By Nick Triggle BBC News health reporter

Emergency admissions will be covered by the scheme

But while few patients will have even heard of the new finance system, the reality is that it could prompt a sea-change in how the NHS works.

And if that happens - whether for better or worse - patients will certainly feel the effects.

From April next year hospitals will be given money for each patient they treat - the rest of the NHS, including mental health and community care, will follow by 2009.

The government is introducing the scheme to help underpin patient choice by rewarding the providers who attract the most patients.

In other words - no patients, no pay.

Introducing a market place means trusts do not know what money they should expect. You can expect some to go under Tony Harrison, of the King's Fund Q&A: NHS reforms

But this is where the problems lie, according to many hospital staff.

The fear is that some hospitals - which have traditionally been given a lump sum of money by local health bosses at the beginning of the year to cover their costs - will not attract enough patients to keep their heads above water.

And while some may claim this is fine for the poorest performing hospitals, there are concerns private operators may "cherry-pick" the easiest cases and thus deprive NHS trusts of much-needed income.

Doctors and unions are also warning the changes could destabilise the NHS and lead to ward closures, recruitment freezes and even complete hospital closures.

Jonathan Fielden, deputy chairman of the BMA's consultants committee, said the government had been encouraging hospitals to collaborate under the new system.

But he added: "It is hard to see how that can work in a system based on competition.

Reorganisation

"Primary and secondary care will be against each other," he said, adding it could lead to a major reorganisation of services or potential closures as hospitals struggle to balance the books.

Health service union Unison agreed, pointing out hospitals were already feeling the pinch with one in three recording deficits last year.

Hospitals in Portsmouth and south London have already announced recruitment freezes, while a clutch of hospitals around the south east have closed A&E wards to save money.

A Unison spokeswoman said: "Hospitals are already in trouble and the danger is that private providers will jump in to do the easiest cases and make money from it while NHS hospitals are left with the difficult ones.

Yes to some extent it will destabilise the NHS, but to a degree that is the point Nigel Edwards, of the NHS Confederation

"If that happens it could make it very difficult for some."

And others believe the unheralded period of uncertainty about income will create problems in itself.

"It is a risky scheme," said Tony Harrison, of health-think tank King's Fund. "Introducing a market place means trusts do not know what money they should expect. You can expect some to go under.

"There is a floppy assumption by government at the moment that doing extra treatment does not cost much because you already have the staff and facilities.

"But that ignores the fact that if the good hospitals are to take up the slack they will need to get more staff or pay people overtime and I don't think they will be prepared to do that.

"In the end you might see some trusts use the money elsewhere to improve other services."

Potential

But despite the concerns of staff, local health bosses and the government maintain the scheme has the potential to benefit patients.

Lord Warner said it would allow the NHS to respond to patient choice - from the end of the year people will be given a choice of up to five hospitals for treatment.

And he added it would lead to the "driving up" of quality and value for money as good services will be allowed to thrive.

Nigel Edwards, director of policy at the NHS Confederation, which represents health service managers, was slightly more cautious.

He said hospitals needed to be given time to adjust and the government needed to be flexible, but, given that leeway, added there was no reason why it should not work.

"Yes to some extent it will destabilise the NHS, but to a degree that is the point. The idea is to have creative tension.

"There are safeguards in place to make sure hospitals do not suffer by losing the easy cases. It is not outright capitalism, it is a form of managed market. The NHS is ready."

Mr Edwards has also been encouraged from what seems like a smooth start to payment by results - from 2003 some hospitals have been operating under the system for elective care as pilots.

"It has not been the disaster that was predicted, and while elective care is easier to predict and therefore easier to manage, I think we can still take heart from that."