A supplier's guide to the Provider Selection Regime and NHS healthcare commissioning

A supplier's guide to the Provider Selection Regime and NHS healthcare commissioning

Most NHS suppliers know the Procurement Act 2023. Fewer know that it does not apply to clinical healthcare services.

Most NHS suppliers know the Procurement Act 2023. Fewer know that it does not apply to clinical healthcare services.

Since 1 January 2024, the commissioning of healthcare services in England has been governed by a different set of regulations entirely: the Health Care Services (Provider Selection Regime) Regulations 2023, known as the Provider Selection Regime or PSR. Understanding what the PSR is, which services it covers, and which provider selection routes NHS buyers can use under it is foundational knowledge for any supplier selling clinical services into the NHS.

Since 1 January 2024, the commissioning of healthcare services in England has been governed by a different set of regulations entirely: the Health Care Services (Provider Selection Regime) Regulations 2023, known as the Provider Selection Regime or PSR. Understanding what the PSR is, which services it covers, and which provider selection routes NHS buyers can use under it is foundational knowledge for any supplier selling clinical services into the NHS.

What is the Provider Selection Regime?

The Provider Selection Regime is a set of statutory regulations that governs how NHS organisations in England select providers of healthcare services. It replaces the previous requirement for mandatory competitive tendering of healthcare services set out under the National Health Service (Procurement, Patient Choice and Competition) Regulations 2013.

The Provider Selection Regime is a set of statutory regulations that governs how NHS organisations in England select providers of healthcare services. It replaces the previous requirement for mandatory competitive tendering of healthcare services set out under the National Health Service (Procurement, Patient Choice and Competition) Regulations 2013.

The PSR was introduced specifically to give NHS commissioners more flexibility in how they select service providers, with an emphasis on what is best for patients and communities rather than what a standard competitive procurement process would produce. Where the Procurement Act 2023 provides a rules-based framework for above-threshold public procurement, the PSR is built around a principle-based approach to healthcare commissioning, one that permits non-competitive selection routes in a wide range of circumstances.

The PSR was introduced specifically to give NHS commissioners more flexibility in how they select service providers, with an emphasis on what is best for patients and communities rather than what a standard competitive procurement process would produce. Where the Procurement Act 2023 provides a rules-based framework for above-threshold public procurement, the PSR is built around a principle-based approach to healthcare commissioning, one that permits non-competitive selection routes in a wide range of circumstances.

Which organisations does the PSR apply to?

The PSR applies to what the regulations call "relevant authorities". These are:

The PSR applies to what the regulations call "relevant authorities". These are:

• NHS England

  NHS England

• Integrated care boards (ICBs)

  Integrated care boards (ICBs)

• NHS trusts and NHS foundation trusts

  NHS trusts and NHS foundation trusts

• Local authorities and combined authorities, when commissioning healthcare services

  Local authorities and combined authorities, when commissioning healthcare services

It does not apply to organisations outside this list. A private healthcare operator commissioning services from another provider, for example, would not be governed by the PSR.

It does not apply to organisations outside this list. A private healthcare operator commissioning services from another provider, for example, would not be governed by the PSR.

Which services are in scope of the Provider Selection Regime?

This is the most commercially significant point in the PSR for suppliers trying to work out which regulatory regime applies to their offer.

This is the most commercially significant point in the PSR for suppliers trying to work out which regulatory regime applies to their offer.

The PSR applies to contracts where the main subject matter is in-scope healthcare services, broadly clinical health services delivered to patients or groups of patients. Hospital services, community health services, mental health services, and dental services are all within scope.

The PSR applies to contracts where the main subject matter is in-scope healthcare services, broadly clinical health services delivered to patients or groups of patients. Hospital services, community health services, mental health services, and dental services are all within scope.

Goods, equipment, IT systems, digital health software, non-clinical services, and facilities management are not covered by the PSR, even when they are procured by NHS organisations. These fall under the Procurement Act 2023 instead.

