Blog: 14th June 2024 - Capsticks, Corporate Partner

We are now nearly six months into the Provider Selection Regime (PSR) - the new regime that governs the award of health care service contracts by NHS organisations, local authorities and combined authorities.  The aims of the PSR are to provide a flexible and proportionate process for deciding who should provide healthcare services, enable collaboration to flourish across integrated care systems and ensure that all decisions are made in the best interests of patients and service users.

Local authorities have been getting to grips with the PSR in the context of public health contracts.  Whilst the PSR provides three ways to directly award a health contract without a competition (two of which enable awards to existing providers in specific circumstances and the other is where patients/service users have choice). Those direct award processes are very prescriptive in nature and so it is important that those involved in advising on public health contracts understand the detail in the PSR and that they familiarise themselves with the Statutory Guidance that sits alongside the PSR and that must also be adhered to.

One question we have been asked a number of times is whether a direct award can be made where the previous contract has expired?  The short answer is no.  The PSR defines an “existing provider” as a provider with whom the relevant authority has a contract for the provision of relevant health care services which has not expired or otherwise been terminated.  In the event that a local authority finds itself in the situation where a previous contract has expired, it won’t have the ability to directly award – it will have to either run a process described as the “most suitable provider process” or run a competition which it can design.

Another area of debate is how a local authority decides between using the “most suitable provider process” which is technically not a competition, but does permit the assessment of providers and using the competitive process which will be familiar to those who have run competitive procurement processes in the past.  Often, the decision is based on who the market is – the most suitable provider process is unlikely to be suitable where there is a large number of possible providers.  It is important for local authorities to know the market of potential providers well as this may inform the award route.

It is important for local authorities to document their approach, reasons for decision making and how potential conflicts of interest are to be managed.  There are different requirements in terms of publishing information depending on the award route used and it is also a requirement to effectively “mark your own homework” each year as regulation 26 of the PSR requires all authorities covered to monitor compliance and publish their compliance and non-compliance online, including how non-compliance will be addressed.

Whilst there is flexibility in terms of some processes, the prescriptive nature of the PSR requires lawyers to carefully read through it and ensure the nuances are understood.

How Capsticks can help

Capsticks has significant experience advising local authorities on the Provider Selection Regime. For further information on how we might assist your organisation, please contact Mary Mundy or Peter Edwards.