The NHS Provider Selection Regime (‘PSR’) was first proposed on 11 February 2021 in a consultation published by NHS England. On 21 February 2022, the Department of Health and Social Care (‘DHSC’) released a supplementary consultation building on the consensus of the February 2021 consultation and expanding on the detail of the proposal.
The proposal was to replace the existing healthcare procurement rules with a new set of rules for arranging healthcare services in England. The existing rules stem from s75 Health and Social Care Act 2012, the National Health Service (Procurement, Patient Choice, and Competition Regulations 2013) (No. 2) (‘PPCCR 2013′)), and the Public Contracts Regulations 2015 (‘PCR’), as applicable to certain healthcare services.
The powers to establish the PSR are contained in the Health and Care Act 2022 (‘HCA 2022′) which received Royal Assent on 28 April 2022. The relevant sections of HCA 2022 are not yet in force and will come into force on a day appointed by the Secretary of State in further regulations. As yet, there is no official word on when the PSR will come into force, but NHS England have suggested that an update will be provided shortly.
The relevant sections of HCA 2012 are:
- s80 HCA 2022 which (when it comes into force) repeals the existing rules, in particular s75 Health and Care Act 2012 and PPCCR 2013 will be repealed; and
- s79 HCA 2012 which (when it comes into force) contains the power to make regulations in relation to the processes to be followed and objectives to be pursued by relevant authorities (combined authorities, Integrated Care Boards, Local Authorities, NHS England, NHS Foundation Trusts and NHS Trusts established under s25 HCA 2022) in the procurement of health care services and other goods and services (for example social care services) procured together with those health services in England. These Regulations must:
- include provision specifying the steps to be taken when following a competitive tendering process; and
- in relation to the procurement of all health and care services to which they apply, make provision for the purposes of ensuring transparency, fairness and compliance and managing conflicts of interest.
NHS England must publish guidance, to which relevant authorities must have regard, as it considers appropriate, about compliance with the new regulations.
DHSC’s supplementary consultation closed on 28 March 2022, however the results have not yet been published as DHSC is still analysing the feedback. A high level summary of what we know from the documents published with the supplementary consultation is set out in the following.
Aims of the PSR
The overarching aim of the PSR is to move away from the expectation of competition in all circumstances and towards a more flexible and collaborative approach across the health and care system.
It proposes a flexible process for decision-makers to follow when selecting healthcare service providers and establishes simpler procedures to reduce the time, bureaucracy and cost associated with the current regime.
While competitive tendering would continue to exist as an option available to decision makers, the regime is intended to give healthcare providers the ability to move away from this approach where existing arrangements are performing well or value to patients and taxpayers in seeking an alternative provider is limited.
The impact of the PSR
The PSR would replace the PCR for ‘healthcare services and public health services which are arranged by NHS bodies and local government, provided directly to individuals or patients under the NHS Act 2006 and have a direct impact in the prevention, diagnosis, and treatment of physical and mental illness’.
The scope outlined in the consultation will exclude services requiring a higher level of competition such as cleaning, catering, the procurement of pharmaceuticals and social care services.
The proposed PSR mechanism: a high-level summary
The PSR regime will establish three new commissioning scenarios:
(a) Continuation of existing arrangements
This will be applicable where the incumbent provider is the only viable provider due to the nature of the service, or an alternative is already available to patients through other means. In such scenarios, a change of provider would be unnecessary or of no value.
(b) Identifying a new suitable provider for a new or substantially changed arrangement.
This will be relevant when the incumbent provider is no longer able to provide the changed service and the decision-making body can provide a suitable alternative provider without running a competitive tender.
(c) Competitive procurement.
If the decision-making body cannot identify a suitable provider or wants to test the market, it may elect to run a competitive procurement.
These circumstances will permit decision-makers a new flexibility to decide the course of the procurement process without the burden of competition.
Once the relevant circumstance has been applied, decision-makers must then follow the decision-making approach relevant to that scenario, ensuring their decisions are justified with reference to the criteria listed below.
Notwithstanding the flexibility afforded by the new regime, the PSR would include a duty to make decisions that are in the best interests of patients, taxpayers and the population. Transparency would also be an integral principle under the PSR; decisions will be made public and undergo sufficient scrutiny to ensure they are made in good faith.
The broad base of criteria that is proposed to underpin decisions made under the PSR is as follows:
(d) quality and innovation
(e) value
(f) integration
(g) collaboration and service sustainability
(h) social value; and
(i) opportunities to increase access to healthcare, reduce health inequalities and disparities, and promote patient choice.
Details of how to apply the circumstances set out above, the criteria and the relevant decision-making process will be set out in the statutory guidance.
Supplementary consultation
The supplementary consultation sets out further details of the proposed regime, building on the discussions that have previously taken place. The proposals focus on:
(a) Scope
Primary legislation and regulations will provide criteria that must apply for an arrangement to be within the scope (as defined at paragraph 1.2). The consultation has suggested a list of common procurement vocabulary (‘CPL’) in an effort to further clarify the scope of the regime and promote understanding of when it applies.
(b) Mixed procurements
Applicability where procurements contain multiple elements with varying applicability to the PSR. In the event of a procurement with multiple elements, each with varying applicability to the PSR, the consultation suggests that the approach for the PSR elements must be consistent with the other applicable procurement rules e.g. the PCR. The aim is to ensure healthcare services with elements of social care, for instance, can still be delivered effectively.
(c) Threshold for ‘considerable change’
The proposal suggests various formula that could be applied when deciding if services can be continued with the existing provider, or if there has been enough change to require a new provider. There are also suggestions of various types of changes that are permitted and should be deemed considerable.
(d) Contract variations
The proposal lists certain variations, which would not warrant the reapplication of the regime – for example, that the variation is solely because of the identity of the provider, or because it falls below certain percentage change in contract value.
(e) Patient choice
A list of stated service criteria is proposed to be introduced into the PSR regulations on patient choice. Where a provider meets these stated conditions and wishes to be an option for patients, they must be offered the NHS standard contract by the decision-making body.
(f) Transparency
In line with general procurement principles, it is proposed that decision-making bodies should issue notices when selecting providers and be required to publish an annual summary.
Conclusion
The PSR will give flexibility to the operation of healthcare procurements and should assist with selecting procurements that are in the best interests of the public at large. The PSR shifts focus away from competition, allowing for alternative commissioning routes.
However, with that flexibility comes a level of uncertainty. Decision-making bodies will not be mandated to run competitive procurements, and a key aspect which remains to be confirmed is how the regime will ensure that the outcomes of decisions are justified by evidence, subject to meaningful scrutiny and made in good faith. This will be key to ensuring that the regime achieves its aims without sacrificing the innovation and value that often results from competitive tension.
The new regime has the potential to revolutionise public procurement in the healthcare sector by giving authorities the powers they need to conduct efficient healthcare procurements. Its ultimate success, however, will be contingent on the quality of the accompanying guidance. Further information on the guidance to be published is awaited. We will provide a further update when more is known about the content and timescales for implementation of the PSR.
