The Provider Selection Regime - Statutory Guidance

The NHS Long Term Plan aimed to improve health and care services for growing demands, better outcomes, and financial stability. In response, the health and care approach in England is changing, with collaboration between NHS bodies, local authorities, and partners for integrated care and improved health results.

The Health and Care Act 2022 introduced legislative changes, creating integrated care systems, and promoting cooperation among those involved in health and care services.

A crucial part of this change is the Provider Selection Regime (PSR), supported by stakeholders. This regime, outlined in the Health Care Services (Provider Selection Regime) Regulations 2023, replaces previous procurement rules for NHS and local authority funded health care services. It provides flexibility for relevant authorities to choose providers, moving away from the previous expectation of competitive tendering for health care service contracts.

Under the PSR, competitive tendering is one option, alongside other routes supporting stable partnerships and integrated care. The regime still emphasises value for money, transparency, fairness, and proportionality in decision-making. The PSR is established under section 12ZB of the 2006 Act (as amended) and is detailed in the accompanying Regulations, with statutory guidance to assist organisations in understanding and applying the PSR.

Why introduce the PSR for health care services?

The 2022 Act shaped the Provider Selection Regime (PSR) to:

1. Make choosing healthcare providers flexible and efficient, focusing on users' needs, better service quality, and improved efficiency.
2. Support collaboration in the healthcare system, ensuring transparent decisions in organising healthcare.
3. Reduce bureaucracy and costs associated with existing rules.

NHS England worked closely with various stakeholders, including integrated care boards, NHS trusts, local authorities, and others, to develop the PSR. The process involved input from commissioning and procurement professionals, and widespread consultation with NHS England and the Department of Health and Social Care gained strong support across the NHS and local government.

How does the PSR work?

This guidance explains how relevant authorities, like ICBs, NHS England, local authorities, combined authorities, NHS trusts, and foundation trusts, should adopt the Provider Selection Regime (PSR). They must follow this guidance.

The PSR applies to the arrangement of health care and public health services, regardless of the provider (NHS, public sector, local authorities, or voluntary and independent sectors).

It doesn't cover goods and non-healthcare services unless part of mixed procurement, as defined in the Regulations.

Relevant authorities can choose from three provider selection processes under the PSR: direct award processes (A, B, and C), most suitable provider process, and competitive process.

The direct award processes.

There are three direct award processes (A, B, C) for awarding contracts to healthcare service providers. Here's a breakdown:

• Direct award process A: This is used when:
  • There is an existing provider for the health care services in question.
  • The relevant authority believes that only the existing provider (or group) can deliver these services due to their nature.
  • It cannot be used to establish a framework agreement.
• Direct award process B: This is used when:
  • Patients have a choice of providers for the health care services.
  • The relevant authority does not limit the number of providers.
  • The authority will offer contracts to all providers meeting the service requirements.
  • Providers can express interest in offering the services.
  • It cannot be used to establish a framework agreement.
• Direct award process C: This may be used when:
  • The relevant authority is not bound by processes A or B.
  • An existing contract is expiring, and the authority proposes a new contract with no significant changes.
  • The authority believes the existing provider (or group) is meeting the current contract standards and will likely meet the proposed contract standards.
  • It cannot be used to establish a framework agreement.

The most suitable provider process

This is about awarding a contract without competition because the relevant authority can directly identify the best provider. Here are the conditions for using this process:

• The authority isn't bound by direct award processes A or B.
• The authority cannot or chooses not to follow direct award process C.
• The authority believes it can identify the best provider based on available information, without needing a competitive process.

This process, called the "most suitable provider process," cannot be used to establish a framework agreement.

The competitive process

This is about conducting a competitive process to grant a contract. Here are the conditions for using this process:

• The authority isn't bound by direct award processes A or B.
• The authority cannot or chooses not to follow direct award process C and also cannot or chooses not to follow the most suitable provider process.

If the authority wants to establish a framework agreement, it must use the competitive process.

Key criteria

When using direct award process C, the most suitable provider process, or the competitive process, relevant authorities must consider five main criteria:

1. Quality and innovation
2. Value
3. Integration, collaboration, and service sustainability
4. Improving access, reducing health inequalities, and facilitating choice
5. Social value.

How does the PSR support fair and transparent decision-making?

Under the PSR, relevant authorities have flexibility in decision-making but must ensure transparency. Key transparency requirements include:

1. Record-Keeping and Publication:
   • Keep records of decisions and publish notices for all situations.
2. Clear Intentions:
   • Clearly communicate intentions before using the most suitable provider process or the competitive process.
3. Decision Records:
   • For direct award process C, the most suitable provider process, or the competitive process, maintain records on key criteria and provider assessments.
4. Standstill Period:
   • Observe a standstill period where representations can be made. Respond to representations before finalising decisions and awarding contracts.
5. Review Mechanism:
   • Allow review of provider selection decisions during the standstill period, including by the Independent Patient Choice and Procurement Panel.

How do organisations use the PSR?

This guidance explains how organisations should use the PSR to organise healthcare services, ensuring compliance with the Regulations. NHS England has created implementation tools to assist organisations in applying the PSR.

The PSR emphasises transparent, fair, and proportionate behaviour by relevant authorities when making arrangements with providers in the NHS, public, independent, and voluntary sectors. Adhering to these behaviours supports the successful implementation of the PSR, aligning with the 2022 Act's goal of integrating service delivery through enhanced collaboration in the NHS and with local government.