Choice, competition, procurement and pricing in the NHS - an alert on recent developments

By Richard Eccles


New NHS provider licences

Monitor has published the final version of the new NHS provider licence. Monitor describes the new licence as “the new main tool” for it to regulate providers of NHS services and indicates that Monitor will license foundation trusts from April 2013, and other eligible NHS providers from April 2014.


The standard licence includes choice and competition conditions that will apply to all licence holders. The competition provisions will prevent providers from entering or maintaining any agreement or arrangement and from engaging in other conduct which has the object or effect of preventing, restricting or distorting competition, to the extent that it is against the interests of people who use healthcare services. As noted in an earlier alert this month Monitor will have concurrent competition law powers with the OFT in relation to healthcare services, from 1 April 2013. However this condition will provide Monitor with a regulatory route for the enforcement of competition requirements without needing to implement Competition Act procedures and may therefore enable a more flexible approach to enforcement action by Monitor.


Licensees will also be required to notify their patients that they have a choice of provider and to indicate where they can find relevant information about the choices.

Pricing and costs information

The standard licence contains pricing provisions which will require commissioners to make payment to providers of prices determined under the national tariff for NHS healthcare services, thus making the national tariff requirements of the Health and Social Care Act 2012 (the Act) binding on individual providers. The licence conditions also require the provision of information by licensees about their costs in line with guidance to be published by Monitor and to submit such information to Monitor.

Integrated care

A further condition will prevent licensees doing anything that could reasonably be regarded as detrimental to enabling integrated care.


Under the Act, NHS Foundation Trusts will automatically hold a licence on entry into force of the requirements, whilst other providers will need to apply for and demonstrate eligibility for a licence. The licence also contains further specific provisions for NHS foundation trusts.

The NHS Foundation Trust conditions will replace NHS Foundation Trusts' existing terms of authorisation, which will cease to apply. These conditions transpose well established principles of Monitor's current regulation of NHS Foundation Trust governance into Monitor's new licence-based system of regulation. It should also be noted that the published text is still under review, as changes may, for example, be required as a result of the Francis report.

Further information

The new NHS provider Licence was published 14 February 2013 and is available from Monitor’s website.

NHS Procurement, Patient Choice and Competition Regulations 2013

Under the new NHS (Procurement, Patient Choice and Competition) Regulations 2013, the National Health Service Commissioning Board and clinical commissioning groups will be required to ensure good practice in the procurement of NHS health care services and to prevent anti-competitive behaviour in commissioning. The regulations set out procurement objectives, in particular to secure the needs of people who use the services, and to improve quality and efficiency. They include requirements of proportionality, non-discrimination and transparency.

The regulations and further guidance to them are available from the Department of Health’s website

Additional healthcare contacts:

David Ayers     Simon Shooter