Health service procurement: draft statutory guidance - Annex D: key criteria

Further detail on the key criteria is set out below, detailing what is covered by each of the key criteria and matters that relevant authorities must give due consideration to when establishing their key criteria.

All the key criteria must be considered when following direct award process 2, the most suitable provider process, or the competitive process, and how they are considered must be recorded. We expect that none of the key criteria are discounted. The regime does not specify how relevant authorities must balance the key criteria, however relevant authorities are expected be aware of wider requirements or duties when considering procurement decisions, such as:

• the Social Partnership and Public Procurement (Wales) Act 2023
• a healthier Wales
• the Wales procurement policy statement
• the Welsh Government’s net zero ambitions and carbon budget
• the need to ensure value for money when arranging health services

The flexibilities offered by the regime do not mean that relevant authorities do not have to comply with those obligations.

Relevant authorities are expected to consider the weightings and their consequences when considering the service to be delivered, and before beginning a procurement process.

Quality

Relevant authorities must give due consideration to the quality of services to be provided by a provider.

What is high quality health services?

The Welsh Government’s quality and safety framework refers to the characteristics of quality in healthcare that were described by the then Institute of Medicine in 1999. They are:

• safe: avoid harm
• effective: evidence based and appropriate
• person-centred: respectful and responsive to individual needs and wishes
• timely: at the right time
• efficient: avoid waste
• equitable: an equal chance of the same outcome regardless of geography, socioeconomic status and so on

These characteristics of quality align with our prudent health and care principles:

• achieve health and wellbeing with the public, patients, and professionals as equal partners through co-production (person centred)
• care for those with the greatest health need first, making most effective use of all skills and resources (timely, efficient, effective)
• do only what is needed: do no less, do no harm (safe, efficient)
• reduce inappropriate variation using evidence-based practices consistently and transparently (equitable, effective, efficient)

Relevant authorities are advised to consider relevant local and national information on the quality of the service provided, where available.

Relevant authorities are advised to consider the extent to which the desired outcomes in terms of quality will be maintained or improved because of the provider/arrangements being considered.

Where a new or innovative service is being considered and no data on quality is available, relevant authorities are advised to weigh the potential value of the new or innovative service against the risk that the service does not deliver the anticipated quality and understand how performance will be assessed, risks managed, and the service evaluated.

We advise that the procurement process for any new or innovative service includes an assessment of how the service will provide information or data on the quality-of-service provision and monitor safety of operations (given it will not be able to rely on existing methods or indicators).

Relevant authorities are advised to consider the provider’s willingness and ability to identify, monitor and mitigate risks on an ongoing basis, engage with clinical governance processes, and involve service users in service planning and oversight.

Assessing the evidence on quality

Assessing the quality of a provider’s services is complex and requires a good understanding of the context in which those services are to be provided. It also requires an understanding of which evidence sources are available as well as which best provide evidence in relation to the provider in question.

Sources of information may include (but are not limited to):

• provider service model
• all recent regulator inspection reports (including any issues related to quality described in the report, overall quality ratings and data on innovation adoption), such as inspection reports from Health Inspectorate Wales (HIW), Care Inspectorate Wales (CIW) or the General Pharmaceutical Council
• HIW or CIW insight
• NHS Wales performance framework
• where commissioning a specialised service, all national clinical audits or outcome reviews relevant to that service
• contract management data
• key performance indicator (KPI) data, including data on equalities and health inequalities
• commissioner or lead provider satisfaction with quality delivered in previous contracts or subcontracts (where applicable)
• evidence that patients and unpaid carers with relevant lived experience are engaged as partners in improving experience and quality
• feedback about service delivery from patients and unpaid carers, including survey results, and action being taken in response
• data relating to the uptake of proven innovation

Regard for Llais representations

When considering relevant local and national information on the quality of the service provided, relevant authorities must have regard for any representations received from Llais.

Llais is an independent statutory body, set up by the Welsh Government to give the people of Wales more say in the planning and delivery of their health and social care services – locally, regionally, and nationally.