Goods, equipment, IT systems, digital health software, non-clinical services, and facilities management are not covered by the PSR, even when they are procured by NHS organisations. These fall under the Procurement Act 2023 instead.

Mixed contracts, where the majority of the contract value is in-scope healthcare services and the out-of-scope element could not be covered in a separate contract, can be covered by the PSR. Where the split is less clear, buyers must assess which regime applies based on the primary subject matter of the contract.

Mixed contracts, where the majority of the contract value is in-scope healthcare services and the out-of-scope element could not be covered in a separate contract, can be covered by the PSR. Where the split is less clear, buyers must assess which regime applies based on the primary subject matter of the contract.

For suppliers, the practical implication is straightforward. If you sell clinical services delivered to patients, the PSR governs how NHS buyers can select you. If you sell technology, software, medical devices, or non-clinical services, the Procurement Act applies. Many suppliers sell across both categories, which means understanding both regimes.

For suppliers, the practical implication is straightforward. If you sell clinical services delivered to patients, the PSR governs how NHS buyers can select you. If you sell technology, software, medical devices, or non-clinical services, the Procurement Act applies. Many suppliers sell across both categories, which means understanding both regimes.

What are the five PSR provider selection routes?

The PSR provides five routes through which relevant authorities can select providers. Four of the five do not require a competitive process.

The PSR provides five routes through which relevant authorities can select providers. Four of the five do not require a competitive process.

Direct Award Process A

Direct Award Process A

Applies where an existing provider is the only one capable of delivering the service. This is a high bar. The buyer must be satisfied that the service can only be provided by the existing provider due to the nature of the services.

Applies where an existing provider is the only one capable of delivering the service. This is a high bar. The buyer must be satisfied that the service can only be provided by the existing provider due to the nature of the services.

Direct Award Process B

Direct Award Process B

Applies to services where patients are offered a choice of provider from a list, and any provider meeting the minimum requirements can be placed on that list. Examples include elective referrals made by GPs for most routine services.

Applies to services where patients are offered a choice of provider from a list, and any provider meeting the minimum requirements can be placed on that list. Examples include elective referrals made by GPs for most routine services.

Direct Award Process C

Direct Award Process C

The process suppliers will encounter most frequently. It allows a buyer to continue with an existing provider where the service is performing well, where the buyer has considered the key criteria and is satisfied the arrangement represents best value, and where there is no material change to the service. The buyer must assess the provider against five key criteria and keep records of that assessment.

The process suppliers will encounter most frequently. It allows a buyer to continue with an existing provider where the service is performing well, where the buyer has considered the key criteria and is satisfied the arrangement represents best value, and where there is no material change to the service. The buyer must assess the provider against five key criteria and keep records of that assessment.

Most Suitable Provider Process

Most Suitable Provider Process

Allows a buyer to identify and assess potential providers without running a full competitive exercise, where they believe they can identify the most suitable provider through proportionate assessment. It is an eight-step process.

Allows a buyer to identify and assess potential providers without running a full competitive exercise, where they believe they can identify the most suitable provider through proportionate assessment. It is an eight-step process.

Competitive Process

Competitive Process

The route that most closely resembles a traditional procurement. Buyers may use it voluntarily in any circumstances, and must use it where none of the direct award processes or the most suitable provider process are appropriate.

The route that most closely resembles a traditional procurement. Buyers may use it voluntarily in any circumstances, and must use it where none of the direct award processes or the most suitable provider process are appropriate.

What does the PSR mean for incumbents?

For suppliers already delivering NHS healthcare services contracts, Direct Award Process C is the most significant provision. It creates a legitimate mechanism for NHS buyers to continue with an existing provider without running a competitive process, provided they can demonstrate the service continues to meet the key criteria.

