The NHS Provider Selection Regime (PSR) came into force on 1 January 2024 under the Health and Care Act 2022, representing a significant shift in how healthcare services are procured in England.
The PSR replaced the previous National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013 and removed healthcare service procurement from the scope of the Public Contracts Regulations 2015.
Key objectives
The PSR applies specifically to the procurement of healthcare services in England, creating a specialised procurement regime for healthcare services in England. Driven by the NHS Long Term Plan's goal to transform health and care services in response to increasing demand and the need for more integrated, efficient care delivery, the new regime aims to:
- Introduce a flexible and proportionate process for selecting healthcare service providers;
- Provide a framework that encourages collaboration across healthcare systems; and
- Ensure all decisions are made in the best interest of patients and service users.
These objectives align with the broader goals of the NHS to improve care outcomes, focus on preventative measures, and create a more sustainable healthcare system.
Relevant authorities
The PSR applies to “relevant authorities” in England, namely:
- NHS England;
- Integrated Care Boards (ICBs);
- NHS trusts and NHS foundation trusts; and
- local authorities and combined authorities.
Healthcare services
The PSR covers the procurement of healthcare services, defined as all types of
"health care services designed to secure improvement in the physical and mental health of the people in England, and in the prevention, diagnosis and treatment of physical and mental illness."
The PSR does not apply to the procurement of goods or non-healthcare services unless they are part of a mixed procurement, and is separate from the new procurement regime introduced by the Procurement Act 2023 which will come into effect on 28 October 2024.
For healthcare service procurement by relevant authorities in England, the PSR takes precedence. However, for other types of procurement (e.g. goods, non-healthcare services) by relevant authorities, the Procurement Act will apply.
Selection processes
The PSR introduces three main provider selection processes that relevant authorities can follow when awarding contracts for healthcare services:
1. Direct Award Processes
There are three types of direct award processes, (A, B, and C):
- Direct Award Process A: this is to be used when the existing provider is the only one capable of delivering the required healthcare services.
- Direct Award Process B: this applies when patients have a choice of providers, and the number of providers is not restricted by the relevant authority.
- Direct Award Process C: this can be used when the existing provider is satisfactorily fulfilling its current contract, is likely to meet the new contract standards, and the proposed contracting arrangements are not changing significantly.
2. Most Suitable Provider Process
The most suitable provider process allows relevant authorities to award a contract without running a competitive process if they can identify the most suitable provider. It involves several steps:
- Step 1: publish a notice of intention to use the most suitable provider process.
- Step 2: identify potential providers using key criteria/basic selection criteria.
- Step 3: assess the identified providers and choose the most suitable one.
- Step 4: publish a notice of intention to award the contract.
- Step 5: observe a standstill period of eight working days.
- Step 6: award the contract and publish a contract award notice.
The key criteria for assessment include quality and innovation, value, integration and collaboration, improving access and reducing health inequalities, and social value.
3. Competitive Process
The competitive process is similar to traditional procurement methods, with some specific adaptations for healthcare services. It is more complex than the other processes, with a larger number of required steps, including pre-market engagement.
Implementation and guidance
To support the implementation of the PSR, NHS England has published statutory guidance setting out detailed information for relevant authorities on how to comply with the regulations and apply the PSR effectively. A toolkit has also been developed to assist relevant authorities in applying the PSR.
Impacts for healthcare providers
For healthcare providers, the PSR presents opportunities and challenges:
- Increased collaboration: the increased emphasis on integration and collaboration may lead to more partnership opportunities.
- Focus on quality and innovation: providers will need to demonstrate their ability to deliver high-quality, innovative services to remain competitive.
- Relationship building: building strong relationships with relevant authorities will be more important than ever. Maintaining a positive track record will be crucial for securing contracts through direct award processes.
- Adaptability: providers will need to adapt strategies and operations to align with the new selection processes and criteria.
Conclusion
As the PSR is still in its initial stage implementation, its full impact on the healthcare landscape in England remains to be seen. However, it is clear that the regime represents a significant shift towards a more flexible, collaborative approach to healthcare service procurement.
Healthcare providers seeking advice on the new regime should contact Tim Wright or their usual Fladgate contact for a no obligation discussion.