From 1 April 2023 Llais replaced the seven Community Health Councils who have represented the interests of people in the NHS in Wales for almost 50 years. Llais are building on the work of the community health councils with additional powers to grow the public's influence on shaping NHS services and social care services in Wales. Llais’s work is driven by the concerns of the people of Wales, supporting and understanding concerns raised and ensuring that all are represented, in particular the voices of those that are not normally heard.

Section 15(1) of the Health and Social Care (Quality and Engagement) (Wales) Act 2020 (“the 2020 act”) provides the Citizen Voice Body (CVB) (operationally known as Llais) with a power to make representations to an NHS body and local authority (both of which are listed as relevant authorities for the purposes of the regulations) about anything it considers relevant to the provision of a health service or the provision of social services. Section 15(3) states that relevant authorities must have regard to representations made to them by Llais in exercising any function to which the representations relate.

In the context of the regulations, relevant authorities must have regard to such representations received from Llais which relate to any services commissioned by them from, or provided under contract by, third parties.

The statutory guidance accompanying the 2020 act provides that relevant authorities should have procedures in place to deal with such representations and (in particular paragraph 25):

make provision to share the [Llais] representations with appropriate responsible persons for the provider(s) concerned and give them the opportunity to contribute to the response.

In addition, while concerns about the care or treatment of individuals will normally be taken forward through the relevant complaint’s procedure rather than section 15 representations, paragraph 27 of the guidance states that relevant authorities:

should follow their relevant procedures to ensure that any individual subject to allegations contained within representations from the CVB has their right of due process protected.

Innovation

Relevant authorities may, where appropriate, also assess the extent to which an arrangement with a provider may generate and maximise improvements in the promotion and adoption of proven innovations in care delivery.

When assessing innovation, relevant authorities are advised to give due consideration to any particular innovative approaches offered by providers that may help deliver better health outcomes.

Relevant authorities may, where appropriate, consider how their decisions may improve or limit the longer-term ability of all relevant authorities to continue to innovate and meet health needs. They are expected to take into account whether an arrangement with a provider may stifle the development and adoption of innovations, and how their decisions may affect the ability of the provider market to support access to, or the development of, new or innovative services for patients in future.

Relevant authorities may, where appropriate:

• consider how their decisions may improve or exacerbate inequalities in access to, experience of, or outcomes from, health services
• operate with the view of securing quality improvement of services in connection with the prevention, diagnosis, and treatment of illness
• consider when entering into an agreement with a provider the impact on reducing inequalities in the accessibility of health services, and the quality of outcomes achieved for all eligible persons following the provision of health services

Relevant authorities may where appropriate consider how providers are able and willing to engage with and undertake health research and are advised to make arrangements that promote and support clinical research and use of research evidence on matters relevant to the health service.

Duties related to quality

Section 12A, 20A and 24A of the National Health Service Act (Wales) 2006 (as amended by the Health and Social Care (Quality and Engagement) (Wales) Act 2020) places a duty on local health boards, NHS Trusts, and shared health authorities respectively to exercise their functions with a view to securing continuous improvement in quality of health services. Quality is defined as including, but not limited to quality in terms of the effectiveness of health services, the safety of health services, and the experience of individuals to whom health services are provided.

Value

Relevant authorities must give due consideration to the need to ensure good value in terms of costs, overall benefits, and financial implications of an arrangement. When assessing the value of a service or arrangement with a provider, relevant authorities are expected to consider:

• the benefits of the arrangement with a provider; benefits may be evaluated in relation to the other criteria in the regime and may relate to patients (in terms of patient outcomes or experience), the population (in terms of improved health and wellbeing) and to taxpayers (by reducing the cost burden of ill-health over the whole life of the arrangement within the resources available)
• the costs (or likely costs) of the arrangement, including but not limited to the efficiency of the service, the cost over the length of contract, value for money, the historical market valuation of certain services and any benchmarking of costs against other similar services
• any relevant local or national financial goals

When judging value, relevant authorities are expected to consider both the costs and the benefits of an arrangement with a provider over the expected contractual term, including fluctuations in external trends and the potential variation of the value of the service over the length of the contract.

Relevant authorities are advised to consider whether a particular arrangement with a provider may positively or negatively impact the costs or benefits of other related services or other commissioning priorities.

