Podcast: What does the Provider Selection Regime mean for primary healthcare providers?

Primary healthcare law experts Justin Cumberlege and Robert McCartney host our first podcast of the year, discussing what the new Provider Selection Regime means for primary healthcare providers.

Listen to the episode below:

Episode summary

In this episode, Justin and Robert discuss what the Provider Selection Regime is, and look at three different scenarios where it would apply.

00:17 – Introduction

01:27 – Scenario one: an existing GP organisation provides a home visiting service

06:49 – Scenario two: a new contract opportunity arises for a newly formed company of GPs

09:50 – The basic and key selection criteria within the PSR

13:21 – Scenario three: a partnership at will is dissolved

Episode transcript

Justin 00:17
Thank you very much for coming to listen to this podcast at Hempsons. We’re a national firm of lawyers, particularly dealing with health and social care. We are talking today about the new Provider Selection Regime and you’ll find on our website a lot of information about that regime which came into force from the 1st of January. So me, Justin Cumberlege, a partner in our primary health care team and Robert McCartney, an associate in the team, are going to actually take three scenarios and we’re just going to go through them and say how we think the new regime will work in those scenarios. So they are one where your contract is coming to an end, two where a new contract opportunity arises, and the third one is where you have a partnership at will and one of the partners dissolves it. So I’m going to hand over to Robert to talk about scenario one when a contract ends.

Robert 01:27
Thank you Justin. So we’ve been considering these different scenarios and how the PSR may apply. It’s quite important for us to probably start with the point that it may apply. The relevant authorities, which in this scenario is most likely to be the ICB, have a lot of discretion under the PSR as to the criteria that they will actually apply within the confines of the regulations. With that in mind, the first contract scenario is where an existing GP provider organisation provides a service. And we’ve selected the example of a home visiting service for the benefits of this conversation. The existing contract would end on the 31st of March, 2024, and it’s not subject to any renewal or extension clauses. The organisation in this scenario has a good track record and has delivered the services so far to the satisfaction of the commissioner.

Robert 02:31:70
So the key question is, can the contract be replaced with a new home visiting service contract without a competitive process being used? Our starting point in this discussion is whether or not any of the direct award processes may be applicable. The first two direct award processes, A and B, are unlikely to apply. Direct award process A is particularly focused on those existing providers who are the only capable provider, and although it may feel that as a provider you are the only capable provider, often there are competitors either in your area or in a larger remit, and so this direct award process A is really designed to put a very um, uh, high end contracts such as the provision of 999 services or of acute, um, trusts. In particular, they refer to a need for the, um, commissioner, uh, required service status. Therefore option A is unlikely to be available. Uh, direct award process B is where there could be multiple, uh, providers in any one area and you can have as many providers with contracts as there are options for the patients so they could choose whoever they want to go to.

Robert 03:55:90
In this particular scenario, most home visiting services are commissioned on a locality basis and you don’t particularly want too much choice from that perspective because it causes confusion and risks patients being missed from the contracts. So the most likely options would therefore be either direct award process C, the most suitable provider, or a competitive process. With direct award process C, you have to be satisfied that they have been delivering the existing contract to a suitable standard and that they are likely to satisfy the proposed new contract. These elements will be determined based on a factual assessment of the criteria that’s already in place for the existing contract and for any new criteria that the commissioner will apply for the future contract. The commissioner cannot, however, make considerable changes to the contract for direct award process C to apply. A considerable change would be any change that increases the lifetime value by at least £500,000 or by 25 percent of its existing value. This isn’t the same as where there is a increase due to a formula change. So let’s say patient volume is the baseline for the amount of work that comes through. The increase in patient volume and activity means that it goes beyond those thresholds. If that is designed within a costing formula in the contract that wouldn’t breach the deemed material change in the contract. It’s more of a case of just an extension of the activity that’s available.

Robert 05:46:70
So assuming that there’s no considerable change and that the provider in this scenario has a good track record, there’s good grounds for the commissioner, the ICB, to directly award a contract using process C. The one other caveat that they might need to consider is the extent to which there is competition for that work in the area. If there is competition, then there are two options available to them. They can either do it as the most suitable provider process where they select which one of those competitors, using all the information available to them, is the most suitable and award them the contract. Or they could run a full competition process. The key distinction here being that the ICB can make the judgment as to which organisation they believe is the most suitable using the most suitable provider process, rather than have to run a full competition that actually potentially limits their choice to whoever scores the highest.

