Policy paper

Health and Care Bill: provider selection and patient choice

Updated 10 March 2022

NHS Providers said:

At present, procurement processes tend to be burdensome and wasteful, unnecessarily disrupting the provision of high-quality local services and preventing effective planning over the longer term.

This fact sheet explains how the government plans to revoke current NHS procurement rules and introduce a new provider selection regime for the arrangement of clinical healthcare services while preserving the powers to protect and promote patient choice.

Background

There is a growing consensus across the NHS that the way to ensure the NHS continues to deliver high quality care and long-term sustainability is by promoting greater integration and collaboration. This means, for example, that NHS commissioners and NHS providers would increasingly work together to design new pathways.

However, the current procurement rules, which make a competitive tender of NHS contracts the default, can sometimes prove inflexible. For example, by creating an overly transactional dynamic between organisations.

This can cause needless disruption to services where contracts must be re-tendered when the contracts end even if there is no viable alternative in the market. The current rules also bring a high risk of legal challenge for NHS bodies, which causes wasteful bureaucracy and can mean too much money is spent on legal fees.

This work builds on almost 2 years of engagement with local NHS bodies. NHS England and NHS Improvement (NHSEI) undertook an engagement exercise in early 2019, and these proposals gained widespread support, with 76% of respondents agreeing or agreeing strongly with their proposals.

Earlier this year NHS England consulted on further detail of the proposed regime that should apply when healthcare services are arranged in future, following removal of the current requirements. As with their previous consultation exercises, they received clear and strong consensus for the more detailed proposals from a wide range of stakeholders, with 70% of respondents either strongly agreeing or agreeing with the proposed approach.

Currently, the provisions that promote and protect patient choice are connected to those we intend to repeal as part of the changes for a new provider selection regime. The NHS Long Term Plan recognises patient choice as a powerful tool for improving waiting times and patients’ experiences of care, while outlining a range of proposals for strengthening choice. To support this, we will be preserving the existing requirements for patient choice by replacing them with similar provisions through the Bill.

What the Bill will do

The Health and Care Bill will change legislation to free the NHS from overly rigid procurement requirements in order to further enable collaboration and integration. The new legislation will ensure commissioners are able to act in the best interest of patients, local populations and the taxpayer, while still recognising the importance and need for transparency and competitive tendering in the appropriate circumstances.

The main changes in this Bill are to:

• repeal section 75 of the Health and Social Care Act 2012 and revoke the National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013 (PPCCR), made under it
• give the Secretary of State the power to create regulations to implement a new provider selection regime, which will also allow the Secretary of State to remove the commissioning of NHS healthcare services from the scope of the Public Contracts Regulations 2015 (PCR)

Under the new provider selection regime to be introduced under the power, we want competitive tendering to continue to be a tool that the NHS and local authorities can use where it can add value and support improvements in the provision of services and recognises the importance of the new provider selection regime being consistent with principles underpinning other public sector procurement processes. The new regime will apply to the commissioning of healthcare services, all other procurement will continue to be subject to Cabinet Office procurement processes. Healthcare services and the treatment of mixed procurements (which include some healthcare services) will be defined in the regulations.

In NHSE’s consultation they set out a new regime that will give greater to discretion to NHS commissioners and local authorities when arranging healthcare services. While competitive tendering would remain an important tool for arranging high quality services, commissioners will also be able to direct award under the following circumstances:

• where there is the absence of competition, such as A&E provision
• alternative provision is already available to patients through other means (competition within the market rather than competition for the market) for example, primary care contracts
• when they want to extend an existing contract where the incumbent is doing a sufficiently good job and the service is not changing
• where there are reasonable grounds to believe that one provider or group of providers is the most suitable provider

Decisions would have to be clearly justified based on the decision-making criteria:

• quality and innovation
• value integration and collaboration
• access
• inequalities and choice
• service sustainability
• social value

And be subject to appropriate transparency and scrutiny requirements.

On patient choice, the Bill would retain powers similar to those currently connected to the procurement provisions at section 75 of the Health and Social Care Act 2012 and to the ‘standing rules’ in the National Health Service Act 2006, including those relating to guidance and enforcement. The power to make guidance and enforcement of patient choice will be held by NHS England, following the planned merger with NHS Improvement. As NHS Improvement currently has, NHS England will have powers to resolve any breaches of patient choice.

How these provisions will help to reduce bureaucracy

As Integrated Care Systems develop, commissioners and providers will increasingly work together to design new pathways. However, the current procurement rules can sometimes get in the way of this type of work, for example by creating a competitive dynamic between NHS organisations, and causing needless disruption due to having to re-tender contracts when services are already working well, or there is no market alternative. The current rules bring a high risk of legal challenge, which drives risk averse commissioning behaviour.

Removing the current procurement rules and replacing them with a more flexible NHS procurement regime would increase the ability of NHS commissioners to arrange services in a more integrated way without the same risk of legal challenge. The proposed changes are also intended to ensure that competitive tendering does not take place where it is shown to add no value.

Further information

The NHS Long Term Plan, January 2019.

The NHS’s recommendations to government and Parliament for an NHS Bill

NHS England and NHS Improvement, Implementing the Long Term Plan: Proposals for possible changes to legislation, February 2019.

NHS England and NHS Improvement, NHS Provider Selection Regime: consultation on proposals, February 2021.

Department of Health and Social Care, Integration and Innovation: working together to improve health and social care for all, February 2021.