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Last Updated: Friday, 6 February, 2004, 01:49 GMT
Q&A: NHS tariffs
How much do we get for you?
The government is to change the way it pays hospitals for treating patients.

The move aims to ensure the NHS gets better value for money by making hospitals more efficient.

BBC News Online examines the scheme.

What happens at the moment?

At present, hospitals are paid a fee for carrying out operations on NHS patients.

The amount they are paid is agreed between the hospital and the local primary care trust, which is responsible for GP and other services and holds the NHS purse strings.

However, the fee can vary considerably between hospitals and between different parts of the country.

For instance, figures from the Department of Health show the cost of a heart bypass operation can range from 2,540 to 6,911. The cost of cataract surgery can range from 763 to 1,164.

What changes are planned?

The government wants to stamp out these variations. In future, every hospital will be paid a fixed price for each operation they carry out.

For instance, every hospital will be paid around 786 for cataract surgery.

Some hospitals may get slightly extra to take account of local factors, such as higher salary costs, but by and large they will be paid roughly the same.

What do ministers hope to achieve?

The aim is to stamp out inefficiency and ensure money is being spent wisely.

Hospitals which charge above the tariff at the moment will have to drive their costs down. If they don't, they will face a funding shortfall that could run into millions of pounds.

This could hit services in other parts of the hospital and trigger longer waiting lists. This could lead to managers being sacked.

How will it affect patients?

Ministers hope the tariffs will help to boost quality of care and cut waiting times.

The theory is that since hospitals will no longer be able to compete on price, they will have to compete in these areas if they are to attract "business".

While the tariffs are aimed at boosting efficiency, it is possible that some hospitals will stop providing certain treatments if they are unable to improve their performance.

While this is expected to be rare, it could see patients having to travel further than they have to now for an operation.

However, ministers believe that patients will be prepared to travel slightly further if they are guaranteed faster and better treatment.

What are doctors saying about the scheme?

The British Medical Association is concerned. It is worried that the tariffs may be set too low for some hospitals forcing them to cut costs.

"At the moment there is no system sophisticated enough to take account of all the factors that can affect hospitals' costs," says Mr James Johnson, its chairman.

"When an elderly patient goes into hospital for a simple operation, doctors often have to diagnose and deal with a range of other related problems that will not be covered by the tariff.

"As a result, some tariffs will be far lower than the real costs of providing care, putting undue pressure on hospitals to make cuts.

"Given that the NHS cannot afford to lose staff, how will these savings be made?"

When do the tariffs come into effect?

The Department of Health set fixed prices for 15 specific operations in 2003. This will now be extended to cover 48 procedures.

The new foundation trusts will be invited to adopt the tariffs from April.

The scheme will be rolled out across England from 2005. However, the tariffs will be phased on over the following three years.

The scheme will be up and running properly in 2008.

Fixed prices for NHS operations
06 Feb 04  |  Health

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