Guidance

Why wider health sector buyers should work with SMEs

Published 24 February 2026

Applies to England

© Crown copyright 2026

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Why you should engage with SMEs

Introduction

At the 2025 Make UK Conference, Chancellor Rachel Reeves described small and medium-sized enterprises (SMEs) as “the lifeblood of the UK economy”. This is more than a soundbite - it reflects a structural truth. SMEs make up 99.9% of the UK business population and are estimated to account for 85% of NHS suppliers. Their contribution is not only economic but increasingly strategic.

SMEs employed 61% of the private sector workforce at 16.4 million employees. They also earned 51% of the turnover in the UK private sector.

In May 2023, Crown Commercial Services published The benefits of working with small and medium enterprises for public sector buyers.

The report continued to highlight the many benefits of working with SMEs such as strong customer service driven by smaller chains of command and a more adaptable and agile style, while acknowledging the persistent barriers they face in accessing public sector contracts.

As a health sector buyer, your procurement decisions influence the:

  • health of local economies
  • resilience of supply chains
  • quality and speed of care delivery

Spotlight - the Health Innovation Network

The Health Innovation Network plays a pivotal role in accelerating the adoption of innovation across the NHS by acting as a bridge between health and care systems, academia and industry.

For SMEs, the network offers a vital platform to scale impactful solutions, navigate complex NHS pathways and align innovations with national health priorities.

The highlights for SMEs include:

  • national reach: 15 regional networks embedded in local systems for tailored support
  • SME guidance: help with NHS engagement, evidence generation and scaling
  • economic impact: £476 million funding leveraged and 1,300 jobs supported (in 2023 to 2024)
  • health outcomes: prevented over 9,000 cardiovascular events and provided tech-enabled care for 500,000 people
  • workforce development: 33,000 NHS staff upskilled through innovation-aligned training
  • net-zero focus: £20 million secured for sustainable health technologies

6 reasons to work with SMEs

1. Faster innovation for frontline challenges

SMEs are often at the cutting edge of healthcare innovation - from artificial intelligence (AI) diagnostics and digital therapeutics to remote monitoring tools and assistive tech. They are particularly strong on co-design and iterating solutions quickly alongside clinicians and patients.

Innovate UK’s Healthy Living and Agriculture Review 2025 - a focus on health tech states that hundreds of UK health SMEs are actively developing new healthcare technologies, creating and retaining 1,200 jobs.

Engaging with SMEs early gives you access to agile, tailored solutions that can often solve specific system pressures faster and at a lower cost than traditional suppliers.

2. Local suppliers = health equity gains

SMEs often have deep roots in the communities they serve. They understand local health needs, engage with underserved populations, and design services that reflect local culture and context - supporting Core20PLUS5, population health and integrated care objectives.

According to the LABS Edit, 70% of jobs outside London and the South East are driven by SMEs.

Sourcing locally doesn’t just support the economy, it can also improve access, trust and outcomes in priority populations.

3. Stronger, more sustainable supply chains

The COVID-19 pandemic exposed the risks of centralised and fragile supply chains. SMEs often offer decentralised, niche and more sustainable alternatives, enhancing supply chain resilience and reducing emissions through shorter, local routes.

Diversifying suppliers with SMEs can reduce delivery risks, support sustainability goals and improve responsiveness.

4. Digital and data capabilities

Many SMEs specialise in areas critical to NHS digital transformation, such as interoperability, real-time analytics and population health dashboards. These capabilities support smarter commissioning, earlier intervention and more efficient care.

NHS demand for digital and data expertise is projected to grow 69% by 2030, according to NHS England’s Data driven healthcare in 2030 report.

Tapping into SME innovation can help unlock the value of NHS data and future-proof your procurement portfolio.

5. Workforce-focused solutions

SMEs are driving innovation in workforce models, from staff wellbeing platforms and flexible scheduling apps to digital training tools. These can help address urgent workforce issues, including retention, morale and burnout.

29% of health SMEs plan to grow their workforce beyond pre-pandemic levels, according to the Small Business Survey 2022: businesses with employees.

Supporting SMEs that address workforce challenges helps tackle one of the most pressing issues facing your NHS trust or the health system.

6. Responsive, customer-centric service

SMEs typically have flatter structures and smaller teams, allowing them to be more responsive, adaptable and personally invested in service quality. This can lead to faster resolution times and closer working relationships.

Capterra’s consumer research shows that 43% of UK consumers state local firms offer better customer service than global companies and a further 37% were neutral.  

Strong supplier relationships reduce risk and improve contract delivery over time.

