Key points to note for the Provider Selection Regime


6th February 2024

What is the new procurement regime for health services in England? On 1st January 2024, the Health Care Services (Provider Selection Regime) Regulations 2023 (the “PSR Regulations”) came into force.

The PSR Regulations remove the procurement of health care services by relevant authorities in England from the scope of the Public Contracts Regulations 2015 and provide those relevant authorities with more flexible processes to select providers to provide health care services in England via the Provider Selection Regime.

Whilst competitive tendering is still available to relevant authorities, it also allows for other routes that may be more proportionate.

The PSR Regulations can be found here and NHS England’s statutory guidance (the “Guidance”) can be found here. NHS England have also prepared a toolkit – including slide  decks, Find a Tender supplementary guidance, end-to-end process maps and flowcharts – which can be found here.

We have put together a PSR guide on how the regulations apply in practice and a high-level overview of the requirements that relevant authorities will need to comply with.

To whom do the PSR Regulations apply?

The PSR Regulations will not apply to any contract award procedure commenced before 1st January 2024. They will, however, apply to modifications to any contract for relevant health services whether or not that contract was awarded under the PSR Regulations or not or before or after the 1st January 2024.

The PSR Regulations apply only to “relevant authorities” who are procuring relevant health care services. “Relevant authoritiy” is defined in section 12ZB of the National Health Service Act 2006 and includes the following organisations:

  • NHS England
  • Integrated care boards (ICBs)
  • NHS trusts
  • NHS foundation trusts
  • Local authorities in England
  • Combined authorities

To what services do the PSR Regulations apply?

The PSR Regulations only apply to the procurement of “relevant health care services” by relevant authorities for the purpose of the health service in England. Schedule 1 of the PSR Regulations list the services which fall within the scope of relevant health care services. A full list can be found here, but in broad terms the PSR Regulations apply to clinical services delivered to patients.

Services which fall outside the scope of the PSR services cannot be procured via the PSR Regulations. The PSR Regulations do not apply to goods and non-health care services (for example medicines, medical equipment, cleaning, catering, business consultancy services, social care) unless those goods or services are procured alongside relevant health care services where those relevant health care services are the main subject-matter of the contract and those additional goods or services could not reasonably be supplied under a separate contract (i.e. a “mixed procurement”).

Overarching principles

When procuring relevant health care services pursuant to the PSR Regulations, relevant authorities must act in accordance with the procurement principles set out in regulation 4.

The principles include acting with a view to:

  • securing the needs of the people who use the services;
  • improving the quality of the services; and
  • improving efficiency in the provision of the services.

In seeking to comply with the above, relevant authorities may also consider the value of providing services in an integrated way.

The principles also require relevant authorities to act transparently, fairly and proportionately in applying the PSR Regulations.

Relevant authorities will be best able to demonstrate that they have complied with the overarching principles by referring to how they have been considered within documents created and maintained as part of the procurement process.

Commentary

The PSR Regulations offer commissioners of health services in England a range of flexible and streamlined processes for procuring services.

The key criteria in particular are framed in broad terms, allowing commissioners significant latitude so long as the criteria are applied consistently where there are multiple potential providers.

Most Suitable Provider Process

The most contentious decisions under the new regime are likely to be those where a commissioner has the option of using the Most Suitable Provider Process, either because:

  • it is of the view that the existing provider is satisfying the existing contract and will likely satisfy the proposed contract to a sufficient standard (Regulation 6(5)(d)); or
  • it is of the view that, taking into account likely providers and all relevant information available to the commissioner at the time, it is likely to be able to identify the most suitable provider (Regulation 6(6)(d)).

Although in both cases the choice of process is at the commissioner’s discretion, as with all discretion in the exercise of statutory functions this must be exercised reasonably. A commissioner will therefore have to consider what factors are relevant, or irrelevant, to its choice of process.

The concept of an existing provider delivering services to a “sufficient standard”, such that they should continue to provide services under a new contract, is also likely to be an area of focus. The Guidance does not elaborate on what this means, other than to note that the key criteria and basic selection criteria should be borne in mind when making such an assessment. There is scope for debate as to whether “sufficient standard” should be judged in objective terms, by reference to a defined standard of care, or be determined by reference to the standard achieved by other potential providers of those services in the commissioner’s area. Data about contractual performance and a provider’s standing with the CQC will presumably provide a starting point for any analysis.

Interaction with patient choice

Alongside the PSR Regulations, amendments to the NHS Standing Rules introduce a requirement for commissioners to assess a prospective provider’s suitability to provide services subject to patient choice. If a provider meets prescribed criteria, and agrees to local terms and conditions relevant to delivery of the services, it must be offered an NHS Standard Contract. In awarding that contract, commissioners will also be required to follow Direct Award Process B under the PSR Regulations.

The Independent Patient Choice and Procurement Panel and Judicial Review

The Guidance describes the Panel which has been established to review PSR decisions where local resolution of any concerns has not been possible. The Panel’s role is advisory and as such we will have to see whether aggrieved providers avail of its advice or whether they will seek to challenge any perceived failings by means of judicial review.

The PSR Regulations are framed in terms which give commissioners a good degree of discretion when deciding which process to follow and the details of how a process will operate in any particular case. On this basis, we would expect a court in a judicial review to be slow to interfere with commissioners’ conclusions on matters such as how the key criteria should be applied, so long as commissioners adopt a coherent approach which is consistent with the procurement principles.

Advice and support

For more details on the Provider Selection Regime, download our PSR guide.

Blake Morgan’s healthcare commissioning experts can support you with all aspects of health services provider and delivery, whether you act as a commissioner or provider.

For further information, please contact authors of the guide David Hill, Joanne Thompson or Tomos Lewis.

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