NHS healthcare commissioning - consultation on the NHS Provider Selection Regime

Amid the current flurry of health sector reform activity, NHS England/Improvement has released its consultation on a proposed new healthcare services procurement regime. The proposals, aimed at ensuring that competitive tendering of healthcare services is a choice, rather than mandated, and removing any procurement related barriers to enabling greater integration and collaboration, represent a radical shift away from the more prescribed current regime. However whether these aims are achieved will likely depend on the ‘on the ground impact’ in terms of behaviours that the new regime promotes or prevents. A key part of that picture will be formed by the way that the wider integration focused reforms wrap around and interact with these proposals to drive the most advantageous behaviours.

What is proposed?

Overview

The consultation document proposes a new regime to apply to all bodies arranging healthcare services, including public health, and local authorities where they are commissioning healthcare services. Current rules, stemming from the Health and Social Care Act 2012 and Public Contracts Regulations 2015 (PCR), would be removed, and replaced with a regime underpinned by a new duty that services are arranged in the best interests of patients, taxpayers and the population.

The consultation recognises that, in current practice, most NHS healthcare services are arranged without competitive process. The new regime aims to ensure that decisions to arrange services in this way can continue without recourse to what it terms a ‘…valueless bureaucratic exercise’. Instead, the proposals are intended to provide a framework within which commissioners themselves are handed the decision as to whether to run a competitive exercise at all, making that choice through application of key criteria following a process dependent on the circumstances in which that decision is being made.

Decision circumstances

The consultation notes that there are three key circumstances in which procurement decisions will need to be made notably where:

1. Existing arrangements are to continue – where the incumbent is the only viable provider due to the nature of the particular services, or the incumbent is doing a good job (as judged against the key criteria) and the service is not changing
2. A new most suitable provider is needed for new or substantially changed arrangements – this might be where the incumbent no longer wants to continue the service, or where the decision-making body wants to use a different provider; or
3. Competitive procurement is required – this may be because a single provider cannot be identified without a competitive process, or if the decision-making body wants to test the market

The consultation proposes that in the first scenario it needs to be simple for existing arrangements to continue. Therefore the decision-maker need only take steps to ensure that good service delivery (as judged against the key criteria) will continue, be transparent, by publishing its intention to continue with the service provider in advance giving four to six weeks’ notice, and following a set process should credible representations be made by other service providers.

In the second and third scenarios, it is proposed that the decision-making body must consider the regime’s key criteria, in the second scenario, before then making a direct award (with notice), or in the third, following an appropriate competitive procurement process to include comparing potential providers against the regime’s key criteria.

Key criteria

The new regime’s proposed key criteria, against which decisions to award must be considered, in summary are: 

• Quality (safety, effectiveness and experience) and innovation – including considering whether quality will be maintained, avoiding stifling innovation, and considering unlocking innovation through the way those services are arranged
• Value – noting that value does not automatically mean cheapest, looking at value over the course of the complete contract term, and considering the transactional costs of changing any existing arrangements
• Integration and collaboration – including ensuring that services consistent with local/national NHS plans around integrating care and joining up services for patients, that services are seamless, from the patient’s perspective, and whether the new service is willing and able to be part of local integration plans
• Access, inequalities and choice – including protecting patient choice, ensuring that services are accessible to all groups, and considering the impact of any decision on health inequalities, and seeking to reduce these
• Service sustainability and social value – including how sustainability will be affected over time, and the impact on local workforce, plus a focus on maximising social value throughout. 

Transparency and scrutiny

Throughout the process, the proposed regime requires decision makers to evidence that they have properly exercised their responsibilities, through steps including publishing their intended approach in advance, publishing a list of contracts awarded, keeping a record of considerations and decisions, and monitoring and addressing any non-compliance.

In terms of challenging decisions, the proposal is that the competitor right to challenge via the PCR or Monitor is removed, and replaced with the ability to make representations to the decision-making body after it has published its decision. These decisions would be subject to challenge via judicial review.

Other considerations

Further points highlighted in the consultation include confirmation that the new legislation would sit alongside any other duties owed by decision-making bodies, and they should not, therefore, assume that through complying with this regime, they have automatically satisfied all their responsibilities. There is also discussion of the proposed interaction with the current ‘Any Qualified Provider’ (AQP) regime, the rules of which, it is proposed, should be strengthened where ICS Boards establish and operate provider lists, which is intended to ensure that there is always patient choice, irrespective of the contract basis (for example via providers or provider collaboratives).

The consultation does also emphasise that the NHS will still be in a position to arrange services with independent and voluntary sector providers, so long as the decision to do so is in accordance with the new duty to act in the best interests of patients, taxpayers and the population. It highlights the ongoing role expected for the voluntary and independent sector, via either specific procurement or the simplified AQP process.

Interaction with other reforms

Of course, these proposals are not put forward in isolation. They are intrinsically linked to other ongoing developments in the sector currently, including in particular the white paper Integration and innovation – working together to improve health and social care for all, and the wide-ranging proposals discussed in the recent Busting bureaucracy release.

For the new regime to really change the way that procurement works in practice and achieve its aims, it must function well within the context of statutory ICS arrangements, place-based partnerships and provider collaboratives. It is not, alone, a magic bullet to simply avoid any procurement process, or the risk of commissioning decisions being challenged, and it will not preclude any current bad practices or behaviours. Those impacts can and will only come about through further development of integrated working practices, and developing trust in those arrangements from both the constituent organisations, and the public seeing how those arrangements affect them.

From our experience of working with clients to pursue integrated commissioning and population health approaches, it is helpful that the proposed rules would also apply to local authorities in respect of public health services, for example. Competitive tendering of these services in isolation from other linked NHS services has sometimes created a barrier to these approaches. However, a behavioural shift will be required on the part of some local authorities and NHS commissioners for the benefit to be felt.

Looking at the key criteria, which it should be noted are not intended to be considered in any hierarchical order, rather on a case-by-case basis as appropriate to the type of healthcare service being arranged, careful consideration will need to be given to precisely what good quality and value means, and how these are benchmarked. Given the flexibility built into the proposed regime, there is potential for these points to be considered in differing ways in different localities. This may prove beneficial across the system to enable the most appropriate approach to be pursued locally (rather than a one-size-fits-all approach) but clearly there will need to be constant review of practices across the country to ensure consistency and to avoid subjective views creeping in which could undermine assurances that best value and quality are being achieved. However, if that risk is monitored and kept in check, a shift in emphasis from cost to value should support a move to longer-term innovative commissioning strategies that focus on health outcomes and the overarching benefit of improving these for all.

The regime is subject to consultation, open until 7 April 2021, and therefore it will be some time yet before we know exactly what shape NHS procurement will take going forwards.