Regulatory and compliance

Changes to the UK public procurement regimes set to deliver digital healthcare in the NHS

Published on 15th Nov 2023

The huge potential of AI and data will help to drive efficiencies, improve patient outcomes and reduce spend

Person in white lab coat looking at medical data on computer screen

The digitalisation of the NHS is well underway. NHS England's £1.9bn Frontline Digitalisation programme, which launched in 2021, aims to bring all NHS Trusts in England up to a core level of digital capability and roll out full usage of Electronic Patient Records (EPR) and Digital Social Care Records (DSCRs) by March 2026.

The programme aims to "harness the power of data" to drive care quality and efficiency. Crown Commercial Service also have a live dynamic purchasing system for AI, including a category for medical artificial intelligence (AI) technology, including screening, diagnosis, augmented decision making and improving system efficiency.

However, there is undoubtedly a long road ahead before the NHS becomes truly digital. Only an estimated 20% of NHS Trusts in England currently have the required level of digital maturity. To achieve its vision, the NHS will need to rely on the private sector to introduce new innovations. 

NHS England is already releasing a steady stream of high-value data and AI procurements, such as the £480m NHS Federated Data Platform contract, expected to be awarded imminently, which will enable every trust to store operational data (such as available bed, waiting lists and supply stocks) on a single digital platform, and share data with other trusts' platforms.

Many more are expected over the coming years. The digitalisation of the NHS, and the volume of procurements required to achieve it, comes at an interesting time in the world of public procurement legislation with two significant changes in prospect: the Provider Selection Regime (PSR) and Procurement Act (PA) 2023.

Procurement of digital healthcare services

The interaction of these two regimes may give rise to some interesting questions in the context of the increasing digitalisation of healthcare in the NHS.

While digital services sit in the world of non-healthcare and so under the Procurement Act, the digitalisation of healthcare is increasing, so a contract that relates not only to storing data but also collects it, analyses it, diagnoses and offers treatment blurs the lines and may fall under the more light-touch regime of the PSR.

Some self-service treatments also rely on digital data to provide a healthcare service. This can already be seen in services for weight loss, sleep clinics and diabetes management. Procurement of these services could fall under the PSR, but would need access to data, which will itself fall under a contract procured under the PCR and the PA.

As AI begins to deliver more of our healthcare, triaging, diagnostics and scans, this trend looks set to continue and accelerate.

The draft PSR regulations make provision for mixed procurements and require that where the PSR is used:

  • the main subject matter of the contract is healthcare services; and
  • the other goods or services could not reasonably be supplied under a separate contract.

The guidance sets out that the main subject matter of a contract is determined by reference to the respective value of the different elements and that whether other goods and services could have been separately procured includes consideration of whether a separate procurement would have a material adverse impact on the authority's ability to act in accordance with the procurement principles.

Osborne Clarke comment

We are seeing an increasing number of high-value data and AI contracts being procured by the NHS, and expect many more over the coming years. While the PSR regulations and guidance provide parameters for which regime a given contract will fall under, these are not bright lines, so there is scope for different approaches in similar cases.

The impact of the two regimes on the market could be considerably different. Under the PSR, if a provider can consistently demonstrate best value for money, they could potentially hold onto successive contracts for many years without having to re-tender for the opportunity. Under the PA, a competitive re-procurement will almost always be required once a contract expires, unless an exemption applies. We will be watching with interest how the distinction between the two regimes plays out in practice as both new regimes come into force next year. 

This article was written with the assistance of Charlie Henig, Knowledge Executive at Osborne Clarke. 


* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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