Why now: the policy shift that empowers you

Two major developments make SME engagement not just beneficial but essential:

What you can do now

As an NHS buyer, you now have both the policy mandate and the strategic imperative to:

  • remove unnecessary barriers to entry
  • choose flexible and proportionate routes to market
  • encourage early SME involvement and ongoing collaboration
  • shift focus from process compliance to strategic value creation
  • maximise innovation, resilience and social value
  • build long-term, collaborative supplier relationships

Case studies on the value of engaging SMEs  

Case study 1: PocDoc healthy heart checks

PocDoc is a standout example of how a digital health SME can rapidly scale preventative care with measurable impact. In just 6 months, PocDoc transformed cardiovascular screening across community settings, saving lives and NHS resources.

Highlights included:

  • 20,000 healthy heart checks delivered
  • 2,100 individuals identified at high risk of cardiovascular disease
  • £5.1 million in projected NHS savings
  • service deployed in homes, workplaces and community venues
  • seamless integration with NHS patient records

PocDoc’s success highlights the agility and innovation SMEs bring to healthcare. By securing contracts with 8 NHS entities and tripling its grant value through partnerships, PocDoc proved how smaller companies can deliver targeted, scalable solutions that larger providers may overlook.

Case study 2: Feebris Hospitals Without Walls 

Feebris is a pioneering digital health SME bringing hospital-level care safely into the community and freeing up vital NHS capacity.

At Medway NHS Foundation Trust alone, its virtual care platform is powering the growth of a first-of-its-kind virtual hospital - scaling a successful virtual ward programme into a fully integrated, clinically governed service that offers a nationally replicable blueprint.

Highlights included:

  • tens of thousands of bed days released annually - equivalent to entire wards
  • more than £5 million net annual savings projected for re-investment into frontline care
  • a 4-fold increase in clinician reach (1:20 vs 1:5)
  • expansion across multiple pathways including paediatrics, oncology and care home admission avoidance

This example highlights how an agile SME can work with the NHS to rapidly co-design and embed innovation, laying the foundations - systems, evidence and culture - for safe, effective and sustainable transformation.

Final thought for buyers: SMEs are specialist partners

SMEs are not small versions of large suppliers - they are specialist partners who can help you unlock innovation, resilience, and a better and more dynamic supply chain.

Engaging SMEs is not a ‘nice-to-have’ - it’s a smarter, more impactful way to engage markets and ensure best possible outcomes from procurements.  

How to design SME-friendly procurement activity 

With the Procurement Act 2023, NHS buyers now have both the authority and responsibility to design procurement routes that genuinely include SMEs.

What this means in practice: 4 core principles

Here’s how NHS buyers can evolve their approach to support SME participation while delivering value to the health system and the public.

1. Design tenders to enable SME participation

Use lotting strategies: break larger contracts into smaller, manageable lots to open access for SMEs and specialist suppliers.

Keep specifications proportionate: avoid unnecessary complexity in specifications and qualifications that may exclude capable SMEs.

Engage early: use pre-market engagement to shape opportunities based on real market capabilities.

Amend standard terms and conditions to remove barriers for SMEs.

Use pre-market engagement not just to inform the procurement, but to signal that SMEs are welcome and valued.

2. Build flexibility into implementation and delivery

Outcome-based contracts: focus on what needs to be achieved, not just how.

Phased or modular delivery: this allows SMEs to scale involvement or partner with others.

Supportive payment structures: use milestone payments and prompt terms to reduce financial strain.

Understand and accommodate the different ways SMEs work, without compromising accountability or quality.

3. Hold prime contractors accountable for SME inclusion

If working through a prime contractor or consortium:

  • award criteria: include contractual obligations or scoring criteria that reward meaningful SME engagement
  • sub-contracting plans: require transparent and reportable plans that demonstrate clear pathways for SME involvement
  • act on non-delivery: monitor delivery to ensure promised SME participation is actually happening and take action if it is not

Ask bidders to name specific SMEs in their sub-contracting plans where possible, not just commitments to ‘seek SME partners’.

4. Apply social value in a way that works for SMEs

Social value should be a gateway, not a barrier. Many SMEs report that social value requirements can be challenging when applied without regard to their size and capacity.

NHS England recently published the NHS Social Value Playbook, which provides guidance and encourages smarter, more inclusive ways of applying social value. See the ‘Applying social value fairly to SMEs’ section below for more guidance.

Use social value as a lever to encourage SME involvement, not unintentionally exclude them.

