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Payments for operations will be standardised
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     The national tariff for clinical procedures in the NHS, published by the government last week, is too crude a system to be fair to all hospitals, the BMA has warned.

    The price list for 48 common NHS operations is part of a bid to improve efficiency and tackle large variations between hospitals in costs. Under the tariff, to be rolled out nationally over the next four years, hospitals will receive a set cost from the primary care trust for procedures such as cataract, hip, and heart bypass operations. Hospitals that can provide services at a cost below the national tariff can use a proportion of the "profit" to improve services.

    Health minister John Hutton said trusts that spend more than the national tariff on procedures will be helped to drive down costs. But by the time the system is fully operational, in 2008, primary care trusts will be unable to pay above the tariff limits for services and could either search for providers elsewhere or leave the hospital to pick up the excess.

    Speaking on BBC Radio 4抯 Today programme Mr Hutton denied that the system gave an in-built disadvantage to those trusts that specialise in difficult and therefore expensive cases, such as teaching hospitals. He also addressed the criticism that some providers, such as the new diagnostic and treatment centres, could "cherry pick" straightforward cases to keep costs down and gain financially.

    "This allegation is always raised, but it抯 not true," he said. "PCTs will have contracts with treatment centres that make it clear that they won抰 be able to cherry pick. There are concerns that the tariff does not reflect the complexity of hospital treatment and local cost pressures, and there is work to be done on that." He added that only 1% of hospital budgets will be commissioned through the tariff next year. "We want to learn as we go. There will be no 慴ig bang.?This way of financing hospitals is widespread across the developed world, and it can certainly work here in the NHS," he said.

    But BMA chairman James Johnson said a tariff system could cause problems for the NHS: "At the moment there is no system sophisticated enough to take account of all the factors that can affect hospitals?costs. 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 that 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?"

    Alan Maynard, professor of health economics at York University, said the introduction of the system was a "mixed blessing."

    "The major gain is that trusts will have to look at the volume of their activity because PCT contracts will pay by results," he said. "So trusts will question why there is variation in the activities of clinicians. The BMA may have won the argument of the consultants?contract, but, 慔ey presto,?they are going to find scrutiny and management will come through the back door with payment by results."

    The Department of Health also disclosed that it was paying as much as 43% more than NHS standard costs for services purchased from the private sector. In the future private providers of NHS care would have to come much closer to matching tariff rates, said Mr Hutton.(London Rebecca Coombes)