For suppliers already delivering NHS healthcare services contracts, Direct Award Process C is the most significant provision. It creates a legitimate mechanism for NHS buyers to continue with an existing provider without running a competitive process, provided they can demonstrate the service continues to meet the key criteria.

Those six key criteria are:

Those six key criteria are:

1. Quality and innovation
2. Value
3. Integration and collaboration
4. Access
5. Equity and choice
6. Social value

Buyers must assess incumbents against them and keep records. The assessment is not automatic. An incumbent whose performance has deteriorated or whose contract terms no longer represent best value cannot rely on Direct Award C.

Buyers must assess incumbents against them and keep records. The assessment is not automatic. An incumbent whose performance has deteriorated or whose contract terms no longer represent best value cannot rely on Direct Award C.

For challengers, this is the flip side. Understanding when and why a buyer may choose to run a competitive process rather than extend an existing arrangement is commercially valuable intelligence. A buyer whose transparency notices show repeated Direct Award C decisions in a specific service category may be approaching a point where they are obliged to consider alternatives.

For challengers, this is the flip side. Understanding when and why a buyer may choose to run a competitive process rather than extend an existing arrangement is commercially valuable intelligence. A buyer whose transparency notices show repeated Direct Award C decisions in a specific service category may be approaching a point where they are obliged to consider alternatives.

Where to find PSR decisions and notices

NHS organisations are required to publish transparency notices following PSR decisions. These notices appear on Find a Tender and on individual NHS organisation procurement portals. Reading them tells suppliers which services are being awarded, through which PSR route, and to which providers, a forward-looking view of where NHS healthcare service contracting is settling.

NHS organisations are required to publish transparency notices following PSR decisions. These notices appear on Find a Tender and on individual NHS organisation procurement portals. Reading them tells suppliers which services are being awarded, through which PSR route, and to which providers, a forward-looking view of where NHS healthcare service contracting is settling.

For suppliers tracking this market systematically, PSR transparency notices complement the contract award data and spend transparency data already available through NHS organisations. Combined with NHS board papers and Joint Forward Plans, which describe commissioning intentions before any formal process begins, they form part of the pre-tender signal landscape covered in our guide to what is pre-tender intelligence.

For suppliers tracking this market systematically, PSR transparency notices complement the contract award data and spend transparency data already available through NHS organisations. Combined with NHS board papers and Joint Forward Plans, which describe commissioning intentions before any formal process begins, they form part of the pre-tender signal landscape covered in our guide to what is pre-tender intelligence.

How the PSR connects to NHS frameworks

Framework agreements for in-scope healthcare services are themselves governed by the PSR rather than the Procurement Act. Where a relevant authority is establishing a framework for healthcare services, the PSR applies to both the establishment of the framework and to call-offs from it.

Framework agreements for in-scope healthcare services are themselves governed by the PSR rather than the Procurement Act. Where a relevant authority is establishing a framework for healthcare services, the PSR applies to both the establishment of the framework and to call-offs from it.

For suppliers seeking a place on NHS clinical service frameworks, this means the qualification criteria, selection processes, and transparency obligations at framework and call-off stage follow the PSR rather than the Act. Understanding the difference is essential before approaching a framework application in a clinical services category. For a guide to how NHS frameworks work more broadly, see our article on how NHS procurement frameworks actually work.

For suppliers seeking a place on NHS clinical service frameworks, this means the qualification criteria, selection processes, and transparency obligations at framework and call-off stage follow the PSR rather than the Act. Understanding the difference is essential before approaching a framework application in a clinical services category. For a guide to how NHS frameworks work more broadly, see our article on how NHS procurement frameworks actually work.

Arcamus tracks PSR transparency notices, ICB commissioning signals, and contract award data across the NHS, so you can see where Direct Award decisions are being made and where competitive processes are opening up. Book a demo.

Arcamus tracks PSR transparency notices, ICB commissioning signals, and contract award data across the NHS, so you can see where Direct Award decisions are being made and where competitive processes are opening up. Book a demo.