The new NHS Provider Selection Regime

The Provider Selection Regime came into force on 1 January 2024, fundamentally changing the way in which the NHS (including ICBs, NHS Trusts and NHS Foundation Trusts) and some other commissioners, including local authorities, buy healthcare services.

Why is PSR of interest to healthtech providers?

The Healthcare Commissioning (Provider Selection Regime) Regulations 2023 (‘PSR’) came into force on 1 January 2024. 

The PSR applies to the procurement of healthcare services, defined in the Regulations with reference to CPV codes. They do not apply to the procurement of goods alone or to what are referred to as ‘health - adjacent services’ (eg. business consultancy, catering, administrative). However they can be used for mixed procurements which might, for example, include the supply of healthtech alongside clinical services. 

The PSR allows commissioners a greater degree of flexibility in how services are procured with new processes for awarding contracts which mean that competitive procurement is no longer the ‘default’ position either when procuring new contracts or when existing contracts end. Instead, commissioners can take advantage of more flexible processes to make their commissioning decisions, which suppliers may view as preferable to avoid the time and expense of competitive procurement and provide the opportunity to maintain ongoing relationships and contracts without disruption.

To work out whether the new regime will apply to their services, healthtech suppliers and their advisors will need to review the new rules carefully in the context of the products they are providing to consider whether they might be classed as healthcare services, or, as is more likely, fall potentially into the category of mixed procurement. By way of example: 

• Technology such as an Electronic Patient Record system will quite clearly fall outside of the PSR as health-adjacent / non-healthcare.
   
• Provision of a virtual ward service or an app to monitor, diagnose or treat a condition might be more likely to fall within the PSR either potentially as a freestanding healthcare service, but more likely falling within the mixed procurement definition (so long as relevant conditions, including in relation to the value of the healthtech element are satisfied). 

Mixed procurement – what does it mean? 

Mixed procurement is in scope of the PSR where:

• The ‘main subject matter’ of the procurement is the healthcare services – so where the healthcare services have a higher estimated lifetime value than the goods to be supplied; and
   
• Where the commissioner is of the view that the other goods or services could not reasonably be supplied under a separate contract i.e. procuring the healthcare services and the goods separately would be likely to have a materially adverse impact on the commissioner’s ability to act within the procurement principles.

Those procurement principles are set out at Regulation 4 and include:

• Securing the needs of people who use the services;
• Improving the quality of the services; and
• Improving efficiency in the provision of the services.

Significantly, the Regulations also confirm that in applying the principles, the commissioner can consider the value of providing the services in an integrated way, which is particularly useful in the context of mixed procurement and could represent some exciting opportunities for providers of healthtech looking to work with the NHS to deliver systemwide benefit. 

Greater flexibility in decision making

So, if the procurement of healthcare services together with healthtech is in scope, what does the PSR do differently and why might this benefit healthtech suppliers? As noted above, the PSR provides more flexibility for commissioners making procurement decisions through measures including:

• Three new processes for direct award, including Direct Award Process C which allows commissioners to award a new contract to an existing provider when its contract is coming to an end in circumstances where the existing provider is satisfying the existing contract and likely to satisfy the new contract and the proposed new contract is not changing considerably. 
    
  This represents an opportunity for greater continuity with less disruption for providers where things are going well, perhaps encouraging greater investment and development since the commissioner is no longer required to reprocure the services at the end of the term.
   
• A new ‘most suitable provider process’ which allows a commissioner to award a contract where it is able to identify the most suitable provider of services without a competitive process by taking into according all relevant information available at the time. 
    
  This promotes greater collaboration between commissioners and providers within the ‘provider landscape’ and provides ‘a mechanism for reasonable and proportionate decision making without running a competitive exercise.’ To benefit most from this flexibility, providers should ensure that they invest in their relationships with local commissioners to ensure there is a good awareness of their capabilities and how they might provide services in new innovative and collaborative ways.
   
• A more flexible competitive process whereby commissioners can design any competitive process that they wish to undertake.

Emphasis on building provider / commissioner relationships

Although commissioners have long been expected to maintain knowledge of the ‘provider landscape’ in which it is taking commissioning decisions, the PSR and associated statutory guidance places greater emphasis on developing strong and ongoing relationships between commissioners and providers. 

To take advantage of the greater flexibility in their decision making, commissioners are required to:

• Develop and maintain a detailed knowledge of the provider landscape, with an emphasis on ensuring this is not just in relation to existing providers. There is also greater emphasis on ensuring this knowledge and relationship is ongoing and not just developed at the point of contracting, such that it becomes a general feature of planning work so that commissioners are not missing opportunities for improvement and identifying valuable innovations;
   
• Understand the ability of providers to deliver services to the population, connect with other parts of the system and their approaches to service delivery;
   
• Consider and undertake regular pre-market engagement activities to update or maintain their knowledge, again not just at the point of contracting; and
   
• Ensure that private sector providers are not treated differently solely as a result of their status.

New challenge processes

The PSR includes a new system for challenging the decisions commissioners make. Whereas the route to challenge previously involved a Court Procedure that was costly for providers, the new regime establishes the right of providers to ‘make representations,’ seeking a review to determine whether the PSR has been properly applied to arrive at an appropriate decision. 

If a commissioner reviews the representations but is still looking to proceed with its original  decision, the new regime enables an aggrieved provider to  make further ‘representations’ to a specially appointed independent expert panel, established by NHS England - the PSR Review Panel. This panel will undertake an assessment of the procurement decisions and make recommendations back to the relevant commissioner. If this still does not resolve the issue, a Court remedy may be sought through  judicial review.

Although we are yet to see how this approach works in practice, on the face of it this represents a less expensive and quicker route for providers aggrieved by decisions to seek redress. However, the absence of direct Court remedies may make the new regime ‘toothless’ since a commissioner is able to make only three decisions (1) to rewind the procurement to an earlier point (2) to abandon the process or (3) to continue with their contract award. Providers should keep a close eye on how this process develops.

Implications for healthtech providers

The PSR offers opportunities for healthtech suppliers in terms of the ease with which they might be appointed to provide products/services and maintain continuity once in place through re-appointment at the end of a term without the need to go through a full re-procurement process. This potential for more long-standing relationships offers greater opportunity to develop stronger relationships with commissioners and to work collaboratively with them to offer more innovative services ultimately benefitting patients.  

Healthtech providers would therefore be well advised to familiarise themselves with the new legislation and accompanying statutory guidance now to plan their approach take full advantage of the opportunities the PSR represents.

If you have any questions about the new regime and how it might impact you we would be happy to discuss these with you, and we also offer tailored training on the impact of the PSR and related patient choice developments  specifically for your organisation. Please do contact us if you would like more information about this offer.