Do you want to bid for NHS contracts?
Ross Clark provides a guide to the Provider Selection Regime for independent healthcare providers.
The time is ripe for independent healthcare providers to expand their practices by bidding for NHS contracts.
That is because the Provider Selection Regime (PSR), which officially came into force on 1 January 2024, significantly changes healthcare procurement law for both contracting authorities and providers.
Leading healthcare law firm Hempsons has worked alongside NHS England on the development of the PSR over the past two years and in this article I outline the new regulations and what these changes mean for private practitioners.
NHS waiting lists are at a record high and with mounting pressure to tackle crippling bed and workforce shortages, the service is increasingly reliant on the private sector to help ease the burden.
With both the NHS long-term plan and the Government’s elective recovery plan aiming to drastically reduce waiting times and demand on NHS services by giving patients more control over their treatment options, there has never been a better time for independent healthcare providers to expand their practices by bidding for NHS contracts.
However, the way in which those contracts are awarded has changed significantly with the introduction of the PSR and this article will give private practitioners a solid understanding of the new procurement processes and principles.
Which services are covered by the PSR?
The PSR applies when relevant contracting authorities, such as NHS England, integrated care boards, NHS trusts and foundation trusts and local and combined authorities, procure ‘relevant healthcare services’ relating to both physical and mental health conditions.
There is no minimum threshold for the application of the PSR regulations, so, regardless of the financial value, all contracts are subject to the same selection processes.
The regulations do not apply to goods and non-healthcare services such as medicines, medical equipment, cleaning, catering, business consultancy services and social care, unless they are integrated as part of mixed procurement.
Nor do they apply when an independent provider with an NHS contract wishes to subcontract a healthcare service to another,
as those providers are not considered relevant authorities under the PSR.
The new provider selection processes
One of three new provider selection processes must be followed when awarding a contract under the PSR:
- Direct award processes A, B and C;
- Most suitable provider process;
- Competitive process.
If there is little to no reason for an existing provider to change or for multiple providers to be assessed against each other for a new contract, one of the direct award processes will be used.
Direct award process A must be used when the existing provider is the only provider that can successfully deliver the relevant healthcare services due to their nature.
Direct award process B must be used when patients have a legal right to choose their provider.
The relevant authority does not restrict the number of providers and is able to award contracts to all providers who express an interest and meet all the necessary requirements.
Direct award process C may be used when:
- The relevant authority is not required to follow direct award processes A or B;
- The existing contract is due to expire and a new contract is proposed;
- The existing provider is satisfying its existing contract and will likely satisfy the new contract;
- The proposed new contract has not changed considerably from the existing one.
Where the lifetime value of the new contract is at least £500,000 or 25% higher than the lifetime value of the existing contract, this will constitute a considerable change.
It’s important to note that if all the criteria are met for direct award process C, the commissioner has the discretion to choose whether to follow this process or one of the following:
- The most suitable provider process may be used to award a contract without running a competitive process when the relevant authority can identify the most suitable provider.
- The competitive process must be used if none of the direct award processes apply, and the relevant authority cannot, or does not, wish to follow the most suitable provider process.
This process must be used if the relevant authority wishes to end an existing framework agreement.
The key decision making criteria
There are five key criteria that must be considered when using either direct award process C, the most suitable provider process or the competitive process. The criteria are:
1. Quality and innovation – ensuring good-quality services and supporting the development and implementation of new or significantly improved delivery or outcomes.
2. Value – balancing costs with overall benefits and financial implications of proposed contracts.
3. Integration, collaboration and service sustainability – promoting successful, long-term relationships across the health and social care sectors.
4. Improving access, reducing health inequalities, and facilitating choice – ensuring patients have choice and access to the healthcare services and treatments they need.
5. Social value – improving economic, social and environmental well-being.
Increased opportunities for market engagement
Increased scrutiny, transparency and defensibility around decision-making means it’s more important than ever that commissioners carefully consider the provider landscape.
The should make use of the comprehensive data available to them through provider performance reports to gain an in-depth knowledge of all potential providers and make informed, data-driven decisions.
This means the potential for bias will be minimised, while allowing commissioners and providers to openly communicate with each other before and during the procurement process.
This opportunity gives you the ability to build strong relationships with commissioners you hope to work with, gain a better understanding of their needs and ensure you are meeting them.
Screenshot
First published in the February edition of Independent Practitioner Today.