With the introduction the Health & Care Act, new procurement legislation and now the development of NHS England’s new Central Commercial Function, procurement in the NHS is set for big changes over the next two years. Health Business examines recent developments in the government’s post-brexit shake up of NHS buying
The NHS commits over £38 billion each year to running its estates and procuring and managing contracts across primary and secondary care. This covers medical and clinical equipment, devices and consumables along with other capital equipment. In January, NHS England appointed a new chief commercial officer in Jacqui Rock, a member of the NHS Test & Trace Executive Team and a former director of the Defence Infrastructure Organisation where she was responsible for £4bn annual investment across the UK and Overseas Defence estate. She led delivery on hard & soft FM, construction projects across the full military estate. She started public service after 30 years in the Financial Services industry for organisations such as Credit Suisse, JP Morgan, Barclays and Bank of America Merrill Lynch. Her previous roles at the UK Health Security Agency were Chief Commercial Officer, Head of Corporate Services and Transition Director.
Central Commercial Function
Rock has recently confirmed that a new Central Commercial Function is currently being developed by NHS England which has multiple aims. These include setting a national NHS commercial strategy, simplifying the multiple routes through which trusts and the new integrated care systems (will eventually) buy goods and services, improving the quality of procurement data flowing to the centre and ‘professionalising’ the procurement and commercial workforce. It will be formally launch on 8th July following NHS England’s Public Board approval of high-level intentions. Some elements of the service are expected to ‘go ‘live’ in the Autumn. Speaking with Health Service Journal, Rock said that she envigages “One central commercial function that has a service offering, that is branded, that is easy to access, that people know is there, that offers all of these different types of services. Government Commercial Function. This is being built by the NHS for the NHS.”
Guiding Procurement Pathways
Rock was keen to point out that the CCF will not look to make it mandatory for procurement teams to buy through specified routes. She said: ““It’s much more about guiding the procurement pathways than it is mandating them. If you start trying to mandate, it will actually have a negative effect. This is about helping and facilitating and making sure that we give them the pathway and the route to what the best options are. On the formation of the CCF, The Health Care Supply Association, which supports and advises NHS Procurement Professionals, commented: “Our organisation welcomes plans that recognise the unique and invaluable contribution of NHS procurement professionals at local, regional, and national level and are pleased to see initiatives which help to raise the commercial and professional capability of the NHS procurement profession. At this early stage, we are supportive of what we have seen so far, but we will, as always, be gauging member feedback to ensure we are representing the views of the NHS procurement community as a whole.”
Provider Selection Regime
The Health and Care Act 2022 will have a
major effect on NHS procurement, not least of which to clinical services. The government believes that the new Provider Selection Regime (PSR) will ensure these services are procured in the best interests of patients. The PSR is intended to provide a regulatory framework for the award of healthcare contracts by NHS commissioners and local authorities that sits outside the formal public procurement regime and means that those contracts will not need to be procured in accordance with the rules in the Public Contracts Regulations 2015 or their successor legislation.
Current procurement rules can sometimes create a competitive dynamic between NHS organisations and can cause needless disruption due to having to re-tender contracts when services are already working well, or there is no market alternative. The current rules also bring about legal challenges, which drives risk averse commissioning behaviour. These changes to clinical service procurement brought in by the Act will aim to reduce transaction costs and give NHS and public health commissioners greater flexibility over when to use competitive procurement processes. To address concerns that these changes would allow contracts to be awarded to new providers without sufficient scrutiny, the PSR include safeguards such as transparency expectations and a process for decision making.
Once it is introduced, organisations, or ‘decision-making bodies’ who will have to comply with the PSR include Integrated Care Boards; NHS trusts and foundation trusts when sub-contracting the provision of healthcare services to other providers, and; Local authorities and combined authorities when arranging healthcare services as part of their public health functions and as part of section 75 partnership arrangements with the NHS.
PSR will not apply to the procurement of goods or medicines, pharmaceutical services arranged under the terms of the community pharmacy contract framework (CPCF) or social care services when not procured alongside healthcare services in a single contract. Recognising that there will be situations where contracts will combine health and social care services, the government is planning consultation on a mixed procurement procedure. Integrated Care Systems come online at the beginning of July this year, and as they develop, commissioners and providers will increasingly work together to design new pathways. PSR will not be established at the same time as integrated care boards, but it is expected to be in place later this year. In the meantime, health commissioners are encouraged not to make future commissioning plans on the assumption that the PSR will come into effect by any particular date. NHS England’s draft guidance “Who Pays” determines which NHS commissioner is responsible for commissioning healthcare services and making payments to providers.
In March this year, NHS England also issued guidance on the procurement of digital and IT services, endorsing 36 of the 57 frameworks currently in use. These are categorised into six ‘pillars’, with key technical, data and digital standards aligned to each pillar. As Jamie Foster, Commercial lawyer at Hills Dickinson points out, a potential difficulty arises when awarding contracts for technology services because it is not always clear whether what is being procured is a “pure” technology service or clinical service delivered through technology. Foster states: “Until the granular detail of both the PSR and the final text of the Procurement Bill are clear, the rules applying to digital technology and mixed procurement remain unclear.” For now, Foster sees the best option for NHS buyers is to continue to consider the ‘dominant’ aspect principle when awarding contracts, and to look to the growing number of frameworks as the easiest way of awarding them.
Currently over 350 different procurement regulations spread over a number of different regimes for different types of procurement including defence and security. The introduction of the Procurement bill aims to simplify these and includes a change of evaluation methodology from MEAT to MAT. Evaluating tenders via MAT (Most Advantageous Tender), as opposed to MEAT (Most Economically Advantageous Tender) will allow public sector bodies to include consideration of benefits other than direct cost, such as social value, environmental, or community-based benefits where appropriate. Although not yet available, a learning and development programme, operated by the Government Commercial College (GCC) will be rolled out across the public sector to meet the varying needs of stakeholders. It aims to provide ‘knowledge drop’ and ‘deep dive’ webinars, along with self-guided e-learning. Communities of practice will be established to allowing individuals to reflect on, discuss and embed their learning on the regime change.
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