Relevant authorities are advised to consider the costs for the provider of changing existing arrangements or establishing new ones, alongside the anticipated cost of the contract itself when assessing value. For example, arranging a service with a new provider may offer a financial saving to the relevant authority over a relatively long contract duration, but if the anticipated cost of switching to a new provider, including any start-up funding required, outweighs the savings the new provider offers, then consideration needs to be given as to whether such an arrangement is still in the best interests of taxpayers.

Relevant authorities may:

• use published data (such as a benchmarking tool) to benchmark costs
• ask providers for the information needed to establish the value they offer (such as a cost breakdown)
• use the competitive process to establish the value providers offer (see the competitive process)

Duties related to value

Section 172 and 175 of the 2006 act (as amended by the National Health Service Finance (Wales) Act 2014) places financial duties on local health boards and strategic health authorities respectively to not exceed the capital and revenue resource limits set each financial year.

Section 21 and paragraph 2(1) of schedule 4 to the 2006 act places a duty on NHS trusts to:

ensure that its revenue is not less than sufficient, taking one financial year with another, to meet outgoings properly chargeable to revenue account.

In addition to these statutory duties, a healthier Wales - which applies to county councils, county borough councils, local health boards, NHS Trusts and strategic health authorities - obliges those bodies to have due regard for the "wellness" system, which aims to support and anticipate health needs, to prevent illness, and to reduce the impact of poor health, through an equitable system where services and support will deliver the same high quality of care, and achieve more equal health outcomes, for everyone in Wales.

Value based health care

A healthier Wales sets out the need for services to transform so they can meet the challenges of the future and help deliver the best results. In Autumn 2019, a national action plan for value based health care in Wales was launched which detailed a three-year programme to embed the value-based health care methodology to ensure the best outcomes for patients while using resources well.

Developing and delivering value-based health care approaches includes improved outcome data collection and use, and the redesigning of clinical pathways. Relevant authorities are expected, where appropriate, to consider clinical audit and outcome reviews, and Patient Reported Outcome Measures (PROMs) to enable a value-based health care approach to be used for service planning and delivery.

Where appropriate, relevant authorities are advised to ensure that the procurement process is part of a value-based health care redesign and that decisions are consistent with a value-based health care approach around services for patients. When assessing this criteria, relevant authorities are expected to consider the extent to which the provider under consideration will be able to support clinical audits, outcome reviews and PROMs, and whether a decision may either improve or adversely impact outcome data collection of related services. Relevant authorities are also expected to consider the extent to which the work undertaken by the provider will help the relevant authority to move in the direction of providing a value-based health and care service.

Collaboration

Relevant authorities must consider the extent to which the services can be provided in a collaborative way.

Relevant authorities are advised to ensure that their decisions are consistent with local and national plans around services for patients.

When assessing this criteria, relevant authorities are expected to consider the extent to which the provider under consideration will be able to collaborate with other related services in a way that improves care (recognising that collaboration of services does not necessarily mean all those services have to be delivered by the same provider).

Relevant authorities are expected to consider whether a decision may either improve or adversely impact the care pathways and patient journeys of other related services, as well as the service being considered, and seek to avoid unnecessary disruption or fragmentation of services where possible.

Relevant authorities are expected to consider whether collaboration may:

• improve the quality of those services (including the outcomes from their provision)
• reduce inequalities between persons with respect to their ability to access those services
• reduce inequalities between persons with respect to the outcomes from the provision of those services

When considering the potential benefits of collaborative working, relevant authorities are advised to consider any existing relationships between the providers under consideration and connected organisations, and whether these are likely to sufficiently improve to lead to tangible benefits for patients and service users.

Relevant authorities are expected to consider:

• whether the flow of patient data will be improved or impeded by the decision
• whether the respective working practices, culture, infrastructure, and systems of the providers involved across linked services are likely to enable better collaboration
• the location of services proposed by providers and whether this may impact on the providers’ ability to integrate

Partnership

A healthier Wales sets out the need for services to transform so they can meet the challenges of the future and help deliver the best results. Such changes require “a strong sense of shared values and partnership”. Working in partnership is important to meeting the needs of the Welsh population. Partnership working has historically allowed “community-based care which cut[s] across traditional organisation and service boundaries”, allowing for improvement in “the health and wellbeing of everyone in Wales” which “is something which we can all [continue to] contribute to, through a new kind of public partnership approach”.

