Provider Selection Regime (PSR)

The Provider Selection Regime (PSR) came into force in England on 1 January 2024, fundamentally changing how NHS and local authority commissioners select providers of healthcare services. It was introduced by the Health Care Services (Provider Selection Regime) Regulations 2023 and applies to relevant authorities including Integrated Care Boards (ICBs), NHS England, and local authorities when commissioning healthcare services.

What is the Provider Selection Regime (PSR)?

The PSR removes most clinical and healthcare services from the scope of the Procurement Act 2023. Instead, it creates a dedicated framework that reflects the nature of healthcare service delivery, where the relationship between a patient and a provider, continuity of care, and patient choice are central considerations.

The PSR sets out three decision-making routes that relevant authorities must follow.

Route 1: Most Suitable Provider. Where a relevant authority is satisfied that a particular provider is most suitable to provide the service, it may select that provider directly without running a competitive process. This route requires transparent documentation of the rationale, a Prior Information Notice, and a standstill period.

Route 2: Sufficient Assurance. Where an existing contract is performing well and there is no material change to services, commissioners may continue with the incumbent provider without a competitive process, subject to the same documentation and notification obligations.

Route 3: Competitive Process. Where neither Route 1 nor Route 2 is appropriate, commissioners must run a competitive process. Unlike older Any Qualified Provider (AQP) arrangements, the competitive process under the PSR is flexible in design and weighted toward quality and integration.

All three routes require commissioners to assess core criteria: quality and innovation, value, integration and collaboration, access, equity and choice, and social value. Decisions must be published, and unsuccessful providers retain the right to seek review during the standstill period.

Why it matters for bidders

The PSR changes the landscape for providers bidding for NHS procurement (UK) contracts. Direct award under Routes 1 and 2 means that many contracts will not be openly advertised through a competitive process. Providers who invest in relationships with ICB commissioners, demonstrate strong quality records, and align with integrated care priorities are better placed to benefit from those routes.

Where Route 3 applies, the competitive process is less prescriptive than under standard procurement law. This gives commissioners flexibility but also places responsibility on providers to understand how each commissioner is weighing criteria. Voluntary sector and community providers are explicitly recognised as a distinct provider type under the PSR, reflecting the importance of social care procurement within the broader health system.

Example

An NHS Integrated Care Board wishes to commission a new urgent community response service. The ICB assesses its population need and determines that an existing community NHS trust, which already delivers adjacent services and has established patient relationships, is the most suitable provider under Route 1. The ICB documents its assessment, publishes a Most Suitable Provider notice, observes the standstill period, and then finalises the arrangement.

Frequently Asked Questions

Does the PSR apply outside England?

No. The PSR is specific to England under the Health Care Services (Provider Selection Regime) Regulations 2023. Scotland, Wales, and Northern Ireland each have their own frameworks for healthcare procurement. EU member states continue to use their national implementations of Directive 2014/24/EU alongside the light-touch regime for social and health services.

Can a provider challenge a PSR decision?

Yes. Providers who believe a relevant authority has made a decision that is inconsistent with the PSR regulations may make a formal representation during the standstill period. If the matter is not resolved, judicial review may be available, though the grounds differ from those applicable under standard public procurement law.

Does the PSR cover all NHS spending?

No. The PSR covers healthcare services as defined in the regulations. Goods, works, and non-clinical services procured by NHS bodies (such as medical devices, construction, or IT) remain subject to the Procurement Act 2023.