Spotlight - highlights for SMEs from the Procurement Act 2023

The act stipulates: 

  • a statutory duty to consider SMEs: contracting authorities must actively consider SME participation in procurement processes
  • simplified procedures: streamlined bidding and centralised digital platforms reduce duplication and make it easier for SMEs to engage
  • prompt payment: all undisputed invoices, including those for sub-contracts, must be paid within 30 days
  • flexible contracting: encourages modular delivery, phased implementation and outcome-based specifications to accommodate SME operating models
  • improved feedback: enhanced debriefing obligations help SMEs learn from unsuccessful bids and improve future submissions
  • social value and local impact: PPNs (such as PPN 06/20: taking account of social value in the award of central government contracts and PPN 002: taking account of social value in the award of contracts) reinforce the importance of social value and regional economic contribution

Applying social value fairly to SMEs

The social value model has recently changed. PPN 002 transitions from ‘themes’ to ‘outcomes’ that reflect the  Plan for Change government missions as set out in the National Procurement Policy Statement.

Here is how to adapt the national social value missions to align with SME capabilities:

Social value missions SME-relevant approaches
Kickstarting economic growth Maximise local economic benefit by sourcing goods or services from SMEs or VCSEs within X miles or region. Include your target percentage of contract spend and how you will monitor this
Make Britain a clean energy superpower Accept simple carbon‑reduction actions like using local labour, local supply chains and consolidating deliveries. Monitor with light‑touch reporting
Take back our streets Prioritise local recruitment, training or re-skilling within the contract’s geography. Encourage community safety or youth diversion projects as well as proportionate rehabilitation quotas
Break down barriers to opportunity Stipulate guaranteed interviews or ring‑fenced entry‑level roles for under‑represented groups, without mandating large recruitment targets
Build an NHS fit for the future Recognise existing internal wellbeing measures such as mental health first aiders, employee assistance programmes, and rota fairness and physical activity initiatives

Remember - how you apply it matters. The most common SME request is to apply social value proportionately.

Consider the following:

  • apprenticeships: for a large firm, 2 apprentices is routine but, for an SME, 2 apprentices is 20% of the workforce
  • carbon reduction: a large firm might have an electric vehicle fleet or green buildings but, for an SME, consider local sourcing or switching to LED lighting
  • community engagement: large firms have the resources to run national campaigns while an SME is better place to deliver local school talks or work with charities
  • training and upskilling: SMEs are more equipped to offer on-the-job learning or continuing professional development rather than formal programmes

Case studies on procurement

Case study 3: Birmingham and Solihull ICS Match My Project initiative

The ‘Match My Project’ initiative is a strategic example of how integrated care systems (ICSs) can embed social value into procurement. By connecting local suppliers with community organisations, Birmingham and Solihull ICS created a proactive, co-ordinated model for delivering health equity and local impact.

Highlights include:

  • social value scoring increased from 10% to 20% in tenders
  • social value delivery embedded in contract performance management
  • continuation of social value projects ensured during contract transitions

This initiative demonstrates how SMEs can play a vital role in delivering community-focused outcomes. Their local presence and flexibility make them ideal partners for ICSs aiming to reduce inequalities and improve population health.

Case study 4: Pennine Healthcare Urethrotech UCD®

Pennine Healthcare’s UCD® device is a prime example of SME-led clinical innovation improving patient safety and reducing hospital admissions. Designed for failed Foley catheterisation, it enables safer, home-based care for patients with complex needs.

Highlights include:

  • 93% catheterisation success rate across district nursing teams
  • 47 hospital transfers avoided
  • 224 staff trained through structured programme
  • trials at University College London Hospitals and Essex Partnership University NHS Foundation Trusts showed improved outcomes and reduced anxiety

Pennine Healthcare shows how SMEs can deliver niche, clinician-driven solutions that meet specific unmet needs. Their ability to co-develop training and iterate with NHS teams fosters innovation that is practical, scalable and grounded in frontline experience. 

Final thought for buyers: follow the Procurement Act

Every contract you put out is a chance to:

  • enable innovation
  • support local jobs
  • reflect the communities the NHS serves

The Procurement Act 2023 doesn’t just give you permission to do this - it expects you to.

Create a procurement environment where SMEs can thrive

A thriving SME ecosystem requires more than accessible procurement - it requires a cultural and strategic shift in how opportunities are created, communicated and delivered.

While the Procurement Act 2023 sets the framework, local NHS organisations must take deliberate action to create a truly SME-friendly environment.

In this section, we recommend actions contracting authorities can take.

Engage early and do it well

Early market engagement is not a box-ticking exercise. It’s an essential part of designing accessible and commercially viable procurements.