Relevant authorities may, where appropriate, support current and future partnership arrangements that allow:

• strategic partnership opportunities that deliver new models of seamless care and the delivery of integrated services
• a holistic approach to supporting health and wellbeing
• patients to recover their independence
• new models of partnership between providers and individuals, enabling people to minimise their hospital stay

Relevant authorities may where appropriate consider whether a decision may either improve or adversely impact partnership working across the NHS and Social Care in Wales. Relevant authorities may, where appropriate:

• seek to ensure that the decisions they make about which providers should provide services are aimed at maximising partnership arrangements for the improvement of patient care
• consider how the arrangements with providers under consideration may impact on current and future partnership arrangements
• consider the extent to which providers may act to increase partnership arrangements within their own activities, and how such activities may lead to other improvements in health outcomes for patients

Service sustainability

Relevant authorities must consider whether and how the decisions they make about which providers should provide services might impact on the stability and sustainability of patient care locally.

When assessing service sustainability, relevant authorities are expected to consider several factors, including but not limited to the:

• financial impact on other services
• impacts on continuity of other related services
• potential impact on quality of other related or dependent services (including those arranged by other bodies)
• stability and sustainability of other providers in the short, medium, and long term
• impact on the ability of the wider market to provide required services in the future

Relevant authorities are expected to consider whether and how the decisions they make about which providers should provide services might have a sustained and material impact on the local health services workforce, including but not limited to:

• the retention of a skilled local workforce
• the ongoing availability of relevant training opportunities for the local workforce (such as apprenticeship, training structure, clinical placements)
• the impact on well-established teams
• whether the models of employment used by providers are consistent with current NHS workforce policy priorities

Relevant authorities are expected to avoid destabilising providers through their procurement process. If the proposals are likely to have a negative impact on the stability, viability, or quality of other good quality services immediately or over time, relevant authorities are advised to consider whether this is justified by the wider benefits of the proposal.

Improving access

Relevant authorities are expected to consider the extent to which the arrangements with a provider may support local population health needs, and ensure services are as easy to access as possible for all patient groups.

Relevant authorities are advised to consider how providers may best be able to:

a) meet needs of local groups who experience poorer than average access
b) improve the access to services, and experience and patient outcomes, for deprived and vulnerable groups and groups with protected characteristics
c) relate to and understand the populations they are seeking to serve
d) expand access to services via their delivery models
e) address digital exclusion
f) provide services at locations accessible for patients

Reducing health inequalities and disparities

The Public Health Outcomes Framework (PHOF) helps raise understanding of the impact which our individual behaviours, public services, programmes, and policies have on health and wellbeing in Wales.

The PHOF reflects both a life-course approach and the wider economic, environmental, and social factors that can positively or negatively influence the health and well-being of an individual, community, or society. From birth to older age, these determinants can only be tackled by concerted and collective action, by a range of services working in partnership at a local and national level. The PHOF is a tool intended to be used by everyone involved in the design or delivery of policies or services which can contribute directly or indirectly to changes or positive outcomes in population health.

Relevant authorities are expected to consider the ways in which the arrangement with a provider will impact on health inequalities and in arranging services, seek to reduce health inequalities and disparities. For example, some population cohorts may require additional support to exercise choice and this support is expected to be proactively offered and provided.

Duties related to reducing health inequalities and disparities

A healthier Wales places duties on county councils, county borough councils, local health boards, NHS trusts and strategic health authorities. The duties include:

• a need to have a focus on prevention
• health improvement and inequality as key to sustainable development
• wellness and wellbeing for future generations of the people of Wales
• proactively supporting people throughout the whole of their lives
• through the whole of Wales, making an extra effort to reach those most in need to help reduce the health and wellbeing inequalities that exist
• reducing health inequalities and improving the population of Wales health outcomes

The Public Sector Equality Duty (PSED) (Section 149) and the wider obligations in the Equality Act 2010 require public authorities, in the exercise of their functions, to have due regard to the need to eliminate unlawful discrimination or harassment, advance equality of opportunity between those with a protected characteristic and those who do not share it and foster good relations.

The aim of the PSED is to ensure that those subject to it consider advancement of equality when carrying out their day-to-day business.

