What the new provider selection regime means for GP practices, PCNs and GP provider organisations

New procurement regulations have been laid before Parliament which, when in force, will make considerable changes to the commissioning of health care services including, in particular, primary care. These are going to affect how ICBs will commission from GP practices, PCNs and GP provider organisations / federations. Healthcare providers will need to understand these changes to help identify how they can and will work with their commissioners in the next few years. This article provides a summary of the new award processes and when each may apply.

Introduction

On 19 October 2023, The Health Care Services (Provider Selection Regime) Regulations 2023 (“PSR Regulations”) were laid before parliament. When in force, the PSR Regulations will introduce a new procurement regime where a “relevant authority” (including in particular NHS England and an Integrated Care Board (“ICB”)) procures “relevant health care services” (health services, medical practice services, general practitioner services and medical specialist services, amongst others).

Subject to parliamentary process, the intention is that the PSR Regulations will come into force on 1 January 2024.

Working alongside the NHS England policy team and NHS England legal team, Hempsons has advised on the development of the PSR over the past two years. This work has included advising on the PSR Regulations themselves (inputting into the drafting of the regulations, the drafting of which was led by DHSC), and the development of the statutory guidance and the toolkits developed by NHS England to support the introduction of the PSR.  Hempsons is therefore well placed to advise on the implications of this new regime for securing the provision of health care services.

For this purpose, below we refer to the ICB as the relevant authority.

There are three new provider selection processes (Direct award processes A, B and C, Most Suitable Provider and Competitive Process), which may apply in certain circumstances:

When each Process applies

1. Only existing provider capable of providing

Where there is an existing provider of the relevant health care services and the ICB is satisfied that the relevant health care services under the contract are capable of being provided only by that existing provider, due to the nature of those services, the ICB must follow Direct Award Process A.

2. Patient Choice

Where a patient is offered a choice of provider, the number of providers is not restricted by the ICB, the ICB offers contracts to all providers that meet the relevant requirements and has arrangements in place to enable providers to express an interest in providing the services, the ICB must follow Direct Award Process B.

3. New contract where no considerable changes to existing contract

Where the ICB proposes to replace an existing contract at the end of its term, is not required to follow 1 or 2 above, and the “considerable change threshold” is not met (see below) and the ICB is of the view that the existing provider is satisfying the existing contract and will likely satisfy the replacement contract to a sufficient standard, the ICB must follow one of the Direct Award Process C, the Most Suitable Provider Process or the Competitive Process.

The considerable change threshold is met where the proposed contracting arrangements are materially different in character to the existing contract, when entered into, or  where:

(i)      changes in the services (compared with the existing contract) are attributable to a decision of the ICB;

(ii)      the lifetime value of the new contract is at least £500,000 higher than the lifetime value of the existing contract when entered into; or

(iii)     the lifetime value of the new contract is at least 25% higher than the lifetime value of the existing contract when entered into.

However, there are two exclusions to this and the considerable change threshold will not be met as a result of:

(i)      a change in the identity of the provider due to its succession into the position of provider following corporate changes (including merger, acquisition or insolvency) and the ICB is satisfied that the provider meets the basic selection criteria; or

(ii)      the changes are in response to external factors beyond the control of the ICB and the provider (for example changes in patient volume or changes in prices in accordance with a formula provided for in the contract).

4. Most suitable provider

Where the ICB is not required to follow 1 or 2 above, does not wish to follow Direct Award Process C, and is of the view (taking into account the likely providers and all relevant information available at the time) that it is likely to be able to identify the most suitable provider, the ICB must follow either the Most Suitable Provider Process or the Competitive Process, such choice being at the discretion of the ICB.

5. None of the above or framework agreement or want competitive process

Where the procurement is to conclude a framework agreement or none of the above apply, the ICB must follow the Competitive Process

The Award Processes

The processes provided for in the new Provider Selection Regime are:

1. Direct Award Process A

Here the ICB can make a direct award (i.e. award a contract without competition), provided that it submits a notice of that award on the UK e-notification service within 30 days of the contract being awarded (the information required to be included in the notice is specified in Schedule 2 of the Regulations).

2. Direct Award Process B

The requirements here are identical to Direct Award Process A

3. Direct Award Process C

Again, the ICB can make a direct award to an existing contractor, provided it follows the six steps set out in the Regulations, including:

• The ICB, taking into account the “key criteria” and applying the “basic selection criteria” (both set out in Schedules to the Regulations), is satisfied that the existing provider will likely satisfy the requirements of the proposed contract to a sufficient standard.
• It publishes a notice of intention to make an award to the existing provider, following which there is a standstill period within which anyone who objects or believes there has been a failure to comply with the Regulations can provide written submissions to the ICB.
• If written submissions are provided, the ICB must (amongst other duties) review its original decision and can decide to continue to award the contract to the existing provider, go back to an earlier stage in the process and start again from there or abandon the procurement.
• If the ICB decides to award the contract to the existing provider, it must then submit for publication a notice of the award of the contract.

4. Most Suitable Provider Process

The ICB can make a direct award to whom it has determined is the most suitable provider once it has followed the eight steps set out in the Regulations, including:

• The ICB publishes a notice of intention to follow the Most Suitable Provider Process (containing the information set out in a Schedule to the Regulations).
• It then identifies potential providers and chooses the most suitable provider (taking into account the “key criteria” and applying the “basic selection criteria”).
• A notice of intention to make an award to the most suitable provider must then be published, following which there is a standstill period within which anyone who objects or who believes there has been a failure to comply with the Regulations can provide written submissions to the ICB.
• If written submissions are provided, the ICB must (amongst other duties) review its original decision and can decide to continue to award the contract to the most suitable provider, go back to an earlier stage in the process and start again from there or abandon the procurement.
• If the ICB decides to award the contract to the most suitable provider, it must then submit for publication a notice of the award of the contract.

5. Competitive Process

There are ten steps to be followed for the competitive process. The ICB:

1. determines the contract or framework award criteria (but must take into account the key criteria and apply the basic selection criteria)
2. invites offers from anyone to provide the services
3. makes a decision as to the successful provider and
4. notifies the successful and unsuccessful bidders and then
5. awards the contract or concludes the framework agreement, unless written submissions are made during the standstill period, in which case the ICB can go back to a previous stage or abandon the procurement.

Receive our detailed analysis

We believe that this will create significant opportunities, particularly for GP practices, GP provider organisations and federations, and PCNs and PCN companies. We have prepared a supplementary analysis of how the new Regulations may be applied in various scenarios, which you can register to receive here:

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