Specialist children's services have suffered, hospitals say

Payment by Results is a new system of funding whereby hospitals are paid per patient treated.

But it has caused cash problems in specialist children's hospitals due to the complex nature of their work.

Ministers said they would get extra money to plug the shortfall and said there was now no timetable to extend it into other services not covered.

Any further developments must be properly funded to fully reflect the complexity of the work involved and the true costs of treating the patient Jonathan Fielden, of the British Medical Association Q&A: Putting the patient in control

Payment by Results is a key part of a package of reforms, including patient choice, which have been designed to make the NHS more efficient and responsive to patient demand.

In the past, hospitals have been given a lump sum based on traditional activity.

But under Payment by Results they have to compete for patients to be paid - ministers believe it will lead to hospitals improving services in a bid to attract patients.

It is currently used for about half of hospital activity - non-emergency surgery and some outpatients and A&E care for which there are set tariffs for each procedure.

It was originally envisaged that adult critical care would be incorporated this year.

Mental health and other community services were also due to be covered by the funding system by 2008.

But Lord Warner said the system would not be expanded at all next year.

And he added: "We will not be specific about what comes after that."

His announcement comes after the government was criticised for the way the tariff for this year was introduced.

It was published in January but had to be reissued after it emerged it was inaccurate.

A government-commissioned report by John Lawlor, chief executive of the Harrogate and District NHS Foundation Trust, on the handling of the announcement said in the future ministers must publish it earlier, employ more staff to calculate it and even consider contracting out the process.

He also agreed it should not be rolled out further in 2007-8 to give the system chance to "bed down".

Payments

It comes after children's hospitals started to lobby government, warning services may have to be but because they were not receiving enough money under Payment by Results.

The Department of Health has agreed to give the Liverpool's Alder Hey Hospital �4.9m this year, London's Great Ormond Street Hospital �3.4m and Sheffield's children hospital �900,000.

The payments are likely to be repeated next year, Lord Warner siad.

The government is also in talks with specialist orthopaedic services over similar problems.

The NHS system of Payment by Results has attracted controversy because it goes much further than its continental equivalents which tend to only cover elective operations.

Jonathan Fielden, deputy chairman of the British Medical Association's consultants committee, said: "The tariff will only be effective if there is close clinical involvement throughout the process to reflect the true needs of patients."

And he added: "Any further developments must be properly funded to fully reflect the complexity of the work involved and the true costs of treating the patient."