NHS Provider Selection Regime – A new direction for healthcare services?


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Hot on the heels of the Green Paper: Transforming public procurement, we now have the publication of the "NHS Provider Selection Regime: consultation on proposals." Having originally been omitted from the remit of the Green Paper, it is now clear that there is a new direction planned for the NHS in respect of procurement.

Lucy Doran and Hilary Blackwell explore these proposals and how they will impact on NHS organisations.

The NHS is currently subject to procurement requirements under section 75 of the Health and Social Care Act 2012 and the Public Contracts Regulations 2015. With the creation of statutory integrated care systems (ICS) imminent, it was felt that the current NHS procurement framework would be inappropriate and more flexibility in respect of commissioning services is required.

The recommendation set out in the paper is that government legislates to remove the current rules governing NHS procurement of healthcare services and replace it with a new "regime" specifically created for the NHS which includes a new duty that services are arranged in the best interests of patients, taxpayers and the population. This will be achieved via a combination of primary and secondary legislation and set out in statutory guidance. The regime would apply to bodies responsible for arranging healthcare services for the purposes of the health services and includes local authorities where they are commissioning healthcare services.

It is intended that the regime will set out broadly three kinds of circumstances that decision-making bodies could be in when arranging services, they could be:

  1. Seeking continuation of existing arrangements using the existing provider;
  2. Selecting the most suitable provider when a service is new or changing substantially but a competitive procurement is not appropriate; or
  3. Selecting a provider by running a competitive procurement.

The decision maker must consider key criteria, satisfy themselves of certain matters and follow a number of steps depending on which circumstance applies to demonstrate that they are acting in the best interests of the patients, taxpayers and population. In some scenarios this will involve an obligation of transparency where there is an absence of competition.

The proposals also look at the "Any Qualified Provider" (AQP) arrangements and confirm that the legal right to patient choice for first outpatient appointment will remain in place. It is proposed that these arrangements will not be procured but a set of stated service conditions must be met by the providers.

The Regime also seeks to ensure that decision makers have clear outcomes when they commission services and the contracts and the contract management arrangements are in place to secure these outcomes. This is teamed with an obligation of transparency and scrutiny which imposes requirements on decision makers to publish certain information relating to their decisions and contracts awarded.

Many in the NHS may welcome the stability provided by not having to retender for services on a regular basis, although during the current Covid-19 crisis most re-procurements have been put on hold and contracts rolled. However NHS England and the new ICS commissioners must still satisfy themselves and their public duties that the services provided do indeed serve the best interests of patients, taxpayers and the population. There has been a surge of innovation in clinical practice, use of digital and other technological solutions and flexibility in the use of clinical delivery space. It would be a great shame if inertia by continuing to rely on existing providers were to lose access to innovation and improved service delivery.

From a local authority perspective, it will be interesting to see how this new regime sits alongside their other obligations under the future consolidated procurement legislation. One of the ambitions of the Green Paper was to consolidate the procurement rules into one place so that it would "reduce complexity and give greater clarity" to contracting authorities. It remains to be seen how the regime will link with this other legislation and avoid any future confusion.

The proposals are currently in the consultation stage and comments and views are invited by the 7th April 2021. Trowers & Hamlins will be submitting a consultation response and we look forward to sharing this with you in the near future.

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