For buyers, it provides:

  • a better understanding of market capacity and constraints
  • improved, realistic specifications
  • enhanced competition and innovation
  • early identification and mitigation of supplier concerns
  • more commercially viable contracts with reduced risk
  • strong evidence of SME consideration

For SMEs, it offers:

  • early sight of upcoming opportunities
  • time to prepare and collaborate
  • confidence about how bids will be assessed
  • a chance to shape what’s being commissioned
  • business development and networking

Proven pre-market engagement methods

These include:

  • market sounding: broadly testing supplier interest and capability
  • supplier days and market events: group sessions introducing upcoming opportunities
  • one-to-one meetings: targeted discussions that are ideal for complex or innovative procurements
  • industry workshops or focus groups: collaborative, topic-focused sessions for co-designing solutions with real world input

Spotlight - the 10 Year Health Plan: highlights for SMEs

The 10 Year Health Plan for England: fit for the future advocates for:

  • strategic reform: the plan addresses long waiting lists, workforce challenges and lagging health outcomes through a comprehensive reform agenda
  • innovation: emphasises digital transformation, prevention and community-based care as core pillars of future NHS delivery
  • SME inclusion: identifies SMEs as important enablers of innovation and system agility, with a focus on reducing procurement barriers and improving access to NHS markets
  • partnership models: encourages collaborative relationships between SMEs and NHS stakeholders to co-develop and scale impactful solutions
  • value creation: positions SMEs as contributors to both improved patient outcomes and economic growth through local innovation and job creation

Give clear, constructive feedback

Timely, clear and constructive feedback is not only a legal requirement - it is essential for building SME confidence and capability, particularly for newer or less experienced bidders.

Best practices for SME-friendly feedback

When giving feedback to SMEs:

  • be specific: avoid generic or ‘copy-paste’ replies - instead, provide specific, actionable insights in plain language
  • offer verbal debriefs: particularly valuable for first-time or near-miss bidders
  • balance honesty with encouragement: highlight strengths alongside areas for improvement
  • signpost future opportunities and support: direct SMEs to future opportunities and any available local support or resources
  • explain scoring and evaluation: clarify how evaluation criteria were applied and what distinguished the winning bid
  • comment on presentation: offer practical tips on how to make submissions clearer and more compelling.
  • close the loop respectfully: reiterate that feedback is provided to support continuous improvement, not to discourage

Appoint SME champions

Designating SME champions can significantly improve SME access and engagement. Champions can:

  • advocate for supplier diversity
  • share best practice
  • coach teams on proportionate requirements
  • track progress under the Procurement Act 2023
  • build external SME relationships

For example, the Department of Health and Social Care is rolling out SME champions across its categories. If you already have local champions or want to learn more, contact england.supplier@nhs.net to connect with this growing network.

Case studies on effective working with SMEs 

Case study 5: CMS Bilicocoon phototherapy

Central Medical Supplies (CMS) partnered with Heartlands Hospital to deliver home-based phototherapy for neonatal jaundice using the Bilicocoon system. This SME-led initiative matched hospital care outcomes while improving family experience and reducing costs.

Highlights include:

  • 204 hospital bed days saved across 100 babies
  • no increase in re-admission rates
  • higher parental satisfaction and reduced stress
  • over 1,000 babies treated with NHS England backing

CMS shows how SMEs can deliver patient-centred innovations that integrate quickly into care pathways. Its ability to adapt contracting and deployment models supports rapid implementation and long-term sustainability

Case study 6: Hunter Healthcare Clinical Workforce Review

Hunter Healthcare’s Clinical Workforce Review demonstrates how SME-led consultancy can drive strategic transformation across NHS trusts. With deep clinical expertise and proprietary tools, Hunter delivered actionable insights and measurable value.

Highlights include:

  • £17.64 million in potential savings identified
  • 29.6 times higher return on investment
  • engagement with over 30 stakeholders and 25 specialty teams
  • recommendations included recruitment, rota redesign and system-led improvements

Hunter Healthcare shows how SMEs can offer specialised consultancy with agility and depth. Its ability to engage stakeholders, resolve issues quickly and support implementation makes them valuable partners for workforce and operational reviews. 

Final thought for buyers: take small steps towards big impacts

Creating an SME-friendly environment isn’t about special treatment - it’s about building a system that works for everyone. When smaller suppliers thrive, the NHS gains a stronger, more innovative and resilient supply.

Early engagement, meaningful feedback and champions for change help build lasting SME partnerships that can deliver real benefits to patients and communities.

The most effective change often starts with small, deliberate steps, and those steps start with you.

Where to find support as a buyer 

The following contacts, tools and advice are available if you need more help and support:

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