FOUR children’s hospitals have warned ministers that they face large deficits and cuts in services as a result of the latest NHS reforms.

The chief executives of Great Ormond Street Hospital for Children in London, Alder Hey in Liverpool and Sheffield and Birmingham Children’s Hospitals say in a letter that the operation of the tariff — the list of fixed prices for NHS procedures — will leave them about £22 million a year worse off.

The tariff is a key feature of payment by results, one of the NHS reforms the Prime Minister is expected to extol in a speech today. Payment by results means that hospitals are paid for what they do, according to the fixed prices laid down in the tariff.

Specialist hospitals have long argued that the tariff is insufficiently sophisticated to take account of the greater complexity of the operations and other procedures they carry out.

There have been discussions about adding special supplements to the tariff for children’s hospitals to try to reduce the losses, but in a letter sent to Lord Warner, the Health Minister, and Sir Ian Carruthers, acting chief executive of the NHS, the hospitals say that this has not been done in the latest version of the tariff.

Based on calculations that they have made so far, Great Ormond Street expects to lose £5.93 million in 2006-07, Alder Hey £11.03 million, Sheffield £2.5 million, and Birmingham Children’s Hospital at least £2.6 million — a total of £22 million.

These forecasts “pose fundamental problems for business continuity and access to specialist services”, the letter says.

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

To make ends meet, the hospitals say, they will have to identify those services on which they stand to lose most money and stop providing them. Obvious candidates include heart, brain and spinal surgery.

“We are extremely concerned that vital specialist paediatric capacity, particularly in surgical specialties, will be lost at regional and national levels this year, which will lead to public concern,” the letter says.

“The new opportunities presented by choice and through payment by results should be benefiting children and young people, but quite the opposite seems to be the case.”

Steve Webb, the Liberal Democrat health spokesman, said: “The whole process of NHS reform is being conducted at breakneck speed, simply in order to guarantee the Prime Minister a ‘legacy’.

“On present form, the Prime Minister’s legacy risks being a decimated NHS, thrown into chaos by over-hasty reform and permanent revolution.”

The letter could not have come to light at a worse moment for the Prime Minister. In his speech today to the New Health Network, Mr Blair will herald the new tariff system as central to the government health reforms as he attempts to shift the focus away from the financial deficits that have forced hospitals to cancel operations and make redundancies.

He will claim that his structural changes to the NHS have reached “crunch point” and will vow not to back down.

The first phase of Labour’s health reforms, in which ministers used strong central targets to improve services and bring down waiting lists, is complete, he will say. The Government is now embarking on the second stage in which the idea of an old monolithic NHS will be abandoned and replaced with one that is more decentralised.

OPERATING COSTS

Some have stopped doing certain procedures as the tariff is too low to make them profitable

Explore Health News

• Swine flu

Times Recommends

• Phoebe Caldwell wins Times/Sternberg Award
• Raging against fake pop has its own pitfalls
• How a voice for everyone led to stalemate