The Provider Selection Regime: unlocking the future of healthcare procurement

Andrew Daly profile picture

06 November 2023

Andrew Daly
Partner and Head of Procurement

A seismic shift is coming to the world of healthcare procurement, and it's about to transform how healthcare services are commissioned. This game-changing transformation centres around the new Provider Selection Regime and is set to revamp the commissioning of certain health services in a big way. Here, we'll give you the lowdown on these ground-breaking changes and how they could impact the procurement of health care services if parliament approves the regulations.

A revolution in healthcare procurement

Last month, the Health Care Services (Provider Selection Regime) Regulations 2023 – or PSR Regulations – were laid before parliament, now poised to usher in a new era of healthcare procurement. They will specifically target "relevant health care services", which includes, for example, health services, medical practice services, GP services and medical specialist services.

Subject to parliamentary process, the PSR Regulations are due to come into force on 1 January 2024. When this happens, the PSR Regulations will introduce a new procurement regime whereby a "relevant authority" – including NHS England, integrated care boards (ICBs), trusts and foundation trusts – procures said services.

At Hempsons, we've been right at the heart of this journey. For the past two years, we've worked closely with the NHS England policy and legal teams, advising on the regulations themselves (inputting into the drafting of the regulations, the drafting of which was led by the Department of Health and Social Care), the development of the statutory guidance and the toolkits developed by NHS England to support the introduction of the PSR.  Our hands-on involvement puts us in a prime position to help navigate this new landscape.

Down to the details. There are three distinct provider selection processes: Direct Award Processes A, B, and C as well as Most Suitable Provider process and Competitive Process. When these processes come into play depends on the specific circumstances. 

When does each process take the stage?

  1. Only existing provider capable of providing: In cases where only an existing provider(s) is capable of providing the relevant health care services (due to the nature of the services), the ICB must follow Direct Award Process A.
  2. Patient Choice: When patients can choose from a variety of providers, and there are no restrictions in the number of providers, the ICB must follow Direct Award Process B.
  3. New contract where no considerable changes to existing contract – carry on as you are: If the ICB plans to replace an existing contract, and there are no significant changes afoot, Direct Award Process C takes the stage. Here, the "considerable change threshold" is a key factor, determining whether this process is permitted (other requirements also have to be met).
  4. Most Suitable Provider – determine who is best placed: If the relevant authority believes it can identify the most suitable provider, it can use the Most Suitable Provider Process and award without a competitive process.
  5. None of the above or framework agreement or want competitive process – select the best provider: When none of the above are available, or the procurement involves a framework agreement, the relevant authority must use the Competitive Process (the relevant authority has the choice to run a competitive process if it wants, provided Direct Award Processes A or B do not have to be followed).  

The award processes unveiled…
Now, let's look at what the five award processes at the heart of the new PSR Regulations entail:

  1. Direct Award Process A: The ICB can make a direct award without the need for competition. However, they must notify this award on the UK e-notification service within 30 days of the contract being awarded. 
  2. Direct Award Process B: Direct Award Process B follows the same requirements as Process A.
  3. Direct Award Process C: The relevant authority can make a direct award to an existing contractor, but only after following a carefully laid-out sequence of six steps. These steps include assessing key criteria and basic selection criteria, publishing an intention to make an award, and addressing any objections or compliance issues.
  4. Most Suitable Provider Process: This offers a direct award to the provider that the ICB determines as the most suitable. It entails eight steps, including the publication of intentions, determining the most suitable provider, and addressing objections or compliance issues.
  5. Competitive Process: This involves 10 steps, where the ICB defines criteria, invites offers, selects the provider, and finally awards the contract, ensuring a fair and transparent competition.


Now that you've had an introduction to the Provider Selection Regime, we invite you to join us at our breakout session, 10:35am on Wednesday 15 November, at the upcoming NHS Providers conference. Next year will be a significant year for procurement and this session will cover the key issues that board members will need to know in relation to the changes. We'll delve deeper into the PSR Regulations, and the new procurement landscape and look at how PSR decisions can be challenged.

Our team at Hempsons is eager to share valuable insights, answer your burning questions, and guide you through the upcoming changes that will shape the future of healthcare procurement, as well as wider procurement changes coming next year. Don't miss this opportunity to stay ahead of the curve.

The Provider Selection Regime is set to revolutionise the way healthcare services are commissioned, and the stage is yours. Embrace this transformation, stay informed, and be part of the healthcare procurement revolution. We'll see you at the NHS Providers conference – where the future of healthcare begins! 

About the author

Andrew Daly profile picture

Andrew Daly
Partner and Head of Procurement

Andrew Daly is a partner and the head of procurement within Hempsons' specialist procurement law team. He has over 20 years' experience of working with the NHS and specialises in procurement law, acting both for contracting authorities and bidders.

Andrew utilises the knowledge gained from acting for clients on both sides of the fence to provide pragmatic advice on running defensible procurement processes/defending procurement law challenges, and also to advise bidders on improving their chances of success/challenging defective processes.

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