The Provider Selection Regime

The long-awaited Health Care Services (Provider Selection Regime) Regulations 2023 (“PSR”) came into force on 1 January 2024 and were the culmination of an attempt to align procurement law with the wider policy aims in reform of the healthcare system to deliver benefits through greater integration and collaboration. Since the PSR commenced in the middle of the 2023/4 contracting year, the conclusion of the 2024/5 year at the end of March affords an opportunity to look at how the PSR has been developed, its successes and its weaknesses. 

A matter of process

One of the biggest changes under the PSR was the introduction of two processes which move away from the previous default position that competition is required to procure services. 

Direct Award Process C sought to address concerns from commissioners that a requirement to compete contracts delivered by well performing existing providers risked a reduction in service quality given the time and resources required to bed in new providers.  We have seen Direct Award Process C be used in this way, but there has also been concern from some providers who feel excluded i.e. that commissioners are using Direct Award Process C to maintain the status quo and are therefore missing out on innovation and improvement available in the marketplace that a procurement exercise would help identify. This concern is compounded by the well-publicised resourcing pressures on commissioning teams, which has led to a fear that Direct Award Process C is or will be used as a stop gap to hold existing arrangements in place whilst strategic commissioning decisions are delayed. That said, none of the Independent Procurement and Patient Choice Panel (“Panel”) (the review body, established to oversee the PSR and the first port of call for aggrieved providers) decisions to date have challenged a decision to use Direct Award Process C in these circumstances. 

The lesson for commissioners is to ensure that the decision to use of Direct Award Process is based on the Key Criteria, as defined by Regulation 5 of the PSR, and is made in compliance with applicable procedural rules. Reasons for adopting a process and crucially the way in which the Key Criteria have been shaped and applied to reach that decision should be fully documented to ensure its defensibility if challenged. 

A most suitable process?

Implementation of the Most Suitable Provider Process (MSP) has proved tricky for commissioners, as demonstrated by some of the decisions published by the Panel and the fact that the statutory guidance has been revised to provide additional clarity.

The MSP requires a sophisticated knowledge of the provider landscape and decision making must be based on the commissioner’s own knowledge of providers’ capability. Essential to a commissioner’s successful use of the process is therefore to recognise how it differs from the competitive process and to avoid the trap of seeking information about and assessing the “offer” from providers i.e. inviting bids rather than assessing the capabilities of provider themselves. If a commissioner becomes aware it does not have the requisite information about its market and/or providers capability, it should consider reverting to the competitive process to award their contracts safely, so it is also a good idea to keep decision making under review throughout.

If these difficulties can be overcome (and the recently revised statutory guidance should provide some assistance), MSP is particularly suited for situations where specialised healthcare services are being commissioned with a limited provider market and therefore the benefits of market testing may not be outweighed by the resources required to run a full competitive process.

Primary Care 

The PSR has proved harder to implement for some services, notably in the primary care commissioning space where the nature of those contracts (which are regulated by statute) does not always sit easily with key concepts under PSR. Modification of contracts with no end date (and therefore with a lifetime value that is impossible to determine) and calculation of the value of proposed changes has caused particular confusion and concern.
There has been some recent additional guidance which looks to provide greater clarity, signposting where the primary care policy and guidance manual should be used in effecting certain changes. However, some further guidance on these thornier issues would no doubt be welcome. 

The challenge in representations

The fact that there have only been (at the time of writing) 6 decisions of the Panel published suggests that generally the regime is working well. A common theme however in some of the more recent Panel decisions is the need for commissioners to treat representations with care and ensure that all relevant documentation is disclosed in a timely and non-defensive manner when reviewing their own decision making. Where commissioners are used to defending the robustness of their processes in the face of a formal procurement challenge under previous regimes, this shift to the role of arbiter where disputes arise can be difficult.

Depriving providers of the full gamut of court remedies and disclosure process available under other procurement regimes, it is clear that the key lesson in this space is that commissioners are expected to manage the representation process in a collaborative and transparent way, in particular responding in a co-operative manner to requests for further information. In turn, providers are more likely to make effective representations and elicit relevant information where requests are specific and target areas of concern rather than taking a blanket approach.