Justin 06:49:10
Thank you for that Robert. So the next scenario we have is a new contract opportunity comes along and we’ve taken an example where the new company has been formed by a group of GPs and they want to provide a contract of services across multiple PCNs. The practices are willing to be the sub-contractors if the new company secures the contract. So does the new contract have to go out to competitive process? In this scenario, the direct awards A to C would not be applicable, um, and it would really be reliant on what the ICB’s approach is going to be to awarding the contract. The ICB, um, will need to issue an appropriate notice stating, uh, what criteria they want for that contract in addition to the key criteria set down in the regulations and what the eligibility would be for any successful contractor. Obviously as a new company is going to have um, an issue with showing that it’s got a track record, and it will have to demonstrate that behind it are the GP practices. And part of it is that they have made the ICB aware of their existence, who they are, what their capabilities and their resources are, and that they are a sustainable organisation. Because without that, the ICB are not going to be enamoured in awarding a contract to it.

Justin 08:34:60
If the desire is to avoid a competition process, then you want to be selected as the most suitable provider, i.e. somebody who does meet all the requirements in the judgment of the ICB, and not only that, that you are the only ones who are going to meet all the requirements. And you can call to your aid the fact that you have a presence throughout the area. Um, you’ve got premises throughout the area. You’ve got numbers of staff pulling on the resources of all the practices, that you know the population, and you are able to integrate this service with other services that you provide. I mean, most, um, obviously the GMS essential services. So all of those things will count in your favour, but won’t necessarily end up in a position where you’re going to be awarded the contract. So it’s a matter of having made yourselves known and ensuring that you are well positioned and you’ve got your case well thought out. Robert, I don’t know if you’ve got anything you’d like to add to that?

Robert 09:50:60
I think it’s worth just briefly considering what the criteria are, you know, we’re talking about here because they fall into two categories of basic selection criteria and key criteria. Both of these are defined within the regulations themselves and have further guidance within the actual guidance document within the, uh, supporting the regulations. The basic selection criteria covers elements such as the suitability to pursue the activity, economic financial standing, and technical and professional ability. So this will include determining whether or not, in this particular scenario, the organisation actually has sufficient economic financial standing. So as a new entity, does it have the sufficient resources to be able to safely run and and control what could be a multi million pound contract, uh, in this particular set of facts. And if not, what steps can be taken to actually secure that in advance of making the application? And of course, can they actually deliver the service? So does the organisation have sufficient resources, expertise, uh, and ability to ultimately deliver that specification? The ICBs will ultimately define all of these basic selection criteria in greater detail depending on the specific facts of the service. But there’s an opportunity as part of the engagement process to help shape that and to really influence what it actually looks like moving forward. So there’s a role here, potentially, with the primary care networks and with the health and well being boards to actually ensure or be part of the process of actually designing the service that’s in the best interest of their communities.

Justin 11:46:10
Yeah, that’s really true, actually. And then you go on to the key criteria, which are a bit more difficult, if you like, to hit and demonstrate, but which are set out in the regulations. And that’s about quality and innovation, improving access, reducing health inequalities and facilitating choice. Um also demonstrating value and that there’s integration, collaboration, and service sustainability, and that there is also social value in what you’re providing. So when you’re creating this company and this concept of what you’re going to do, you do need to bear in mind those things and how you’re going to demonstrate them.

Robert 12:31:20
If you’re a completely new entity, you may need to be reliant on the experience and history of the other parties to it, so building up almost a library of examples and good projects that your partners within the organisation are willing to contribute towards the overall objective will be a really good starting point for building up the evidence base to meet these key criteria. Of course, if you’re an existing entity, it’s not quite so difficult because hopefully you’re delivering and you’re demonstrating a lot of these, but it does take a bit of time and resource to actually really think them through and say, where do we evidence this? What are the examples that we can pull together, um, from across the whole organisation?

Justin 13:21:40
Yeah, very good point. Absolutely. Having that history and showing that. So the third scenario, this is just a teaser for you to think about. But when a partnership at will is dissolved by one of the partners because of a dispute, the GMS contract states that all the partners, including the leaving partner, has to agree that the GMS contract continues with the remaining partners. And of course in a dispute situation, uh, that very rarely comes about. So, uh, what would happen? Because a new GMS contract needs to be awarded and under the old regime that would have to be by competition. And the question is whether under the new regime, you would be able to argue that the continuing partners, as it were, could show that they are the most suitable provider, and therefore that contract should be awarded to them without going out to tender to other potential providers, like other practices in the neighbourhood or a larger conglomerate, which is taking over practices. So that’s an interesting one that we come across in our primary healthcare work. And on that thought, we’re going to end this podcast. Thank you for listening, and do contact us if you have any issues or would like any assistance in bidding for contracts or ensuring that your existing contract continues with you, or indeed, if you hit a dispute situation and need some assistance in that. Thank you very much.

Robert 15:10
Thank you.

Contact the team

If you have any questions about the issues raised in this podcast, or to find out more about our primary care and procurement law services, get in touch with the team.

To listen to more episodes, view our full podcast library.