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Last Updated: Monday, 17 April 2006, 19:13 GMT 20:13 UK
Children's hospitals in cash plea
Nurses and child at Great Ormond Street
Children's treatments could be hit, say hospital bosses
Heads of the UK's leading children's hospitals say a new system for paying NHS providers could cause financial problems and lead to cuts in services.

In a letter to ministers bosses of four hospitals in London, Liverpool, Birmingham and Sheffield say they will lose 22m in total in the coming year.

From now on, NHS trusts are being paid per individual cared for, according to a set of tariffs for treatments.

Ministers say this gives greater choice for patients in where they are treated.

But the chairmen and chief executives of Alder Hey in Liverpool, London's Great Ormond Street and Birmingham and Sheffield children's hospitals say specialist children's services will lose out.

They expect to lose about 22m in 2006-07 and say the new system prevents financial planning for years, maybe causing cuts to treatment.

Alder Hey: 11.03m
Great Ormond Street: 5.93m
Sheffield Children's Trust: 2.5m
Birmingham Children's Trust: 2.6m

The so-called "payment by results" (PBR) system is part of the government's structural reform of the health service.

Instead of hospitals, community care and mental health providers being given lump sums by local health bosses at primary care trusts, as was the case, the cash follows the patient.

The intention is to empower GPs so they know the treatment costs and giving patients choice.

Hospitals which perform well and attract more patients get extra rewards.

The system was already being used for elective care, but from April it was rolled out for A&E and emergency surgery.

Talks plea

The letter to health ministers Jane Kennedy and Lord Warner said unlike other trusts, specialist hospitals could not look elsewhere to find savings.

"When taken together with the efficiency requirement of 2.5% and transitional losses on PBR, the financial forecasts pose fundamental problems for business continuity and access to specialist services," the letter said.

On present form, the prime minister's legacy risks being a decimated NHS
Steve Webb
Lib Dems

"It has been clear to us for some time that these problems are largely the result of an inaccurate and highly insensitive tariff."

The hospital chiefs called for an urgent meeting with ministers to resolve the issue, which has already been the subject of talks for 18 months.

A Department of Health spokesman said they did not recognise the 22m shortfall but recognised the tariffs may need to be adjusted for specialist children's hospitals.

"It is our intention that PBR is part of the solution to financial problems, not the cause of them," he added.

'Too hasty'

But the Liberal Democrat health spokesman Steve Webb blamed Tony Blair's departure for the "breakneck speed" of reform.

"On present form, the prime minister's legacy risks being a decimated NHS, thrown into chaos by over-hasty reform and permanent revolution."

Shadow health secretary Andrew Lansley said it was essential the NHS tariff accurately reflected costs, especially for children's specialist services, where costs could be higher.

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