Social responsibility

Relevant authorities must seek to ensure that the decisions they make about which providers should provide services are aimed at maximising well-being outcomes by contributing to improvements in social, economic, environmental, and cultural outcomes aligned to local priorities.

Relevant authorities are advised to be aware of other requirements and duties not set out in legislation. For example, county councils, county borough councils, local health boards, NHS trusts and strategic health authorities are expected to adhere to the:

• Wales procurement policy statement
• Welsh public sector net zero: baseline and recommendations
• the application of net zero and carbon budget requirements in the procurement of NHS goods and services

The Social Partnership and Public Procurement (Wales) Act 2023 provides a framework to enhance the well-being of Wales by improving public services through social partnership working, socially responsible public procurement and promoting fair work. The act includes a statutory duty on certain public bodies to carry out socially responsible public procurement, to set objectives around well-being goals, and to publish a procurement strategy and annual reports. It also requires bodies to ensure that socially responsible outcomes are pursued through supply chains.

In assessing social responsibility, relevant authorities are expected to think about how the arrangements with providers under consideration impact on:

a) environmental issues and sustainable development, including addressing climate change, making, and meeting commitments around reducing emissions, air pollution and consumption and waste, through promoting circular economy principles as well as enhancing the natural and built environment as applicable

b) delivery in a way that improves the economic, social, environmental, and cultural well-being of their areas, specifically by contributing to the achievement of the well-being goals listed in section 4 of the Well-being of Future Generations Act 2015

c) inclusive and "good" employment characterised by fair work principles where workers are fairly rewarded, heard and represented, secure and able to progress in a healthy, inclusive environment where rights are respected, and supports opportunities for local people or population groups experiencing health or other inequalities and addresses risks of modern slavery

d) community cohesion and the wider health and wellbeing of the population, including by helping communities to manage and recover from the impact of COVID-19

e) social determinants of health (such as employment, income, housing, local environment, food, transport, community, safety)

Relevant authorities are advised to consider the extent to which providers have acted to increase well-being outcomes within their own activities, and how this can lead to other improvements in health outcomes.

Relevant authorities are advised to consider social responsibility in relation to the other criteria in this regime. For example:

• improved integration that leads to fewer patient journeys may also enable environmental gains to be made
• a service that leads to improved air quality may contribute to improved health outcomes over time and hence projected savings

Relevant authorities are advised to consider how a provider’s policies and practices align with:

• moving towards net zero in the procurement of goods and services
• increasing the impact of organisations providing health services as anchor institutions and partners in place

Relevant authorities are expected not to make arrangements with providers that stifle the potential for development and adoption of sustainability within the services or result in a local provider market that may not be able to support the development of new or sustainable services for patients in the future.

Foundational economy

The foundational economy programme weighs up how we can spend money in Wales to yield beneficial outcomes. More than half of Welsh Government’s budget is allocated on health and social care services, so it is important to focus on how this money is spent and ensure that all decisions are made in a way that will bring the maximum benefit for the people of Wales and our economy.

The foundational economy programme focuses on:

• the direct goods or services we buy (such as food for hospitals)
• the workforce we directly employ
• how the location and co-location of our services affects communities and how they can access services

Looking at a means by which goods and services that we procure can help the Welsh economy and support the Welsh population. Such focus should support Welsh companies to provide jobs and training within a local supply chain which will also make improvements to our environment. Such considerations will help ensure opportunities to train or find work and ensure that services are accessible to the local population.

Relevant authorities may, where appropriate:

• seek to ensure that the decisions they make about which providers should provide services are aimed at maximising the "foundational economy"
• consider how the arrangements with providers under consideration may impact on the people of Wales and our economy
• have a focus on how the goods and services procured can help the Welsh economy and support the Welsh population by increasing spending in Wales to support Welsh companies providing jobs and training within a local supply chain
• consider the extent to which providers may act to increase the foundational economy within their own activities, and how such foundational economy improvements may lead to other improvements in health outcomes from the creation of stronger and more resilient communities

Relevant authorities are expected not to make arrangements with providers that may impact negatively upon the workforce they directly employ or may directly employ or would impact negatively on the accessibility of services within our communities.