included on their application, “the benefit of incorporation is that it will ensure the financial stability of the practice”. This is clearly a tangible benefit and has been accepted by a number of LATs, yet I am aware of separate LATs who have said that they are not prepared to accept this.
We are therefore back in the position whereby NHS contractors are at the mercy of their local LAT. The rule of thumb seems to be that if you have a good relationship with the LAT then you more are likely to get what you want, but if you don’t then you probably won’t.
The guidance itself is poorly drafted and ill-thought through and is being interpreted inconsistently by LATs. It seems that if you are a private dentist looking to incorporate you can do so to your heart’s content, but if you’re an NHS dentist you will have many hurdles to leap over. This makes NHS dentists, in terms of incorporation at least, very much the poor relation in the family.
John Grant of Goodman Grant Lawyers for Dentists
For more information call John Grant on 0113 834 3705 or email [email protected]
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