How often are published regulations withdrawn for further consideration? Like the "pause", when the Department of Health reconsidered the healthcare reforms, the revised National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013 demonstrate the Department is listening to the medical profession, albeit reluctantly.

The original regulations required contracts for healthcare services to be offered to the market, unless commissioners were satisfied that the services could only be supplied by one known provider; the argument being that competition is the best driver of quality and cost-efficiency. This gave the impression that the regulations introduced compulsory competitive tendering - an impression which was "inadvertently" created, according to the Government.

In the eyes of the profession, forcing commissioners to tender services risked atomising healthcare, undoing hard-won service integration, undermining quality and destabilising providers: to say nothing of massively increasing commissioners' overheads.

So what's different about the revised regulations and how will they work?

Comparing old with new - background to the Regulations

The National Health Service (Procurement, Patient Choice and Competition) Regulations 2013 (the Regulations) formalise healthcare procurement in a way that has not previously existed. Much of the content of the Regulations builds on or restates procurement law and best practice, with which commissioners are now increasingly familiar.

In any event, contracts for healthcare services worth more than £173,000 must be let in accordance with EU law, to the extent that it applies to them (note also that substantial revisions to EU procurement law directly affecting Part B services such as healthcare will be in place by the end of 2015).

The Regulations are stated to build on the 'old' Principles and Rules for Cooperation and Competition (PRCC), on the basis that a statutory footing is required to protect patients' interests against a backdrop of achieving best value for the tax payer. Consequently commissioners have explicit duties to act with a view to improving quality and efficiency including through the provision of integrated services.

The reference to integrated services is a change from the first version of the Regulations, and incentivises commissioners to commission 'in the round', addressing to some extent the perceived risk of private providers cherry picking the most profitable services. Commissioners are specifically prohibited, however, from favouring one type of provider over another, particularly "on the basis of ownership".

Overall, the Regulations seek to strike a balance between using competition to further the quality and efficiency agenda, and hence the patient interest, and permitting anti-competitive behaviour where it is "in the interests of people who use healthcare services for the purposes of the NHS". Two instances of permissible anti-competitive behaviour are: (1) the provision of services "in an integrated way" - provider alliances in a local health economy, for example; and (2) co-operation between providers - the commissioning of services along a frail and elderly care pathway, for example.

These provisions are a considerable dilution of the earlier version which contained an outright prohibition on anti-competitive behaviour against the interests of people who use the NHS.

What this means for healthcare procurement procedures

Elsewhere in the Regulations, the underlying assumption - which can be said to be consistent with procurement law generally - is that the solutions offered by the market are superior to those of a planned economy. Therefore all contracts for NHS healthcare services must be advertised, tendered for and cannot simply be offered to a provider unless a commissioner "is satisfied that the services to which the contract relates are capable of only being provided by that provider".

The key difference between the new Regulations and those they replace is that the latter had said that the only situations where a sole provider could be used were where there were technical reasons, or reasons of urgency. The new Regulations broaden this a little, allowing a wider discretion to decide that a particular contract is suitable for just one provider.

The selection process must be on the basis of "transparent, proportionate and non-discriminatory criteria", i.e. the classic procurement law principles must be applied. Further, records must be kept of each contract awarded including details of the provider, the contract value and the process used to select the provider. They are also required to be published on the same NHS Commissioning Board-hosted website used to advertise contracts: http://www.supply2health.nhs.uk/.

In theory, this is a straightforward addition to existing procurement procedure; in practice, it is a potentially onerous new requirement. Although the test for sole provider capability has been removed, the requirement to publish details of the selection process means commissioners need to demonstrate clearly why they were satisfied that a contract should not be tendered.

Making 'Informed Choices'

From the patient's perspective, the Regulations underpin the Informed Choice pledges in the NHS Constitution. The NHS Commissioning Board (NCB) must respect the individual's right to choose a GP practice and to express a preference over whom to seek treatment within that practice. The Regulations also reiterate the duty on commissioners (i.e. GPs) to offer patients an alternative provider where waiting times are too long.

Given that many patients are unaware of the Choice pledges and have grown up with a service framed around GPs and consultants, the impact of these provisions is likely to take some time to work through to the letting and management of GP contracts. In the longer term, however, they could influence the landscape of GP provision radically. Comprehensive, accessible information to support Informed Choice will be a key enabler.

Monitor - regulatory tiger or domestic cat?

From the perspective of the regulator, Monitor, its powers of intervention have been modified by the Department of Health to the extent that there is now no ability for it to require commissioners to tender a contract. But Monitor can still declare a contract ineffective where commissioners did not adhere to the Regulations and their failure to do so was "sufficiently serious".

In investigating how a contract was awarded, Monitor can either act in response to a complaint or, where it suspects unjustified anti-competitive behaviour, investigate on its own initiative. Given the renewed sensitivities around accountability in the NHS, Monitor will come under pressure to make scrutiny of high-profile service reconfigurations a priority. Although there is also the question of its resourced capacity.

The Regulations force complainant providers to either pursue actions under the Public Contracts Regulations (and thereby through the courts) or make a complaint to Monitor. In addition to declarations of ineffectiveness, Monitor can direct commissioners to prevent or mitigate the effects of failing to adhere to the Regulations, including the provisions around Informed Choice. It can also require commissioners to withdraw or vary tenders, including tendered contracts, and even vary existing arrangements where these are found to be in breach of the prohibition on anti-competitive behaviour.

The prospect of "teeth" for Monitor in intervening in procurement challenges rectifies (partly) the glaring difficulty presented by the Principles and Rules of Co-operation and Competition and the Co-operation and Competition Panel's (CCP) procurement disputes guidelines. This difficulty could result in a complainant finding itself too late to make a formal challenge in the court where the complaint to the CCP had failed to give closure. Procurement disputes can still be referred to the CCP, but at least Monitor now offers something of a viable alternative to court action.

Alongside all this, of course, providers whose complaints are upheld will have grounds for seeking to recover losses or damages from the non-compliant commissioners.

Conclusion

It will take time for the implications of the Regulations to be fully understood for providers of services bundled around provision at specific sites and for patients living in areas where there are multiple suppliers of primary and secondary healthcare services; London being a prime example. External factors, such as the appetite of providers and funders for risk, will also affect how the new legislation plays out in practice. The Department of Health has listened, but only to a degree; there is still plenty of scope for competition to influence the reshaping of healthcare provision in England.